• Where is the outrage over employer-sponsored coverage in the “rate shock” debate?

    I’ve been keeping pretty close tabs on the “rate shock” debate—as a healthy twenty-something, it behooves me to know what other people are saying I should think. (I jest, but you all have some pretty firm opinions on that.) It’s a complicated issue, and prophecies about young adult enrollment, including my own, have relied on broad strokes and guesswork. But one thing in particular has been grating on me: when it comes to complaints about redistribution and overly-generous benefits in health insurance, why is the echo chamber limited to the individual market? Where is the outrage over employer-sponsored insurance?

    Josh Barro hit the mark on this earlier in the week:

    Redistributive public policy is even more of a theme in the group health insurance market, which is nine times larger than the individual market and the dominant source of “private” health coverage. […]

    Employers are also limited in their ability to pick and choose whom they offer insurance to. You can limit coverage to full-time workers only, but you have to offer it to all of them on approximately the same terms, without premium adjustments for claims or health status. […] [T]hat benefit ends up being much more valuable to people with high health costs than with low ones.

    Some 90% of people with private insurance receive it through an employer, and those plans are generally priced using “pure” community-rating. This means the company serves as one giant risk pool, and a firm’s youngest employees have the exact same insurance premium as their eldest colleagues. The practice has roots in tradition and history; unions started negotiating these kinds of contracts after World War II, and other plans followed suit. But it’s also a matter of law: HIPAA and the ADA prohibit premium variation by health status. Age rating is constrained somewhat—though not entirely—by the Age Discrimination in Employment Act.

    Yet, I’ve seen exactly zero Obamacare opponents railing to amend the employer-based practices that require most young healthies to pay more than their “fair share.” No one is plying Congress to amend HIPAA or the ADA so young invincibles can pay premiums appropriate to their health status. No one is calling out employers on their “redistributionist” policies, even though uniform insurance premiums force a substantial transfer from the young to the old. It makes histrionics over Obamacare’s 3:1 age band hard to take seriously.

    As an anecdotal aside, I selected a modest HMO plan when I joined the working world at 22, the second-cheapest of my six options. Even so, my monthly premium was about $450 in untaxed dollars, after my employer kicked in their share. I’ve checked out exchange rates in Ann Arbor, and I could get a silver plan from the same insurer for about $270 a month before subsidies. The cheapest plan at my disposal is less than half of that. To recap: I, a healthy 24-year old, can buy an exchange plan that costs less than a third of what my employer-sponsored plan cost in 2011, without a subsidy of any kind (though all apples/oranges caveats apply).

    Selective ignorance of employer-based coverage in the rate shock debate is an old gripe of mine. In posing this question to Twitter in the past, the responses I got tended to fall into one of two buckets:

    “So what? Employers pay for most of the premium, anyway.” This is stupid, no good, very bad logic. A dollar towards health insurance premiums is a dollar taken out of wages; the evidence is pretty clear on that. It’s true that many Americans don’t realize the full cost of their health insurance because their employer foots a big fraction of the bill, but this is far less true of wonks. Ignorance is hardly a sound policy justification.

    “Well, employer-sponsored insurance isn’t compulsory.” Right, it wasn’t compulsory—though Barro makes a good case that the tax exemption makes it coercive. Regardless, put in context with the ACA, it’s about as compulsory as individual market insurance. If you decline to take your employer’s plan, you probably won’t be recouped the full value of the plan you were offered. You’ll have to buy other coverage to avoid the penalty, and—because you have an option from your employer—you’ll be ineligible for subsidies. Moreover, your labor is worth the value of your total compensation package; when you decline benefits, you’re effectively being underpaid.

    I know many conservative wonks find fault in ties between employment and insurance, but they haven’t injected that into recent critiques. If messaging around rate shock is more than opportunistic hackery—if it’s genuinely about how “health insurance” ought to be conceived—why are they leaving the most prevalent and most redistributive form of private coverage unscathed? Surprise me.

    Adrianna (@onceuponA)

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    • Doesn’t this make the case for single-payer, or at least single-system? Putting EVERYONE in a single, huge market would do the most to reduce costs?

