• Let Consumers Decide About Obamacare

    In The New York Times yesterday:

    Gov. Rick Scott and the Republican-dominated Legislature have made it more difficult for Floridians to obtain the cheapest insurance rates under the exchange and to get help from specially trained outreach counselors. Missouri and Ohio, two other states troubled by the Affordable Care Act, have also moved to undercut the law and its insurance exchanges, set to open on Oct. 1. In Georgia, the state insurance commissioner, Ralph T. Hudgens, has said he will do “everything in our power to be an obstructionist.”

    What is being obstructed is consumers’ access to information about health insurance options under the ACA.

    You could view this as just another skirmish in the war over the Affordable Care Act. But there is an important principle at stake here.

    A key argument for free markets is that individuals exercising their preferences in purchasing decisions will induce producers to supply the right kinds and the right amounts of goods. The freedom of individual consumers is important for its own sake. It is also likely to lead to a superior social outcome, because a well-informed individual is the best judge of what will benefit her.

    The view that individuals should ordinarily have free choice in purchasing decisions is widely held. On the left, the economist Abba Lerner wrote in 1972 that

    This view [the sovereignty of consumers] I find very close to the idea of democracy or freedom — the idea of normally letting each member of society decide what is good for himself, rather than having someone else play a paternal role.

    HayekOn the right, F. A. Hayek was one of the first to use the concept of consumer sovereignty. In his 1935 critique of Collectivist Economic Planning, Hayek argued that

    [the] free choice of the consumer… and planning from the center are completely incompatible aims.

    The Supreme Court has ruled that commercial or marketing speech enjoys protection similar to non-commercial speech. Justice Kennedy wrote the Court’s opinion in Sorrell v. IMS Health Inc (with Alito, Scalia, Roberts, Thomas, and Sotomayor) and argued that

    Lawmakers may no more silence unwanted speech by burdening its utterance than by censoring its content.

    Commercial speech benefits consumers and deserves protection against regulatory encroachment. Again, from Sorrell:

    Fear that speech might persuade provides no lawful basis for quieting it.

    Obstructing consumers’ access to information about the ACA is deeply unprincipled. Florida, Missouri, Ohio, and Georgia should not substitute their paternalist and collectivist decisions for the free choices of consumers. Conservatives lost this battle in Congress, the Supreme Court, and the 2012 Presidential election. But they still have legitimate opportunities to defeat the ACA. There will be another election in 2016. And they could allow consumers to vote for or against the ACA right now, using their dollars in the marketplace.

    @Bill_Gardner

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    • I thought from your headline I would be reading a post that would argue that both sides in this debate need to stop being disingenuous and focus on getting the best possible information to consumers – take the politics out of the process [to the extent that is even possible]. Then I read…

      “Obstructing consumers’ access to information about the ACA is deeply unprincipled. Florida, Missouri, Ohio, and Georgia should not substitute their paternalist and collectivist decisions for the free choices of consumers”

      I could easily see this re-written as…

      Obstructing consumers’ access to information about the ACA is deeply unprincipled. THE OBAMA ADMINISTRATION should not substitute their paternalist and collectivist decisions for the free choices of consumers.

      Do you and anyone who reads this blog seriously doubt that the Senate would vote to repeal the ACA if it was ever brought to the Floor? If this is such a great piece of legislation why won’t Senator Reid put a vote on record?

      • Because the ACA passed. It can, therefore, be presumed to be the will of the people. Since then, there’s been a lot of less-than-honest propaganda about how bad it will be, but that’s hardly a reason to revisit the legislation.

        Congress will never get anywhere if everyone who doesn’t like some law that got passed is free to demand a revote, and another revote, and another revote.

        Further, given that healthcare reform along the lines of Massachusetts’s system was a prominent feature of Obama’s election, Americans voted for Obamacare twice.

        • And my basic point stands – the administration has hid behind the idiotic “rate increases are not as high as WE expected” – forgetting the initial promise that a family of four would see their rates GO DOWN….

      • “Obstructing consumers’ access to information about the ACA is deeply unprincipled. THE OBAMA ADMINISTRATION should not substitute their paternalist and collectivist decisions for the free choices of consumers.”

        …but the Obama administration isn’t the one obstructing the information of a constitutionally approved law.

        It seems like false equivalence to me.

    • Here is the reality of what is going on with the actual Insurance policies.
      In 2014, if you buy your own insurance there is very little competition.
      Indiana only has 3 carriers offering Individual policies off the exchange. On the exchange there is only 4.

