[spoiler]The scene: A woman in casual business wear addresses the reader directly.
Panel one
Woman: i’m TRAPPED in my job, because my kid is sick, and if i change jobs there goes my health insurance!
Panel two
Woman: i have a great idea for a business start-up — the kind of thing that could change my life! but i’m TRAPPED in my job because of the health insurance.
Panel three
Woman: the job recently forced me to relocate to IDAHO. i HATE living in idaho! i miss my family. but i’m trapped in my job because… well, you know.
Panel four
Woman: my boss assigns me unpaid overtime and makes inappropriate comments… but i can’t tell him to SHOVE it, because i’m TRAPPED.
Panel five
Woman: so my friend tells me that to solve all these problems, i should support single-payer health care. and i said
to her, ARE YOU NUTS?
Panel six
Woman: once the government gets involved in health care, we won’t be FREE![/spoiler]
The obvious third alternative: give individuals the same tax break for health insurance that is given to businesses. Health care is tied to work in the US due to a quirky Eisenhower-era law that let employers offer health coverage as a perk. Employers aren’t exactly doing this out of the goodness of their hearts – with the tax break, it’s cheaper than salary.
So: let individuals deduct health insurance premiums like they do mortgages.
No reason for business OR government to get between individuals and their health care providers.
1) What about people who can’t afford it? Many people don’t pay enough in taxes to cover the cost of health insurance.
2) “let individuals deduct health insurance premiums” doesn’t mean business won’t get between me and my doctor. It means that a huge health insurance corporation will get between me and my doctor.
Of course, if government were more democratic and less corporate-enslaved, perhaps Ben’s fears of a detached Big G would be less understandable.
Great cartoon, though. I am in the single payer column.
Businesses also get much lower rates than individuals on the insurance market because (a) they have a greater ability to negotiate, (b) they aren’t capable of only buying insurance if they think they need it, (c) they represent a larger pool of generally healthy people.
So: let individuals deduct health insurance premiums like they do mortgages.
I just don’t understand how this would work. I have a prescription for migraine meds and I have a minor chronic condition; as a result it would probably cost me upwards of $800/month to get private health insurance unless I wanted catastrophic coverage, and even that would be expensive. So I would need a tax break that would generate almost $10,000 to be able to afford the insurance I get through my job. My employer pays about half that to insure me, and if they stopped insuring me I somehow doubt that they’d give me a $400/month raise.
Aw, heck. You’ve just given me my writing assignment for tomorrow (or at least the jumping off point for it). Can I post the cartoon with attribution and a link back, or would you rather I just link?
Go ahead and post it, Maureen! :-) But I’d appreciate the link back.
Here’s the link to the article: http://walkingupstream.blogspot.com/2011/03/health-care-freedom-and-human-capital.html. I linked back to this article from it. Thanks again for your consistently good work.
a. We don’t know how much it should/would cost, because the direct connection between consumer and provider has been so obfuscated – by the employer’s involvement, and by government-mandated coverage that individual consumers may not want.
b. Subsidize the small minority that can’t pay for catastrophic coverage. The obvious analogy is to food stamps – we don’t need to socialize the food supply to make sure nobody starves.
Well, yes – the consumer will still have to contract with whatever person or professional organization provides the service. That “Huge Health Insurance Corporation” is already part of the story – not a new result.
But additional intervening players will be removed, and you can negotiate directly for the coverage you want – and find a better deal if your HHIC does not satisfy you as a consumer. And direct competition will make HHICs more attentive to their customers – that’s what happened here in Israel when socialized medicine was reformed into a hybrid system.
Frowner predicts that:
But we just don’t know, because we don’t have a free market for medical services. This is due to:
1) The aforementioned tax-dodge.
2) State-level mandated coverage, originally intended as lollipops for special interest groups, that basically prevent insurers from offering uniform plans in all 50 states (which would, for example, let them spread the risk/expense of your migraines over many more insured).
3) Price fixing by Medicare/Medicaid.