    • I think outrage over this particular issue right now would be far stranger than the lack of outrage you’re pointing out for several reasons:

      1. Employer-based coverage has worked like this for ages, and everything you’ve mentioned has been discussed for ages. The ACA is new, relatively speaking.
      2. This issue doesn’t resonate much with the general public because they are oblivious to the real costs. See your own linked example. It appears that your coverage is dirt cheap when you don’t know the employer share. Payroll deductions obscure this even more. Out of sight, out of mind.
      3. People absolutely do compare plans at prospective employers, and they actively make decisions based on their preferences. Whole Foods has a very different model of coverage than other similarly sized organizations.
      4. Employers can tailor this cost-sharing so that it matches the preferences of their employees. Some actively promote the cost-sharing as a just method to help those paid the least. Some actively punish employees with unhealthy behavior. People will tend to work for employers who share their values.

      I could go on…

    • Of course, part of the outrage is is precisely because buying insurance is no longer optional. One must pay a penalty or buy a policy designed by the government, at whatever price such a plan might require.

      I agree that individuals buying insurance should get the same tax breaks as employer plans. With no penalty for good plans. Again, government should butt out.

      • Did you just say that people should get tax breaks and that governments should butt out?

        Sorry, but reality doesn’t work that way.

      • That glosses over some important details. “Must buy at any price or pay a penalty” is incorrect; if no plan is available that is less than 8% of one’s income, they are exempt from the penalty. Also, the policy is “designed by the government” but through a complicated process of comparing the prevailing benefits available through group plans in the market, on a state-by-state basis. That’s pretty far short of what progressives wanted, which was a nationwide standard.

    • Great post. Another point young and single working adults often miss is that they consistently get lower compensation than their older colleagues who cover spouses and kids on the employer plan. A family premium cost could easily be 3x the single cost and young workers subsidize not only their older colleagues, but their spouses and kids as well. The individual exchange age and family rating changes the game in that aspect, and many will and should reconsider their options.

      On your anecdote: your photo suggest you paid $41.94 bi-weekly for the HMO that was likely at least gold-level. That’s about $91 a month, not $450 making the comparison with the $270/month plan a bit misleading.

      • The $91/month is what I saw pulled directly out of my paycheck. My employer kicked in another $223 $360 (edited to fix) each month. Economic evidence suggests—strongly—that premiums are foregone wages. It’s more sensible to compare the entire cost of the premium against exchange premiums than the employee contribution exclusively.

        • Economic evidence suggests—strongly—that premiums are foregone wages.

          That is a strong reason to discourage employers from providing health insurance. PPACA is attempts to force some employers to provide insurance.

          You make a good point in your post but looking at this from a historical perspective, when health care spending was below 5% of GDP it made some sense for employers or governments to provide health insurance charge one rate but at 18% we need more people to be motivated to economize.

          The Amish often go to Mexico for healthcare but no one cares about overspending Government or insurance company money and that is a problem when healthcare spending is 18% of GDP.

          • “The Amish often go to Mexico for healthcare…”

            So where to the Canadian Amish go?

            • Maybe they go to the US. For those that understand the systems cross border travel can be very useful. Canada has some excellent physicians and the prices are great compared to the list price we see. America has some great physicians as well and the prices are much lower than many expect and the waiting time is lower as well.

        • If the Rand study was correct that means that your salary was reduced by a similar amount. People that don’t have to worry about health insurance choose jobs where the pay is higher.

    • “Some 90% of people with private insurance receive it through an employer, and those plans are generally priced using “pure” experience-rating. This means the company serves as one giant risk pool, and a firm’s youngest employees have the exact same insurance premium as their eldest colleagues.”

      I think you mean that within the employer, the plan has community rated pricing. Experience rating means that the insurer prices according to individual risk (i.e. charge sick people more). Actually, though, the usage of community rating that I have heard is when the concept is applied across an entire market, e.g. a state’s entire individual market, its entire small employer group market, etc.

      You could say, I think, that insurers will use experience rating from employer to employer, but generally employees pay the same rate as all the firm’s employees (unless the employer offers different tiers of benefits, like a PPO and an HMO, or in my last company they voluntarily charged the high earners more).