      The ACA has already limited competition in the health insurance market.

      What choices do those states really have?

      Has anyone seen information being released about the ACA from the Fed?

      There is little to none that is for the consumer.

    • As near as I can tell, there isn’t a single contributor at TIE who even pretended to flinch at the idea of placing the central authority in control of the lives of 315 million with respect to a local activity. So much for freedom and self-government (i.e., federalism). It’s very amusing therefore to see a contributor criticizing opponents of ACA on freedom grounds (and citing Hayek yet, of all people).

      • This is just over the top. Central authority in control of the lives of 315 million? Really? That’s really what you believe is happening here?

        You know, of course, since you’re a regular reader of this blog, that the large majority of people will not shop for insurance in the new marketplace, right? So, this government takeover rhetoric is pure nonsense (sorry for the polemics, but I am truly sick of this).

        The ACA will give insurance options to people who have never had them before. This is equivalent to central authority in control of the lives of the entire population?

        Sad . . .

        • It’s hard to make someone understand something when their political ideology depends upon them not understanding it.

          Or pretending to not understand it.

        • So you think Obama and the other socialists will stop with Obamacare, Skippy? They have already made it clear that this is merely part of a transition towards single payer.

      • 16% of Americans have Medicaid
        13% of Americans have Medicaid.
        3% of Americans are registered with the VA
        That’s a third of the population with Gov’t insurance.

        And the thing is, you don’t hear people complaining about it. Seniors like Medicare.

        The VA runs America’s largest medical training program in the US, with more than half of all doctors practicing in the US, having had some part of their medical education in the VA system. Therefore, you can say that the Gov’t run VA has to have a huge influence on the quality of doctors in the US and most people agree that we have good doctors.

        49% of Americans have employer-sponsored health insurance. The ACA is not changing that.

        21% of Americans don’t have insurance. The ACA is targeting them. Obviously, the current system is failing them. But let’s not forget, federal law requires hospitals to treat the uninsured. Uncompensated care totaled 41 billion dollars in 2011. And the federal government provides some reimbursement for uncompensated care. So, the federal gov’t currently determines many aspects of health care provision and payment for these people.

        That leaves 5% of Americans with private insurance. And yes, their insurance might change as a result of the ACA.

        So, please don’t pretend that we have an unfettered, free market that will, thanks to Obamacare, become a Gov’t controlled market. It’s just not true.

    • Hmmm….

      SAO

      “49% of Americans have employer-sponsored health insurance. The ACA is not changing that.”

      I must be living in an alternative universe – I have seen tons of stories about changes to employer sponsored insurance plans [Walgreens, UPS, among others] and even unions are concerned about their Taft-Hartley plans.

      And how exactly is the current system failing the uninsured?

      • Employer sponsored insurance has been declining for a generation (that’s one of the reasons we have so many uninsured). It is simply disingenuous to point to UPS and other companies making changes now and blame it on the ACA.

        And how exactly has the current system failed the uninsured? Ask someone with a pre-existing condition.

      • If your basing your views on anecdotal evidence, you clearly have not thought this through.

        As for our system failing the uninsured, we have tens of millions of people whose only access to a doctor is the emergency (read bare minimum) care provided in emergency rooms.

      • “I must be living in an alternative universe – I have seen tons of stories about changes to employer sponsored insurance plans [Walgreens, UPS, among others] and even unions are concerned about their Taft-Hartley plans.”

        I’ve been working full time since 1982. In that time my health insurance has changed regularly from year to year. Premiums have gone up, coverage has changed, medical groups have gone off and on the lists of providers. Was that all due to Obamacare?

        “I just wish those of you advocating the ACA would be honest and admit that it is simply a mechanism to steal from the healthy to pay for the unhealthy.”

        My brother-in-law has a common, mild congenital heart valve problem which makes him uninsurable. His hobby is hiking and his thriving small business is very physical. He is entirely healthy. Why do you believe he should be denied insurance? He is not an exception. I’m healthy too. Why can’t you be honest and admit that healthy people like me sometimes become unhealthy and almost always become older?

    • Thanks to all of you for the comments.

      I’ve received some criticism on Twitter questioning whether I am being sincere and consistent in invoking consumer sovereignty and quoting Hayek.

      It’s a fair question and I’ll do my best to answer.