It is highly likely that removing these barriers will create an open market with varying levels of coverage, and allow people with pre-existing conditions to form larger risk/customer pools – reducing insurance costs.
We saw a lot of these benefits here in Israel when we moved to a hybrid system (government-subsidized basket of basic services + private insurance through HMOs).
Ben David,
We already have a private, individual health insurance market. If I don’t like my employer provided health insurance, I am free to call around to the health insurance companies and negotiate individual coverage. Prices in the individual market are much higher than prices in the group market (even before taking into account the tax benefits for employer provided health insurance).
The Israeli system involves vastly more government intervention than the US system. The Israeli system has an individual mandate to participate in an HMO, with a single standardized baseline level of coverage, paid for by a progressive tax, rather than by a negotiated individual insurance rate. I wish the US system had the Israeli system, it sounds about on par with a single payer system. Using the Israeli experience to argue that the US system needs to move even more towards a free market system is puzzling.
Yes, the US system of employer based health insurance is a bad thing, but an individual free market in health insurance would be even worse, and the Israeli experience is most definitely not an argument for a more free market based approach.
CharlesS writes:
Because it’s not a mass market – fewer customers usually means higher overhead and higher prices. That’s basic economics.
If insurers were tailoring and selling packages directly to consumers – and if they could offer the same package in all 50 states – we would see the same economies of scale as in the corporate packages, with additional choice and transparency.
You write:
I’m less concerned with labels and more concerned with what works – and while I’m very sympathetic to the idea that we have a moral obligation to insure care for our fellow citizens, I have not seen single-payer, socialized care that works in the long term.
1) It could be argued that Medicare/Medicaid is a de facto subsidy of core services, similar to the Israeli government’s basket – in both cases, the government is saying “we will reimburse insurers X amount for Y procedure.”
2) Israel originally had a system where a handful of HMOs operated under strict government price controls that virtually eliminated competition. In addition, the government owned facilities directly or indirectly, and health care workers were government workers. Service, capacity, and innovation were abysmal – and membership in the HMOs was often conditioned on membership in worker’s unions and involved other inequities.
Now the HMOs have been clearly spun off from the government. And both HMOs and individual practitioners have incentives to innovate and bring new developments to Israel, because they are free to charge what the market will bear for unique services.
After competition drops prices and treatments become mainstream, they enter first the HMOs’ private coverage plans, and then the government’s basket, making them accessible to all. Dentistry advances and laser eye treatment are two recent examples of this process.
In addition, there is a lot of “added value” on partially subsidized treatments – such as holistic/naturopathic birthing options on top of subsidized prenatal care.
The result is:
Greatly improved service at the best prices, and a virtuous cycle of innovation instead of socialized stagnation.
Care for all – with minimal government involvement, personal choice, and countervailing market forces.
You know, I have trouble believing that insurance companies are really going to drop prices dramatically on good products. I remember when, for example, it was predicted that CD (music CDs, that is) prices were going to drop radically to below ten dollars, using some similar logic. Never happened. Why exactly would companies drop prices substantially when they can all just decide to keep prices fairly high? I mean, in theory if my employer no longer pays for my health care they should in theory give me the difference in wages too, but they’re not going to–they’re going to keep the savings. Sure, maybe they’ll throw me a bone and I’ll get an extra $50 a month or something.
If free market health care costs me $600 out of pocket every month instead of $800–after I’ve lost my employer-provided cheap coverage–well hey, I’m still going broke here. It would take a hell of a tax break to make that work. At my income level, I don’t even pay $7800 a year in federal taxes.
Why exactly would companies drop prices substantially when they can all just decide to keep prices fairly high?
Competition. If there are no barriers to entry, then new companies will come in and accept a lower profit margin in return for larger market share by underselling the existing companies.
There are a number of ways to short-circuit competition. Illegal collusion, etc. But the most common way to block competition is barriers to entry, i.e., making it difficult or impossible for new entrants to come into the market. This is one reason big companies accept regulation – regulatory burden makes a great barrier to entry.
