• Will anyone benefit from the removal of the individual mandate?

    First of all, I had planned to post earlier, but I’ve been having my life saved by Austin’s post on Dustin Luck’s script to fix Google Reader. I still want my old colors back, but it’s totally usable again, and I’m feeling so much better. I haven’t been this ticked off by a stupid product change since New Coke.

    Anyway, what I really wanted to talk about was a piece by Jennifer Haberkorn on the Supreme Court’s potential rulings on the ACA. She suggests that if the court throws out the mandate, but keeps the rest of the law, this could be good for health care reform:

    If the Supreme Court next year gets rid of the health reform law’s requirement to buy insurance, Republicans could gain momentum to get rid of the rest of the law — and President Barack Obama would suffer a huge embarrassment at the height of an election year.

    But Democrats and supporters of the law also see a silver lining: If the least popular part of the law goes away, they think what’s left could become stronger and more popular with the public…

    some strategists who support the law say it could be a new opportunity for health reform — despite the embarrassment of such a high-profile loss — because what’s left of the law would have much stronger public support. A March poll by the Henry J. Kaiser Family Foundation found that 67 percent of people want to repeal the provision. Only 27 percent favored keeping it.

    One of the reasons I hate polling on issues like these is that they are influenced by so many other decisions. Read the piece. You’ll see any number of interpretations of the numbers to fit someone’s agenda.

    Here’s what I think. Support for the law likely closely tracks support for a political party. I think that the individual mandate has become the focus of attack because it’s unpopular and doesn’t benefit people directly. But if it goes, I think then we will start hearing about how bad the regulations in the ACA are, or how it is a government takeover of health care, or DEATH PANELS!

    I have yet to see any convincing data that show there’s a significant portion of America that loves the ACA, but hates the mandate. I see no politicians running on a platform of removing the mandate, but leaving the rest of the law intact. I see no reason to believe that dropping the mandate will do anything to increase support for the President, the Democrats, or the ACA.

    But that’s besides the point. The politics are silly. What matters is what will happen to actual people.

    Your insurance premiums will go up. Significantly. In fact, the average premium will be over 25% higher by the end of the decade than if we leave the law alone.*

    Here’s what happens to coverage:

    The ACA is projected to reduce the number of uninsured by more than 32 million; take away the mandate, and that number drops to less than 7 million. But here’s where it gets even worse. The ACA strengthens the private insurance market, so that the number of people with employer coverage is expected to drop by only about 4 million. Take away the mandate (which protects private insurers) and the number of people with employer based coverage drops by more than 13 million.

    Basically, if you remove the individual mandate, you make insurance cost more, cover less people, and you make private insurance weaker.

    If the individual mandate goes, more healthy people will opt out of buying insurance in the exchanges. The likely result will be an increase in premiums, and a subsequent increase in subsidies required to make them “affordable”, which will drive up the long term projections of the price of the law. If the premiums go up too fast, the market could fail.

    This could all be fixed by other means, but I don’t see Congress taking action to do so. After all, support for mandate wasn’t always so rare.

    Regardless, I still wish we could see more stories detailing to the public what decisions like this will mean to actual Americans instead of to the few hundred people running for office.

    • While repealing the individual mandate might have negative impact on insurance coverage, it will have a huge positive impact on all Americans. It will ensure that a future, less well-intentioned, Congress will not have a constitutional power to force people to buy random things. I am one of those “not many” you mention that fully supports trying to improve health care, but absolutely objects to the individual mandate with the most extreme prejudice. The Bush years showed us just how many freedoms we can lose to government power when the wrong people are in charge, so I am not okay with Democrats foolishly expanding that power just because they have good intentions.

      Until the individual mandate was enacted into law, I supported Democrats and the idea that government can be a force for good. After the individual mandate, I must conclude government cannot be trusted as even the good guys think expanding power for the bad guys works. I can only conclude that power corrupted them, and more power will only make things even worse. So now I support the crazy Tea Party people because they seem to be the only ones pushing for more limited power. They might do an absolutely huge amount of damage to the country in the process of trying to remove that power, but I see no other choice. I just don’t think our country can survive another Bush with all the extra powers granted lately (through both the court and Congress).