      I believe what I wrote about freedom, consumer sovereignty, the importance of economic competition, and the superiority of market solutions.

      But I also believe that this competition must be run under conditions that provide fair equality of opportunity to all persons. Further, although I am not Christian, I believe that our social policy must be guided by what Catholic social teaching calls the “preferential option for the poor.” (From Matthew 25:40, where Jesus teaches, “Amen, I say to you, whatever you did for one of these least brothers of mine, you did for me.”)

      So I am egalitarian, in the limited sense that there is a minimum of key resources that we can and morally must provide to everyone. Everyone should have a childhood that gives them fair equality of opportunity. Everyone should have the protection of the military, the police, and legal services. Everyone should have access to a decent minimum of health care.

      Of course, economic growth has done an enormous amount for the poor! So, again, I am for market solutions. But thinking that markets can do everything is insane. They don’t provide national defense and they don’t provide a universal safety net.

      The ACA is a way to provide health insurance to the poor and working poor. It is among the least paternalist ways to do this. And there is nothing inconsistent about citing Hayek in this context. Here he is on social insurance:

      “There is no reason why in a society which has reached the general level of wealth which ours has attained the first kind of security should not be guaranteed to all without endangering general freedom. …. [T]here can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody. … Nor is there any reason why the state should not assist the individual in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision.”

      • I really am going to get slammed for this…

        But I really think you folks who are so in love with the whole pre-existing conditions thing need to take a deep breath…

        1. Folks with HIV/AIDS consume more health care dollars than those who have been married to the same man or woman for 20 + years and faithful.

        2. Those with high blood pressure are going to cost more than those with normal BP.

        3. Those with diabetes – ditto

        4. A child born with Down’s Syndrome will consume more in health care dollars than one who is not..

        5. Motorcycle owners will on average consume more health care dollars than those who drive pickup trucks.

        And so on…

        I just wish those of you advocating the ACA would be honest and admit that it is simply a mechanism to steal from the healthy to pay for the unhealthy.

        Whether or not it is good policy is something we can disagree on, but please – it is forced taking – THEFT – just stop the rationalizing and admit that is what is going on.

        • People who support using taxes to promote access to health care aren’t being hypocritical. They simply don’t share your belief that the government has no more right to take money forcibly than a private individual does. Unlike you they do not or equate taxation with theft.

        • We already pay for the uninsured to get necessary care. When an uninsured, drunken, helmetless, AIDS-infected, diabetic, hypertensive motorcyclist lands in the ER, he gets treated.

          This is paid for by federal reimbursements to hospitals (your tax dollar) and by hospitals charging higher prices to people who can pay.

          All the ACA is doing is changing the way this guy’s care is paid for. Yes, there’s some preventative, but there’s also an organization to research effectiveness, which, presumably, will include what sorts of preventative care are effective at lowering lifetime costs.

          Second, all taxes are theft, by your definition. I get a hell of a lot more annoyed at my tax dollars going to fund a futile effort to bomb the Middle East into peace and democracy than to provide healthcare for someone with Down’s Syndrome.

        • LL,
          As always, thanks for commenting.

          Theft implies that you are knowingly misappropriating someone else’s property, no?

          How is a child with Down syndrome doing that? No sarcasm intended.
          cheers
          Bill

          • Bill,

            I am not opposed to covering the DS child – in fact I would support funding of both care and research. But I do think we need to be more honest about what is going on – and quit pretending that what is going on passes any sort of fairness test. As my handle implies, I am not a fan of taxes – particularly those based on income [anyone want to guess how long we managed to run this country with out income based taxes?]

            When I was growing up there was a little girl a few doors away with DS – the father worked two jobs and the local Churches – not just the one they were members of – and the Boy Scouts and just neighbors all pitched in to help him pay for care and treatment. I know that we will never go back to this sort of thing – but I do think there was a time we looked after each other and did not require a paternalistic Government intruding into our lives.

        • ‘Stealing from the healthy to pay for the unhealthy’? The whole point of collective action – of which taxation is a subset, is to bundle up things, so that things can get done. If you allow people to pick and choose, to say, oh, I need less healthcare, so I’m paying less, then that creates the free rider/tragedy of the commons problem. And the funny thing of the tragedy of the commons is that everyone suffers – healthy and unhealthy. The existence of unhealthy people without treatment creates tremendous strains on society way outside of the immediately affected. Illnesses spread. Sick people have to be cared for. Businesses suffer if their staff take time off work. Emergency care gets clogged up.