      • I wrestled with how to best phrase this, because I recognize that most people use “community rating” to refer to general risk pooling with uniform premiums. But I wanted to be precise: in my classes, I’ve been taught the appropriate term to use for ESI is “experience rating”, where the relevant “experience” is the health profile/claims history of the entire firm. “Community rating”, by contrast, refers to geographic pooling of risk, irrespective of employer.

        When BCBS first set up shop, they offered community-rated plans that didn’t vary across individuals or employers. After WWII, unions—which had employees that might be more healthy than the general population—negotiated “experience-rated” contracts, reflecting the slightly better health of their employees, but those plans still had uniform premiums. I know nitpicking around terminology is tricky, which is why I tried defining it in the post.

    • The reason there is no “rate shock” in the employer sponsored market is because there is no rate shock yet…most of these plans have been grandfathered in under ACA, even though they do not meet Essential Health Benefits.

      There is community rating within a pool, or however you want to frame it, but it isn’t a shock because we have been dealing with it for decades. When I voluntarily chose my employer and voluntarily chose my insurance I voluntarily agreed to this community rating. There is no voluntarism in ACA.

      The real rate shock in the employer market will come when the grandfather status runs out. When employers have to start picking up maternity, skilled nursing, and substance abuse, and pediatric dental on 100% of employees. Will employers pass those added cost on to the employees or pick them up in the employer share?

      I work for the state agency in charge of administering ACA in my state and our employee sponsored insurance plan does not meet the requirements of ACA. When it loses grandfather status and is forced to comply is when we will see our true rate shock.

      • The reason there is not outrage is that insurers have not provided renewals in a timely fashion. Our employees have all received the dreaded – you’re cancelled (I don’t know anyone who has a grandfathered policy – i don’t believe they exist). The supposed deadline was 10/31. We have two carriers and the second just submitted last night.

        So, the information is limited to a select few. We will prepare recommendations for mgmt and then the employees will find out the information when we have decided what to provide. We are under 50 and provide a corporate contribution toward benefits.

        Believe me – OUTRAGE is on the way. 15% increase in premiums! My personal story – to cover my family I will be spending 30% of my net income on premiums. And, coverage will be catestrophic. With the ACA changes, that means my family’s financial exposure will also be increased.

        We could cut eveyone loose and see how they fair on the exchange. But I doubt their results will be much different than mine. I make just enough to NOT qualify for a single subsidy, etc. And, that is the same for many at my company.

        Obamacare is affordable—NOT! Do I really have better coverage if I have higher financial exposure – both through premiums and deductibles, and now have to figure out where to sacrifice to pay the additional $260 per month? That’s my electric bill in the winter.

        I’m certainly outraged and I know my fellow employees are going to be outraged too – when I get the pleasant task of presenting their 2014 benefit plan.

    • When ESI causes the young and healthy to subsidize the old and sick, that’s traditional and therefore good. When the ACA does it, it’s Obama Kenyan Muslim Communism and therefore bad.

      If you never think, you’re never troubled by cognitive dissonance. I strongly suggest you turn off your brain. It’s clear you use it too much.

    • My employer, like many, has premiums weighted to income and family status. Older workers tend to have higher income and families and pay more than younger workers.

    • Great post – thank you for sharing the information. In my previous 25 years of big company employment, I never gave that a thought. I just picked from their offered plans based on what it cost me. Obviously, when purchasing private individual insurance, you are exposed to all the costs and may even look into the policy deception.

      Ironically, I ended my career early due to health problems, and the inability to agree on treatment with my insurance company/large employer (they are often the same, with the plans just administered by an outside company).

      I would love to see employer sponsored heath insurance (and their tax breaks) disappear. Getting your health insurance/health discount from your employer is just another way to prevent people from moving to more enjoyable work.

    • We will be using experience rating for a few select self insured employers in the next few months. It will be community-rated across each employer.
      I believe this is fair, for the younger subsidize the older, and the healthy subsidize the sick.
      However this is the premium, initially.
      Over 36 months, one can accrue as much as a 60% discount off the community-rated premium. Insurance pooling can actually be done not only for the entire group, but also for each family. For example, if a family of 4 has one member with consistently high claims, 3 members receive the 60% discount, while the high claimant receives the community-rated premium. As a family, they are saving significant premiums off of the initial community-rated premium of the group.