      • Richard:

        You are complaining about a power that Congress already has in practice. How exactly, in practice, do I opt out of incomes taxes, including social security and medicare? These currently pay for random things, in the case of income taxes, and health care.

        If you can put someone in jail for growing a plant on their property (see drug laws) based on the interstate commerce clause you certainly can require them to buy insurance. In other words, the powers you are complaining about aren’t recent.


        • I have no problem paying taxes, as I have representation in government for those taxes. If I pay for health insurance through Cigna, I don’t get to vote for representatives that then run Cigna.

          As for growing a plant on your property, there are certain plants the federal government has a reason to ban. That ban has to extend even to intrastate activity to be effective. Whether or not a specific plant should be banned is something to bring up with your specific representatives in the government, which you can do. With the individual mandate, I don’t have that same ability.

    • It seems your points reflect the problem of severing the individual mandate from the ACA. Your post gives the plaintiffs more evidence that the individual mandate is essential to the operation of the ACA. Would you rather have all or nothing?

      • No, a method of preventing free riders is necessary to the functioning of the ACA. There are many ways to do this other than the mandate, as I linked to.

        • Does anyone know if the supreme court could rule that the mandate is unconstitutional, the ACA otherwise is not, but some mechanism for universal coverage is necessary for the rest to work, therefore congress has a limited period of time to get a new mechanism in place (say 1 year) or the entire law is void?

    • FWIW, the Lewin Group published an analysis in Health Affairs that suggested that losses in coverage would be less than what CBO estimated, and that premium increases would also be lower. I think there’s a chance it could be not as bad as CBO thinks. But I wouldn’t personally take the chance – removal of the mandate will not be good for the ACA, the only question is how bad.

    • I too am one of the clear majority in every polls that hates the unconstitutional mandate and likes most of the rest of the bill (Medicaid expansion, pre-existing condition ban, etc.)

      I agree the political implications of overturning the mandate are hard to predict, but the policy implications of not forcing Americans for the first time to purchase a poorly regulated product from a monopoly corporation that enjoys an anti-trust exemption would be a gigantic win.

      • “[T]he policy implications of not forcing Americans for the first time to purchase a poorly regulated product from a monopoly corporation that enjoys an anti-trust exemption would be a gigantic win.”

        Would a public option, therefore, also be a “gigantic win” in your view?

        More on that anti-trust exemption: http://theincidentaleconomist.com/wordpress/does-mccarran-matter/ .

        Also, I’m not sure a “gigantic win” is a policy implication. Sounds like a political implication or an expression of a policy preference.

        • A public option would be a big, but not gigantic, win IMHO (because I realize that what public option that could have passed under reconciliation would have been far from robust, but I do believe in the camel’s nose under the tent philosophy that we could have strengthened it later.)

          But more applicable to this particular discussion is that with a public option, the individual mandate would have been INDISPUTABLY CONSTITUTIONAL – as it would then fall under the govt’s power to tax. Really it would have been an extension of the same principle as Medicare, and then given people an option not to pay that tax if they chose to purchase private coverage. That’s the real reason that corporate democrats should have thrown in a weak public option – to cover their asses if they wanted to go ahead with the main Heritage/Ignani/Baucus plan to force people into a minimally-reformed private market.

          However, without the public option, the individual mandate is clearly unconstitutional (commerce clause cannot regulate inactivity on the theory that it will have some effect on some later activity…and commerce clause use has to be “necessary and proper”, but the individual mandate is highly improper considering the lack of any remotely relevant previous precedent in American history.

      • I’d be interested to hear why you think the insurance market is poorly regulated, and what effect the anti-trust exemption has on insurance markets, given that you’ve thrown those things out there.

        • Well, obviously the insurance market is terribly regulated now, given that we have by far the most expensive care in the world and not particularly good quality. The only oversight on rates is at the state level and that is a hodgepodge that’s generally ineffective. Regulation of their actual practices is practically non-existent, given the amount of care denied and the number of people who go bankrupt due to medical bills despite carrying insurance.

          ACA proponents think some of this will change under the law, but I doubt it. First of all there’s no federal rate authority like Feinstein tried to throw out there last minute to attempt to address one of the gaping holes in the law. So costs won’t go down, as Massachussets has shown, the exchanges sure aren’t going to change anything.

