Free Markets, Free People

individual mandate


Let’s pretend “mandate” doesn’t really mean “mandate”

That seems to be the solution Andrew Sabl has concocted to temper the outrage directed at Democrats for mandating everyone must buy health insurance.  If you’re a fan of word salad, this will please you:

The phrase “individual mandate,” though it explained to wonks how we were going to achieve near-universal coverage, was always bound to make for atrocious framing.  Pairing it with a subsidy is great policy but possibly even worse framing.  Now one thing people don’t like—being told by the government what to do—is supposed to be made better by another thing they don’t like—admitting they need government help.

Here is another way of describing ACA that’s completely accurate but explains the point much better:

“If you or your family aren’t getting health insurance through your job, the government will pay to get you private insurance coverage, just as an employer would.  You’ll have to contribute something—but the law guarantees, with specific numbers, that it will be no more than you can afford. It’ll be less than three percent of your paycheck if your family makes $33,000 a year, less than ten percent if you make as much as $88,000.  Pre-existing conditions won’t matter.  The government will still pay for your insurance, with the same affordable contribution from you.”

The bill has lots more—things that make it even better.  But that, it seems to me, is the basic idea.  And if we drill it in, people (Fox News junkies aside) will stop imagining that the bill is somehow about government telling people without insurance that they have to get it because the government won’t help them.  It’s the opposite.  Under ACA, it’s the government’s job to get you insurance, and to pay for almost all of it if you can’t afford it.  Before, you were on your own.

Objections?

Well I can think of many, but first let’s start with the good Stephen Bainbridge’s characterization of this attempt at giving a word a new meaning:

“When I use a word,” Humpty Dumpty said, in a rather scornful tone, “it means just what I choose it to mean—neither more nor less.”

“The question is,” said Alice, “whether you can make words mean so many different things.”

“The question is,” said Humpty Dumpty, “which is to be master—that’s all.”

Bainbridge goes onto point out that “mandate” comes from the word “mandatory” as in you must do, obtain, be, spend, whatever is demanded. It’s not a suggestion. There’s no option.  It’s not something you can decide to ignore. In this case there’s the force of law behind it and 16,000 new IRS agents to insure you fulfill it – something Sabl seems to have somehow missed. Also apparently forgotten by Sabl is the fact that fines for not buying your mandated coverage are one of the major revenue streams with which this monstrosity is fed.

But the best irony is saved for last: Sabl entitles his blog “The Reality Based Community” with the sub “Everyone is entitled to his own opinion, but not his own facts.”

Indeed.

~McQ


NOW they tell us…

John Cassidy, writing in one of the blogs at that hotbed of reactionary conservatism, the New Yorker, notes the following about the BFD.  First, he writes that the individual mandate is likely to prompt rather different behavior than the law assumes:

Consider the so-called “individual mandate.” As a strict matter of law, all non-elderly Americans who earn more than the poverty line will be obliged to obtain some form of health coverage. If they don’t, in 2016 and beyond, they could face a fine of about $700 or 2.5 per cent of their income—whichever is the most. Two issues immediately arise.

Even if the fines are vigorously enforced, many people may choose to pay them and stay uninsured. Consider a healthy single man of thirty-five who earns $35,000 a year. Under the new system, he would have a choice of enrolling in a subsidized plan at an annual cost of $2,700 or paying a fine of $875. It may well make sense for him to pay the fine, take his chances, and report to the local emergency room if he gets really sick. (E.R.s will still be legally obliged to treat all comers.) If this sort of thing happens often, as well it could, the new insurance exchanges will be deprived of exactly the sort of healthy young people they need in order to bring down prices. (Healthy people improve the risk pool.)

He then moves on to note that employers may respond in a rather unexpected fashion as well:

Take a medium-sized firm that employs a hundred people earning $40,000 each—a private security firm based in Atlanta, say—and currently offers them health-care insurance worth $10,000 a year, of which the employees pay $2,500. This employer’s annual health-care costs are $750,000 (a hundred times $7,500). In the reformed system, the firm’s workers, if they didn’t have insurance, would be eligible for generous subsidies to buy private insurance. For example, a married forty-year-old security guard whose wife stayed home to raise two kids could enroll in a non-group plan for less than $1,400 a year, according to the Kaiser Health Reform Subsidy Calculator. (The subsidy from the government would be $8,058.)

In a situation like this, the firm has a strong financial incentive to junk its group coverage and dump its workers onto the taxpayer-subsidized plan. Under the new law, firms with more than fifty workers that don’t offer coverage would have to pay an annual fine of $2,000 for every worker they employ, excepting the first thirty. In this case, the security firm would incur a fine of $140,000 (seventy times two), but it would save $610,000 a year on health-care costs. If you owned this firm, what would you do?

I assume that final question is rhetorical.

Too bad no one could explain this prior to the bill’s passage.

If only there was some intellectual discipline that tried to predict how people respond to incentives in a world of scarce resources!

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