      This more accurately prices insurance over time, while still providing a fair communnity-rated premium for those with higher claims.
      Don Levit

    • My wife and I work at the same employer. I am covered under her insurance. I do not get any compensation for the benefits I declined. Now if I quit and a new employee comes along and she has a family my employer would shell out upwards of $15,000 on her behalf. If a single person took my job I don’t know how much they would pay but it would be in the thousands. Where is the logic in that?

    • Should we forget that it was government policy that got us into the mess of third party payment by providing the tax break only to employers? Now a new mess is being created, so if one wants to compare one government policy to another go ahead. Government is not a good manager in these types of affairs. Many have spoken loudly and clearly that the tax deduction should be fixed to include all or none and I have made my own unfavorable comments about the tax deduction on this blog.

      I’m considered a conservative (classical liberal might be a better term), but these terms are very broad and all inclusive of many different opinions outside of the left. One of the most popular themes on conservative sites so happens to be third party payer is the cause of many of our ills so I don’t know why you find that discussion absent. This isn’t a conservative site so the direction is led by those that post the blogs.

      • The alternative is Singapore style HSA’s which are great, but I don’t know whether people really understand that those entail the government telling you what you HAVE to spend 20% of your after tax income on,

        The other problem is that the “personal responsibility model” hasn’t really figured out what to do about kids who become adults with Type 1 diabetes or MS or other expensive illnesses. If health insurance is no different from car or home insurance, then a person with a chronic disease looking for insurance is committing fraud since they know they’ll get more out then they put in.

        • Singapore is not THE alternative. It is a healthcare system used in Singapore and I believe in part modeled off an American idea. Some of its characteristics can act as models for an American solution, but we have already implemented a portion of it. Unfortunately, the success of that program causes angst among some on the left because it demonstrates an alternative to socialism which gradually and inevitably fails.

    • Here’s an observation from the other end, the nearly old (between 60 and 65): why discriminate against me and allow insurers to charge up to three times the premium as for someone Adrianna’s age? Because I’m at higher risk of needing health care? Not nearly as high a risk as a 25 year old with leukemia, diabetes, or other chronic illness. Congress could have adopted pure community rating (like Switzerland and the Netherlands), but chose modified community rating because it significantly reduced the cost of the subsidies. The refrain that the young are subsidizing the nearly old is incorrect; it’s the healthy who are subsidizing the sick. Do I, someone nearly old but otherwise healthy, object to subsidizing someone Adrianna’s age who has leukemia, diabetes, or other chronic illness? No, that’s the purpose of insurance, to share (disperse) risk.

    • What employer rate shock are you talking about?

      As confirmed by HHS in 2011, 98% of the employer sponsored plans they surveyed were “play” compliant – they offered at least one plan that was of “minimum value” where the employee contributions were “affordable”. As a result, every employer I know is in a “comply as you go” mode when it comes to health coverage … pretty much making the “once and done” changes required by PPACA in 2010, 2011, 2012, 2013, and with the delay in the employer mandate, 2014.

      Self-insured employers pay all costs in excess of the employee’s contribution. So, if you as a 24 year old are paying the same contribution as a 64 year old, it is probably because of another federal law, the Age Discrimination in Employment Act, which some have interpreted as precluding employers from varying the rate based on expected claims costs. It is why employers offer multiple options, including HSA-qualifying HDHPs, generally with the same dollar amount company contribution for each option (if they know what they are doing), so that younger folks with different coverage needs can select a less expensive plan (with higher deductibles, etc.) and pocket the reduction in employee contributions (and perhaps some HSA funding as well). When originally passed by congress and signed into law, ADEA allowed employers to vary costs based on actual experience – and, you still see that today in age-based rates for life insurance. Between ADEA, HIPAA, PPACA, etc., forget about that.

      Simply, old, grey-haired people like me have health costs that, on average, and averages can be deceiving, will typically be 6 times what a young person like you will incur. PPACA actually tilts the taxpayer and young person subsidy even more in favor of old folks, passing the added cost to you and taxpayers for the differential, limited to no more than 3:1. That is, the proponents of PPACA believe you SHOULD shoulder an even greater burden to subsidize older Americans – and they codified it – to subsidize those who share no common bond with you, unlike coworkers, other than residing in the same state.