          Whether you believe the quality of care will improve due to ACA generally depends on whether you believe the federal gov’t has the resources to enforce any laws opposed by big business – which, judging from the financial industry, environmental regs, etc., is highly dubious. Heck, Obama has already thrown the pre-existing conditions and community rating under the bus, he petitioned the SCOTUS to nix those if he can’t have his individual mandate.

          As for the anti-trust exemption, it’s kind of just a cherry on top of the insurers’ complete control – but in a more reasonable time we could have broken up many of these insurers who monopolize regional markets using the anti-trust laws.

          • So, you want to strip out the mandate but generally like the rest of the bill? I’m just trying to understand the scope of your objections. Just the mandate? Or do you want to take the whole thing down?

            • Yes, the only thing I object to is the mandate – I like everything else in the bill. The only problem is that the harm done by the mandate to people and our society and system of laws greatly outweighs the positive done by everything else in the bill combined.

              But generally the structure of the bill is a fool’s errand, IMHO. Never going to control costs with the exchanges – profit-making businesses have only one purpose – so throwing taxpayer subsidies at the problem is very ineffective in the long run. Will help people in the short term though and I like the progressive nature of the subsidies. Like the medicaid expansion. Think the failure to really address cost (drugs, incentive to over-treat) is a joke. And I think most of the well-intentioned regulations (pre-existing conditions etc.) won’t be enforced effectively in the long run.

              I’m a single-payer Medicare for all guy. I guess the best hope at this point is that the mandate being overturned by the SCOTUS will lead to an adverse-selection death spiral in the private system which will need to be replaced in 5 to 10 years – at which point hopefully there will be good models of single-payer up and running in VT, OR, maybe CA…and we leverage it up nationally (like Saskatchewan and Canada).

          • “Well, obviously the insurance market is terribly regulated now, given that we have by far the most expensive care in the world and not particularly good quality.”

            How would regulation of the insurance market reduce the cost of health care or improve its quality? Insurance is expensive because health care is expensive, regulating the cost of insurance does not make health care any less expensive.

            “Regulation of their actual practices is practically non-existent, given the amount of care denied and the number of people who go bankrupt due to medical bills despite carrying insurance.”

            Medicare/caid deny just as much if not more care as private insurance. And please cite statistics on people with insurance going bankrupt. Most insurance policies have annual out of pocket limits in the $5-10K range. This can be expensive, but would not typically not bankruptcy inducing. (And I’ll say pre-emptively, if you planned on citing Elizabeth Warren’s “medical bankruptcy” study, save the effort, as it has been rather thoroughly debunked)

            And after a decade working in the insurance industry (I do not anymore), I can assure you that it is absurd to say that regulation of practices is “practically non-existent”. I’ve spent countless hours defending rates to regulators, submitting and resubmitting rate filings, defending rate increases, justifying my reserve levels, etc. The market is highly regulated already.

            “As for the anti-trust exemption, it’s kind of just a cherry on top of the insurers’ complete control”

            Come on, this is just hand-waving. You’ve got to explain the impact the anti-trust exemption has on the market if you’re making these claims. Austin already provided you with a link to a discussion on McCarran-Ferguson, and he’s written at length about the balance of market power between insurers and providers and what it means for the market. It’s easy to just look at the surface and say “insurers have an anti-trust exemption, ergo they are monopolists who abuse their power”, but an honest examination of these issues shows that to be an overly simplistic and not quite correct view.

            So if you think anti-trust is having a major impact on the insurance market and increasing costs, you’re going to have to explain why.

            • “please cite statistics on people with insurance going bankrupt.”

              I’m not sure what use that specific statistic would be since someone could go bankrupt for almost any reason whether or not they had insurance. Instead, I’ll cover what percentage of bankruptcies had a significant component involving medical issues or debt. (I’m not claiming primary cause, just noteworthy contributing role)

              28.3% specifically cited illness/injury:

              10% of insured have medical debt:

              It’s hard to imagine those that go bankrupt are less likely to have medical debt than those not going bankrupt, so 10% is likely a floor. It’s also hard to imagine medical issues were statistically underreported, so 28.3% is likely a ceiling. So it’s relatively safe to assume 10 to 28.3% of bankruptcies have a significant medical component. A fairly old statistic pinned it at 12%, but it would make sense for that to have inched up a bit as costs have increased and the economy got worse.