Why exactly would companies drop prices substantially when they can all just decide to keep prices fairly high?
Magic free market pixies will make everything better.
Oh sorry, Robert and Ben David already said that.
Ben David,
I’m not arguing that the current Israeli system doesn’t work better than the older Israeli system. I’m arguing that that claim doesn’t tell us anything about how making the US system even more purely free market would improve it.
If you had suggested that the US take up the Israeli system in which all citizens have access to basic health care for free (paid for by progressive taxation), with the option of buying top-up coverage for additional types of treatment, I wouldn’t have objected (it sounds similar to the French system, which is also highly regarded), but simply removing the incentives for employers to provide health insurance would not improve the accessibility of health insurance in the US, and the Israeli experience is not an argument that it does.
If the Israeli level of government involvement is termed ‘minimal’, then the US level is already at the ‘less than non-existent’ level, and I wish we would move up to the minimal level.
Magic free market pixies will make everything better.
There’s nothing magical about it. Just a combination of human nature and available opportunities.
Markets generally work. There are things that make them not work, like collusion, governmental distortion, artificial barriers to entry, etc. And it’s a long list of “etc” – there are lots of ways to break markets. Most of which are in play in the health care industry, which is one reason that medical prices are so fouled up.
But the general principle that competition brings prices down to their cost-clearing level is supported by an absolutely massive pile of evidence, most of which is directly accessible to ordinary consumers.
Are you saying that there is no competition among health insurance companies for employer provided insurance? If you’re saying that, you are terribly wrong. Each year, when it is time to renew or switch insurance companies, I get quotes from a minimum 8 health insurance companies from which to choose.
I’m arguing that that claim doesn’t tell us anything about how making the US system even more purely free market would improve it.
What on EARTH is “free market” about most of the US health care system?
We have massive government regulation of what insurers can and can’t do. We have massive government subsidies for certain kinds of care, assigned willy-nilly to poor people of all ages and old people of all economic classes; when Bill Gates turns 65 he starts getting free care. We have a massive regulatory infrastructure to manage those government subsidies. We have a massive tax intervention into the buying decision that surrounds insurance, which is itself an economically moronic way of funding healthcare, which essentially requires any corporation wishing to be competitive in the labor market to buy into a fundamentally stupid way of paying for health care.
We’ve had increasing government intervention and attempted management of health care since the early 20th century, with a real uptick in the WWII years when a Democratic Congress passed the tax break for employer-provided healthcare that has been enormously distortive to the market price for care. The latest atrocities against common sense are just the latest icing on an already-teetering cake of government interference in the market. Hey, let’s fix all the problems we’ve been introducing with government interference in a market by implementing a bunch more government interference in the market!
I have no illusions that a purely free-market health care system would be a utopian wonderland of fairy dust and magical pixies. For many people, such a system would be starkly nonfunctional and they would have a hard time getting health care. The pre-Medicaid, pre-Medicare, pre-“health insurance” world was not a paradise.
But we’re about a million miles from that world now, and we’ve simply traded one set of problems for another. Saying that our current system is “free market” is like saying that Libya is currently engaged in a vigorous process of civil discourse aimed at reaching a happy social consensus about values.
Are you saying that there is no competition among health insurance companies for employer provided insurance? If you’re saying that, you are terribly wrong. Each year, when it is time to renew or switch insurance companies, I get quotes from a minimum 8 health insurance companies from which to choose.
No, in that case I’m saying that the tax incentives for employer-provided insurance are very distortional of the actual market price for care.
Panel 7: Thirty years later…
Panel 8: I have a fatal disease for which no cure exists. There might have been one by now, but once the government attained monopsony status, it “negotiated” down the price of drugs to a level which made the development of marginal drugs unprofitable. I’m trapped!
Panel 9: But it sure is nice of the government to pay for my hospice care.
Also, this woman must have an incredibly specialized skill set, if there’s only one job in the whole country for which she’s qualified that offers health insurance.