      Just as important, PPACA de-couples cost from your contribution with respect to exchange coverage. That is, regardless of the estimated cost to provide you coverage, young or old, your contribution is primarily determined by your income.

      With respect to the reduction in wages, it should be noted that the provision of health coverage and how it is priced and budgeted by employers, has traditionally been consistent with PPACA – it specifically favors lower compensated employees. While policy wonks rail about the loss of tax revenues due to the tax preference, the fact is that most employers do not vary the employee or the employer contribution towards the cost of coverage and where they do, they typically subsidize lower income, usually younger workers. So, someone making $25,000 a year gets the same company contribution, sometimes more, than another worker earning $100,000 – that is, the company contribution is “progressive”, a smaller and smaller percentage of pay as compensation increases. So, while spend on benefits allocates monies that might otherwise be spent on wages, it is not a “dollar for dollar” reduction in wages … and … it is not a “person specific” reduction in wages. The actual funding by the employer, is almost never used to adjust wages, or even departmental, business and salary budgets.

      So, as someone pointed out above, the greater subsidy is not between young and old, but between those who enroll their dependents and those who do not – remember, many workers who have families do not enroll their spouse/children, but secure coverage where the spouse works. So, the company contribution differential between single and family coverage has typically been the largest “cross-subsidy” … not the differential based on the lack of an age based rate.

    • Oh there is rate shock… from people whose employers have been choosing plans that have been gouging them for three years already, using the ACA as cover. My boyfriend’s employment based insurance has been doing just that.

    • You have actually made the point for why 125c HRAs are attractive to small businesses with less than 50 employees. The vast majority of potential employees are relatively healthy so access to health insurance has generally not been their problem. As a result small businesses and their employees have benefited from the lower costs that were available in the individual market. In many states company provided health insurance and self-insurance are the costlier options. As an added bonus the company is out of the health insurance business. Although small businesses are not conservative wonks they looked at the “most prevalent and most redistributive form of private coverage” and decided it would be wiser for all if they spent more of their money on growing their business. I don’t think this approach was ignored by medium to large businesses. I would not be surprised if these medium and large companies are working very hard to get to a defined contribution approach to health insurance and let the government clean up their subsidized mess.

      • That small business’s employees can get a better deal on the open market is quite a claim. The people I know who started small businesses said the biggest problem they had was finding employees who were willing to work without company insurance. The pool of qualified people who had success on the individual market or a working spouse with insurance wasn’t that large. People living on their COBRA tended to quit when it was running out, if the firm hadn’t grown big enough to provide insurance.

        The individual market prices maternity very high. 30-somethings often want families, and they recognize that unplanned (or planned) pregnancy + baby with problem can easily add up to millions of dollars of uncovered expenses.

      • There is no such thing as a IRC 125 HRA – or Health Reimbursement Arrangement. There is an IRC 125 Health Savings Account. The two individual account plans are totally different – in terms of how they are deployed in today’s employer-sponsored coverage marketplace.

    • In my first professional position back in 1969, I found out that the health “benefit” offered my employer could be had more cheaply on the open market. I so resented the transfer of my wealth to the sick, old, female and breeders that I just quit working in “captive” positions.

      As a hardware and software engineer, I easily found 6-month, 9-nonth or 12-month contracts that came with no benefits but with twice the hourly pay of the poor “captives” working beside me. I never looked back, and by working only as an independent contractor or consultant, I was able to manage 32 weeks of unpaid vacation on average per year for 45 years, attributable to the fact that a good engineer, single and childfree, and once freed from having to support women and the married breeders, need not work more than 20 weeks to earn a more-than-sufficient $40,000 to $60,000 (in today’s dollars) annually.

      Even in Germany, I was able to work “freiwillig (un)versichert” keeping the portion of my pay that would otherwise be lost to their “universal” health-insurance system. Insurance is a religion that only fools buy in to. Like the Amish and Mennonites, I now seek health care in Mexico, where, for example, cataract surgery costs $18000 pesos ($1400, compared with the (“discounted”) $4000+ charged for the same in Austin, TX). Comparable low prices can be had in Prague, India, Hungary, Thailand, Philippines, Costa Rica and Brazil.