            • Regulation of the industry could reduce costs by setting rates. Notice your electric company does not generally double your rates every 5 years or so? Regulation. Practically every other advanced country either regulates their health care industry in the manner we do utility companies, or they have single payer systems which cut out the middlemen and further reduce costs.

              Medical care does not have to be inherently expensive – every other advanced country pays half as much as us because they treat it as a common good and not a sport from which the maximum profit can be extracted at every step.

              As for denial of care…Medicaid denies a lot because it is a highly flawed system which provides care to the poor, the disabled, etc., so it has a weak constituency and is subject to constant attack from stingy politicians. The way to improve that is to open Medicare for all, that way everyone gets good care.

              But if you compare Medicare to the private sector, it’s not even comparable, Medicare is far more comprehensive and the private sector denies much more care. You have to compare apples to apples. You have to take the amount of money that people have paid into Medicare, and then translate that into what they could get on the private market for the same money. It would be death panel incorporated.

              I do hope Elizabeth Warren will be the next president, however I was not aware of her medical bankruptcy study. I’m sure if her numbers didn’t satisfy you, I won’t be able to find others that will.

              As I said, the anti-trust exemption is just the cherry on top. The insurers, hospitals, device makers, and pharma control the gov’t/regulators/patients/consumers so thoroughly they don’t even need it. But you notice the insurers strenuously objected to it being removed. Must’ve been a reason, right?

            • Richard, those numbers are from the Warren/Himmelstein study I mentioned. You’ll note that those bankrupcy cases are because of illness/injury and the associated loss of income. This is entirely different than the cost of medical care, and is representative of two different problems: the link between employment and health insurance, and a lack of disability insurance. If you get sick or injured and can’t work anymore so you go bankrupt, that is not a failing of our health insurance system. If you get sick or injured and can’t work so you lose your health insurance, that is a direct result of our decision to have so much employer-sponsored insurance. If you’d like to have a discussion about how to properly handle disability insurance in this country I’m open to that. Entirely different issue than health care costs and bankruptcy though.

              That being said, there are numerous problems with that study that have been covered in great detail years ago. One very obvious one that I’ll point out since it listed in the table is using a cutoff of $1000 in medical bills over a 2 year period. That is a trivial amount. If you had a health insurance policy with a $500 deductible that you met two years in a row this would consider your medical bills as having contributed to bankruptcy. That is a small fraction of average annual medical spending per person, how is that possibly an appropriate cutoff for defining a medical expense-induced bankruptcy?

              Michael: “Regulation of the industry could reduce costs by setting rates. Notice your electric company does not generally double your rates every 5 years or so?”

              Leaving aside the complete apples/oranges comparison, you cannot reduce the cost of medical care by more aggressively regulating insurance companies. Health care is expensive, so health insurance is expensive. Even completely eliminating insurance companies would be a one time reduction that does nothing to address the underlying trend in health care costs, which is the real problem.

              “Medicare is far more comprehensive and the private sector denies much more care.”

              We can’t really have this discussion if you’re going to keep making inaccurate claims with no sources.

              “But you notice the insurers strenuously objected to it being removed. Must’ve been a reason, right?”

              Yes, actually there are many reasons, though not the ones you suspect. Many of the things that McCarran-Ferguson exempts them from are regulated by existing state regulations. Adding additional federal regulation on top of that would be wastefully duplicative and add additional administrative/compliance costs (and the costs of compliance are frequently ignored when lambasting insurers for high administrative costs). It also allows for some data-sharing which is beneficial for the market overall.

              These comments are high on accusations and implications, but short on specifics. What specifically do you think is a problem in the insurance market that is caused by the anti-trust exemption?

            • “Richard, those numbers are from the Warren/Himmelstein study”

              Actually, the numbers are from studies predating the study by Warren. Warren probably referenced them, but a bad study referencing good data doesn’t contaminate the data. And as I said, I was not talking about the primary cause. I was only talking about a contributing component. Even $1000 is a noteworthy component of the bankruptcy.

              Keep in mind I was establishing a ceiling and a floor. Pointing out the ceiling number includes more bankruptcies than is proper means nothing, just as pointing out the floor leaves some out is meaningless.