She’s concerned that a new insurer won’t cover her son because his condition is pre-existing.
That’s not actually how employer-provided health insurance works, is it? My (admittedly limited, so I could be wrong) understanding is that if you’ve had continuous coverage for a certain amount of time prior to changing employers, they can’t exclude preexisting conclusions. And also that you can continue coverage through COBRA for a fairly lengthy period of time.
It’s funny Robert, you have routinely described health insurance as something that fundamentally doesn’t make sense, and yet you claim that it works properly in a free market, and that an unregulated health insurance market would have lower prices while still providing functional service (you can already get really cheap health insurance if you don’t mind having every claim you file denied).
I find that contradictory.
Ah, never mind. Comment 18 makes more sense. I still think comment 13 was basically libertarian boiler plate, and a serious mismatch with your belief that health insurance is basically nonsensical.
Certain limited kinds of health insurance aren’t nonsensical. Using it as the primary means of paying for all care is crazy.
Sometimes boilerplate is boilerplate because it’s true.
Charles S:
Yet one of the initial rallying cries for US health care reform was that the connection between employment and healthcare was “unfair” and disenfranchising.
Round and round it goes. Proven free-market principles are dismissed as “pixies” and arguments twist to justify the predefined goal of single-payer. Some people are politically committed to socialism, and to socialized health-care…
And, no – in the Israeli system all citizens do NOT “have access to basic health care for free” – the vast majority of Israelis are dealing solely with their HMO, with the government subsidy in the background.
If we don’t pay into a monthly plan, we are billed, and most plans include co-pays – precisely to avoid the waste and inefficiency of “free health care”. Similarly, we are billed directly for emergency-room visits, which we either pay out-of-pocket or submit to our HMO based on the coverage we’ve purchased. When I was unemployed, the basic health-care premium was deducted from my unemployment check, and I kept up my private plan by paying the additional monthly fee out-of-pocket.
So when you write:
– the Israeli government’s involvement is about parallel to Medicare/Medicaid: while covering health costs for the needy, the government indirectly affects market prices by stating how much it will reimburse. The rest of the system is blessedly open to private HMOs, private hospitals, free-market medical practitioners, and the choice, service, and innovation they provide.
You dropped the word simply from my quote. Your response makes much less sense with that word restored to my statement.
Is your point that there are systems of health care and health insurance that work well and don’t have a strong bias towards employer provided health insurance besides single payer? If so, I agree. The British NHS (much more socialist than single payer), the French system, the Israeli system, the Swiss system (which is somewhat similar to the not yet implemented AHA system in the US, but with less of a bias towards employer provided care), and many more, all seem to provide near universal affordable access to health care without a substantial employer bias (unlike the US system, which links affordable access to employers and doesn’t provide universal affordable access by a long shot). I think Amp’s reference to single payer in the cartoon is a simplification (it is a cartoon) and could reasonably be swapped out with a reference to any system with strong government control (ask Brandon or Robert or RonF, any of our anti-government types, if they’d be happy with the level of government intervention in the free market that the Israeli system entails). Single payer is just the talismanic term used in the US for all such systems.
If that isn’t your point, if you are actually arguing that removing the employer provided insurance tax benefit, absent any other substantial changes to the US health insurance system, would provide better, near universally affordable access to health care, then I must disagree.
The Israeli system bears no resemblance to what the US system would be minus the employee insurance tax benefit. To argue otherwise is ridiculous.
For any other non-Israelis reading this, here’s a useful description of the Israeli health care system.
Are Israeli HMOs free to discriminate based on health or age? No. US HMOs and insurance companies are.
Are Israelis required to belong to an HMO? Yes. People in the US are not required to have health insurance.
Are Israeli HOMs required to provide a fixed basic package of benefits? Yes. US insurance companies in most states are not.
Are Israeli HMOs paid through a capitation system, funded by payroll and general taxes, at least for the basic package? Yes. US insurance companies are paid directly by individuals or employers, at rates negotiated by the individual or the employer.