      I am certainly advising my nephews to drop out of Obamacare, put the saved premiums in the market, control their withholding so as never to leave anything on the IRS table to pay any penalty, retire at 45 and sit back and enjoy the $millions saved by not supporting the superstitious breeders.

      • “In my first professional position back in 1969, I found out that the health “benefit” offered my employer could be had more cheaply on the open market. I so resented the transfer of my wealth to the sick, old, female and breeders that I just quit working in “captive” positions.”

        And this one time, at band camp, I was in a large dark warehouse, making donuts, when a snake wearing a vest came up to me and said “you had me at goodbye.”

      • Jimbino, I agree with much of what you say, but I am risk averse and recognize the benefits of insurance. It protects my assets otherwise I wouldn’t bother with it for it is a bad deal. If I could have in the past I would have increased my deductible from what was offered, but there is a point where the savings don’t make sense.

        As far as working in the fashion you work, I know some nurses that refuse to let themselves be hired. They are very good and can fill many different spots in a hospital. They get a premium rate far higher than any nurse in the hospital. The only thing they don’t have is job security for the duration of the year. They like traveling and were always in high demand able to work whenever they chose to. That type of independence is not looked upon favorably by our government.

    • Emily,

      I think if I were a young man now, I would start a health cooperative, much like what the Amish and other Christian organizations do, except that my group would be limited to young, single, childfree men, the group most supremely exploited by Obamacare and all other kinds of USSA wealth and income re-distribution.

      Members would be assessed a contribution by age, counseled in avoidance of Obamacare as well as the penalty, and have pre-existing conditions excluded. Young, single and childfree women could be included if they agreed to waive coverage of all pregnancy-related expenses and pay a higher fee to compensate for female hypochondria and hysteria.

      The only thing better would be a Tontine, which has long been declared illegal in support of the Insurance Oligopoly. Nowadays, however, there are probably ways to set up a Tontine, expecially overseas, to avoid the silly gummint rules. Men and women who are lifelong single, gay, childfree, etc., would be perfect candidates for a Tontine.

      • Jimbino since you are fantasizing how about this:

        Off the coast of Texas lies the Gulf and outside the legal limitations of the law but close to some of the best hospitals lie unused oil platforms. Do you get my drift… specialty hospitals with helicopter and service by boat. You can draw your own conclusions.

        I won’t comment on your social arrangements.

        • Insurance would be a fortune. We checked it out. We looked into a hospital ship. The military used to have them. Too much overhead.

          Steve

          • Why would insurance cost so much? Considering the costs of complying with the rules and regulations we have in the US and the malpractice costs I would think that insurance would not be as big a problem as you seem to think.

    • I do not have a comment on the issue of community rating.

      But I do want to protest against the economist’s conception that health insurance always comes out of wages.

      Look around you. An auto mechanic who works for state government makes his $45,000 a year plus let’s say a $15,000 health insurance policy that the employer pays most of.

      Then look at the local brake and transmission shop down the street.

      A mechanic with identical skills might make $45,000 with no company health insurance at all.

      The mechanic in the local shop does NOT make $60,000. His employer feels no obligation to make up in salary for the health insurance he is missing.

      The mechanic who works for state government is getting a bonus. Health insurance comes on top of his wage, it does not come out of his wage.

      This is because the employees in America who have no employer health insurance also have no bargaining power.

      (unlike Jimbino in his post, who did have bargaining power. He is incredibly rare in the USA)

    • Basically what you are saying is that the previous regulatory regime forced a transfer of wealth and limited options on the employer provided health insurance market, and the new regulatory regime forces that same unfair distribution effect on the private, individual insurance market therefore complaints about the later are either overblown or unfounded.

      In reality, the new regulatory regime just extended, by rule of law, the same ugly consequences to the entire market that existed for the majority of the market. That does not make the change for the market for individual insurance right and just; it is a reason to object to that change enacted by force.

    • One other point regarding your anecdotal example is that, based on some simple market basket comparisons, the ACA is both redistributive from young to old and male to female. It is not a surprise that you are getting the financial result on your own insurance rates.

      One may view these outcomes as a fair result of the dictation implicit in the plan. That, however, is a values based conclusion, not a market based conclusion. That may all be well and good in a democratic society, but, in this case, one has to make a set of assumptions. Foremost, one has to assume this outcome was acknowledged and known to those who acceded to it had knowledge of it throughout each phase of its enactment and implementation as provided in our Constitution. I think that assumption requires a fair amount of stretching to assert, particularly given the comments of its authors upon passage from the legislative branch.