            • “Even $1000 is a noteworthy component of the bankruptcy.”

              I don’t think this is true at all, certainly not in the context of saying our health care system contributes to bankruptcy. $1000 in medical costs over 2 years is a trivial amount. The average person can expect to spend that much more than that on routine health care. You could no more call that a medical bankruptcy than you could a food bankruptcy or a gasoline bankruptcy. The per person taxes to support a single payer system would certainly be higher than that, so I’d guess we call anyone who has ever gone bankrupt in country with a single payer system a medical bankruptcy.

    • You want specifics, AB? Overhead (profit, administration, etc.) in the private system is 31%. In Medicare it’s 3%. All those “countless hours” you spent would be unnecessary in a Medicare-for-all system.

      And please stop making blanket statements like “medical care is inherently expensive.” There’s a reason every other country pays half as much as us, and it’s not magic, and it’s not because we have better quality, it’s because their health care systems are designed for ensuring a healthy society, while ours is designed to maximize profits for industry stakeholders and shareholders.

      • “You want specifics, AB? Overhead (profit, administration, etc.) in the private system is 31%. In Medicare it’s 3%”

        That’s simply not true, and this is an oft-cited and just as frequently disproven statistic. I can gladly provide multiple sources that show the fallacy of this statistic if you’d like. The cliffs notes: those numbers are a measure of admin costs divided by total health care spending, but while many of the costs in the numerator are fixed, the denominator is much higher for Medicare because seniors inherently have much higher costs, so ratios are misleading. A more useful comparison would be costs per enrollee, to prevent the average health costs skewing the ratio (i.e. if it costs $10/person to administer health benefits the ratio for a person costing $3000/year is very different than for the person costing $6000, despite equal “efficiency”, admin costs do not scale up at the same rate as health care costs). The 3% also omits a number of costs that should be included in Medicare’s overhead, and the 31% includes a number of costs imposed on private insurance by the government, as well as activities done by private insurers that reduce overall costs, i.e. Medicare could spend more on admin to reduce overall health spending by an even greater amount, and the failure to do so not only makes admin costs look low, but also further exacerbates the problem described above about different denominators.

        The 31% vs 3% meme is pernicious, but falls apart with the slightest level of scrutiny.

        “And please stop making blanket statements like “medical care is inherently expensive.” There’s a reason every other country pays half as much as us, and it’s not magic”

        I think you’re missing my point. I don’t disagree at all that there are serious structural problems with our system that contribute to our high costs. The status quo is not what I prefer. But please consider the context: the point of that statement about high costs is to point out the error in trying to reduce the cost of health care by more aggressively regulating insurance as you suggested. It would be akin to regulating what gas stations charge without addressing the cost of oil.

        “more specifics (from Himmelstein – the NYT considers him worthy of citation, you don’t – I’ll go with the former):”

        Argument from authority is surely a suitable method of figuring this out. I’ve mentioned the serious problems that other researchers have pointed out with this study, but it was cited by the NYT so I guess that settles it.

        But your quote belies the problem I already pointed out. “had insurance, at least when they first got sick” reinforces the weaknesses of tying insurance to employment as well the gaps in our disability insurance. Going bankrupt because you are too sick to work and lose income is quite a different problem than what is implied in the discussion, and is a disability insurance problem. Going bankrupt because you’re too sick to work and thus lost your insurance is a problem with our employment-based system.

        I’m happy to discuss the problems with our current system and weight the relative value of proposed reforms. But citing various inaccurate memes/myths about our system will not lead to a very fruitful discussion.

    • more specifics (from Himmelstein – the NYT considers him worthy of citation, you don’t – I’ll go with the former):

      2.4 million people suffer from medical bankruptcy per year. “And of the medically bankrupt, three-quarters of that group had insurance, at least when they first got sick.” The remaining one-quarter are also the fault of our system of course, since they were denied care due to either having the wrong employer or else they were priced out of the market.

    • Ok, maybe some of that 31% is justified, and I do think Medicare should spend a bit more on administration, to crack down on fraud for one thing.

      And I agree with you that the evils of our system are more due to its employer-based nature than just the practices of the insurers…but overall the issue is more what we’re not doing – i.e. single-payer.