Do Israeli HMOs compete with each other on the price to the consumer of the basic benefits package? No. US Insurance companies compete with each other over the price of all benefits packages.
Does failure to pay for the basic insurance package mean that you lose coverage in Israel? No. Failure to pay for insurance in the US means you don’t have insurance.
Does this statement:
(from page 47 of the above linked document) describe the level of government regulation of a large chunk of the non-mandated and government paid for portion of the Israeli health insurance market? Yes. The AHA (and Massachusetts) health insurance exchanges look similar, but they regulated the core insurance package, not supplemental insurance packages, and they aren’t (yet) the national standard practice. (There is a third chunk of the Israeli insurance market, commercial insurers, who are allowed to discriminate and allowed to negotiate group rates for employers, but they are providing a supplement to a supplement, not anyone’s core insurance).
These are huge differences. They can not be hand waved away by declaring that Medicaid/Medicare are the equivalent of the government component of the Israeli system (they are not).
A US system in which the employer insurance subsidy was replaced by a universal subsidy, with a universal insurance mandate, with a fixed and substantial minimum insurance package, and a ban on charging differently based on individual condition, with sizable income based subsidies, with the primary health insurance companies being exclusively non-profits, with 64% of the cost of health care covered by taxes and 50% of hospitals being state owned, and a legal right to health care: that would be a very different system than the one we have now. It would involve substantially more government involvement than the current US system (more even than the not yet implemented AHA system involves), and it would involve about the same or less government involvement compared to the Israeli system.
As a side note, when you say that you were paying the basic health-care premium while you were unemployed, do you mean that you were paying the 3.1% health tax on your unemployment benefits, which you think of as an HMO premium, or is this:
and this
no longer accurate (quotes from page 42 and 43 (page 68-9 in the pdf) of the previously linked document)?
Ben David,
When you say: “2) Israel originally had a system where a handful of HMOs operated under strict government price controls that virtually eliminated competition. In addition, the government owned facilities directly or indirectly, and health care workers were government workers. Service, capacity, and innovation were abysmal – and membership in the HMOs was often conditioned on membership in worker’s unions and involved other inequities.
Now the HMOs have been clearly spun off from the government….”
Are you describing the results of the 1995 NHI law, or are you describing a very recent change that I can’t find any mention of anywhere online?
if you’ve had continuous coverage for a certain amount of time prior to changing employers, they can’t exclude preexisting conclusions. And also that you can continue coverage through COBRA for a fairly lengthy period of time.
[cough]governmentregulation[/cough]
Elusis:
Sure. But “we already have government regulation addressing this problem” isn’t a terribly compelling argument for why we should have more government regulation to address this problem.
And there’s no compelling reason this problem couldn’t be solved through market mechanisms, such as insurance against developing pre-existing conditions, but there wouldn’t be much point in buying it when there are regulations that make it essentially worthless. The fact that we currently have a government-based solution to the problem of pre-existing conditions doesn’t mean that it’s the best possible solution.
I don’t think that’s what Elusis is arguing (though I don’t really want anyone to think I’m trying to speak for her or him). Elusis seems to have been just pointing out that your response was an example of gov’t regulation–iow you were kind of arguing for govt regulation in the form of COBRA or at least dismissing a problem or concern by referring to a govt solution.
And in answer to your previous questions–yes, new providers can deny a person for pre-existing conditions regardless of whether your old provider covered it (at least until Obamacare came around) and COBRA only applies for 18 months (29 in certain cases). But really, if you switch jobs it is extremely hard to keep paying your old premiums for 18 months or until a new employer provided plan kicks in.
All, All this sounds very confusing… I have a friend that moved to Thailand and gets first rate medical attention for pennies on the dollar. I’m afraid we are doomed to wage slavery and sucking up to the rich… who really don’t have any use for the poor after about 60 anyway. Poor people, after their mental and physical powers diminish, are of little use to billionaires intent on having all of the best. The cartoon is poignent and amusing at the same time. Just remember, we are doomed… and it will all turn out the same in the end.
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