      Ultimately, there is much good about the ACA, and much that is simply inexplicable in the context of our society and its inherent strengths – unless, of course, an opaque forced income redistribution was the objective all along.

    • You can split off the elderly from youth or any other divisions you might want to make, but the more these hairs get split, the less the resulting product can be called insurance. Insurance spreads risk, and if you don’t like your risks spread because someone else might “win” while you might “lose”, don’t buy insurance. Go naked instead; it’s the only way you KNOW you’re getting exactly what you deserve.

      • Benedict, I think you misunderstand the concept of “hedging risk through insurance”.

        Any form of insurance splits as many hairs as possible, to use your parlance. The rate one pays is specific to the risk factors associated with that individual circumstance. In auto insurance, for example, age, gender, driving record, type of vehicle, location and a variety of other variables contribute to the assignation of the price you receive. Those who manage in such a way as to mitigate risk, therefore, pay less. Those who insist on speeding while drinking, are in a high risk pool. This is a fair result as those who contribute more risk to the pool pay more while those who have less risk exposure pay more.

        First, in the ACA verison of “insurance” many of the risk factors are improperly priced resulting in what one can legitimately call a wealth transfer between different groups compared to a baseline of what the price differential would be should the pricing controls or forced elimination of indicative risk variables not be present. Moreover, the force purchase of product components that one does not require – Maternity insurance for young single men, for example – exacerbates this.

        I think everyone understands that any insurance pool works because it spreads risk. The question is, does it spread risk fairly or , in the case of ACA, is there forced price controls or product designs that dictates that the risk is shouldered by a one group to the benefit of another. It is fairly obvious that be both structural design and pricing manipulation, ACA forces increased burdens of risk on some groups while decreasing it for others.

        What is remarkable is that this is even debatable as the President and Nancy Pelosi have stated repeatedly that they needed young people in the program to shoulder the risk and make the program work, thus the individual mandate. What I do think is that most Americans did not understand the implications of their rather opaque references to it.

        • The problem with the car insurance metaphor is just what you listed out.

          People have control over most of those, and being without a car or car insurance is not an unlivable condition. Inconvenient, but not a massive hardship.

          Bodies are different. You get one, and only one, issued at birth with no returns or refunds or trading up. Not having insurance for it can be a terminal condition.

          If you’re born a woman, your body is prone to certain health conditions that men aren’t. Should women be penalized for being born women and should men be rewarded for their foresight in picking a Y chromosome? I’m pretty sure some women are upset that their silver plan covers prostate cancer.

          The design of the program was there to make sure that things that weren’t the fault of the patient wouldn’t change the cost of the insurance. (things like gender or race) There’s a legitimate point to be made that it should do more to reward healthy living. There likewise nothing illegitimate about trying to equalize the cost between men and women.

    • What good is the ACA when it relies on the younger generation to pay more for coverage than those at high risk, when 1 stipulation in the ACA allows those under the age 26 to be covered on their parents plan ……….You are taking away the biggest pool of youngest payers ……….where do they expect to pay for the coverage …..Higher taxes or rationing ..the only 2 choices they have

    • Thank you for describing this readily apparent but somehow unnoticed situation. I’ve been outraged about this ever since I worked at an orthopaedic surgery group. This is how we got to the point where health care is 18% of gdp. People are rewarded for being unhealthy and consuming health care. The main reason for this is the health care industry makes money off it. ACA does nothing but try to save this broken system by forcing people to participate. The only way to control costs is having people consuming health care pay for it, or to ration it as they do in Europe. Either choice is preferable to the corrupt american system. This is why it is called affordable care act not affordable insurance act. ACA reeks of corrupt businesses trying to use law to maintain their income.

    • Here’s another thing. If enough people don’t participate in an employer group insurance plan, the insurance company will refuse to sell it to the employer. So the insurance company insists on a minimum participation rate to insure their is a suitable risk pool. Thus if all the young, healthy people at a company refused to take the group insurance, then the company wouldn’t be able to offer the plan to anyone working there.