          Imagine if people could individually decide whether to pay for national defense or police or not. After all, the folks outside of the big cities are much less likely to be the victim of terrorism, right? Maybe muslim people should pay less and republicans can pay more. If that happened, how would it possibly be funded? Might it not create massive perverse incentives in the system? Why not extend it to other things as well? Shall we make sure that people only pay tax for the maintenance of the precise roads that they use? Doesn’t that sound massively inefficient for you, and likely to cost a ton more than it saves?

          The thing is, public health is the same thing. If not more so, because healthcare has tremendous direct and indirect impact on society, far beyond what external terrorist threats might pose. Someone scared about the lives of their children won’t go into college, won’t get an education, won’t be around to run a business in twenty years’ time.

          Is it ‘forced’? On a simple level, you still have a choice. All of this is nothing more than altering the implicit contract of living in the US – the contract that in return for the wide variety of benefits you get as a citizen, you have to observe the laws your fellow citizens have decided, including paying taxes, according to the system of democracy. If you don’t like it, then leave. If you deny those citizens that voted *for* ACA their right to have their policy, then you are saying that the government should violate the contract that they signed. At which point, what the hell did they pay their taxes for, if not the representation of their views? Wouldn’t that be theft from them?

    • Another great Hayek quote:

      “Nor is there any reason why the state should not assist individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance, where, in short, we deal with genuinely insurable risks, the case for the state helping to organise a comprehensive system of social insurance is very strong. There are many points of detail where those wishing to preserve the competitive system and those wishing to supersede it by something different will disagree on the details of such schemes; and it is possible under the name of social insurance to introduce measures which tend to make competition more or less ineffective. But there is no incompatibility in principle between the state providing greater security in this way and the preservation of individual freedom.”

      • Bill,

        There is a BIG difference between paying for someone’s stroke or heart attack or cancer and paying for their colonoscopy or mammogram.

        I think Hayek was speaking about the former – not the later…

        • Absolute nonsense. A colonoscopy or mammography may prevent enormous expenditure on cancer treatment, and prevent the economic welfare costs of bringing up a family without a father or a mother mother. The savings to society are nearly incalculable.

        • LL —

          I’m trying the understand your logic with respect to procedures such as colonoscopies and mammograms.

          Recently, my doctor recommended that I get a colonoscopy as a precautionary measure. Because a previous sigmoidoscopy that I had had was covered by my insurance, I assumed that the colonoscopy would be covered as well.

          Come the day of the procedure, when checking in, I was informed that it was not covered by my insurance and that the cost was $2000.

          So, I’m wealthy enough to pay the $2000, but someone less fortunate could not, even though their doctor asked them to do it as well.

          The poor play russian roulette, and the rich do not. Ellysium, here we come.

          What an odd mind you have.

      • Pulling out quotes like this from Hayek shows that he wasn’t a proponent of absolute laissez faire economics. But he nevertheless would be appalled by our movement toward centralization and central planning for one-sixth of the world’s largest economy. To cite Hayek in support of ACA is to misrepresent him.

        • @Alsan

          Given that Hayek was born in Central Europe and lived in the (far more centralized) UK for a good part of his career, I expect Hayek knew what socialism, centralization and communism look like in the real world and would know the US is not anywhere near anything of the sort and won’t be long after Obamacare is successfully implemented.

    • When a government levies property taxes to fund the fire department, people with expensive homes pay more than those with cheap homes or no homes. Even though it is possible that cheap homes have more fires per capita than expensive homes.

      This type of “sloppiness” is true of all public services. People who have had high salaries will wind up paying more for the same Medicare as people with low salaries. etc etc

      As a society we tolerate this sloppiness, if you want to call it that, because we want fire fighting or senior health to be available to all.

      Actually by that standard the ACA is not egalitarian enough, in my view. In the ACA a person making $30000 a year still has to pay about 9% of their income for health insurance. Personally I would prefer a payroll tax that exempts the first $30,000 of income as a way to fund health care.

      Incidentally, I live in Minnesota which is quite a blue state. I bring that up because I wonder how the governors of states like Florida and Georgia (which have a lot of poverty) can get away with grandstanding against the ACA. One gets the impression that the whole political dialogue down there is rich older white folks talking to other rich older white folks. I suppose this goes back to the idea that concentrating on God, Guns, and Gays takes people’s minds off their own real interests.