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Run Everybody! Avik Roy is Coming!

Avik Roy is a conservative blogger on healthcare who is also an adviser to the Romney campaign and who by sheerest coincidence also wants to scare the bejeesus out of everyone about Obamacare, especially if they live in a swing state. In two articles (so far) covering Ohio and Wisconsin, Roy leads off with a dire prediction: that Obamacare is going to cause premiums to go up 55 percent to 85 percent (Ohio) and 35 percent (Wisconsin) for individual insurance policies. Is this true? Are premiums going to go up like this?The individual market, where individuals (rather than businesses) purchase insurance policies is not like the group market and the way that the individual market operates now underlines a great deal of what is wrong with American healthcare today. Individual insurance is what is called in the business "heavily underwritten", which means that each policy sold is heavily scrutinized by underwriters. This means, of course, that no pre-existing conditions need apply, which in turn means that one has to be in almost perfect health to get such a policy. People who buy these policies also do not get the same level of benefits (as a rule) that people get with company policies. (For example, maternity care is usually not covered). So individual policies are relatively uncommon (only about ten million Americans have them -- out of about 200 million people with insurance) and relatively cheap.Under Obamacare, the individual insurance market will have to offer the same benefits that everyone else gets and will have to offer individual policies to everyone, even those with pre-existing conditions. People who have individual policies and want to keep their current rate levels and benefit levels can be grandfathered. People who before could not purchase insurance at any price will now be able to buy individual policies regardless of their pre-existing condition status and with the same benefit levels that people with group policies have. These new policies will cost about 55 percent to 85 percent (in Ohio) more than the cut-rate policies that can only now be purchased by the very healthy.

In the case of Ohio, Roy has appended a chart from an actuarial consulting company called Milliman that outlines the sources of the new rates. By way of comparison for small commercial groups (employers with 100 or fewer employees), the same things that will be increasing individual rates will be increasing small group rates by 1 percent to 3 percent. In the case of groups larger than 100 employees, rates won't go up at all.Roy uses a similar sleight of hand when he talks about Medicare. Obamacare will "cut" $716 billion from Medicare over the course of a decade. Ohio's share of this is $21.2 billion. Roy says:

This year, Ohio has 1,971,260 Medicare enrollees, which means that these cuts amount to $10,763 for every senior in Ohio.

He does not say that he is not talking about benefit cuts and that he is not talking about one year, but it sure looks like seniors are going to be hit for almost $11 grand a piece. In fact, these cuts are costs that will be cut over ten years whether or not Obamacare is repealed. The fact is, medical care becomes more efficient each year and these efficiencies (not benefit reductions) are going to fuel the savings. Fraud elimination will also contribute to these savings; Roy himself points out in another shrill article that Medicare fraud now amounts to four times the total profits of all commercial insurance companies.Roy also (in the Ohio article) has a headline that says Survey: 24 percent of Ohio doctors will stop accepting Medicare patients. Read further and one finds that the 24 percent said they would stop taking Medicare patients if fees decrease ten percent. While Obamacare mandates that fees will be reduced this much over a decade, Medicare mandates the same thing. Again these are not some kind of lump-sum reduction but cost cuts over a decade. If you think that they are utterly unreasonable, think about how many things that were once done with lengthy hospital stays that are now done on a outpatient basis.Avik Roy has made himself a bit of a career trying to scare people about Obamacare with articles like How Obamacare's $716 Billion in Cuts will Drive Doctors Out of Medicare and Obama's MLR 'Bomb' Will Create Private Insurance Monopolies and Drive Premiums Skyward Hallelujah! where he predicts declining insurance profits (didn't happen), soaring individual and small group premiums (also didn't happen), and further monopolization of private insurance markets (been happening for decades). I think he knows better. But his main job isn't to inform; it's to alarm. What he wants to do is to scare enough people to tip the balance towards Romney and the other GOP candidates. Don't be scared, even if it is Halloween.

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Thanks, unagidon. Doesn't lying count as a sin anymore with Americans? Seems not.

Ann, there is no such thing as pure truth in politics - or in marketing, of which politics is a subset. That's one of the big flaws of representative democracy. Both U and AR have their truths, and you'd need to be a certified policy wonk to have a prayer of understanding who's right - or, probably putting it much better, whose chosen positions most closely match the ones you think you'd take if you were in his place.But you know that :O)

David- Actually, even without being a wonk, you can sometimes figure out who to believe or disbelieve. Avik Roy has been untruthful (or mistaken, if you prefer) in the past, and that can be factchecked. It means you need to be more skepticall of what he says thanyou would be of someone who is credible

@David Smith (10/30, 12:03 am) Heck, let's go all the way and stipulate that (excepting the Immaculate Conception and Jesus) there's no such thing as pure truth in any human endeavor.Having done that, it's actually one of the political virtues of a political commonwealth like ours that it takes humanity as it is and attempts to build a political culture and infrastructure that takes into account our human failings, frailties and weaknesses. (James Madison is particularly good on this.)Now to your third sentence. It may be true that both unagidon and Avik Roy "have their truths". However, what unagidon has done above is---using the data Roy himself provides---point out the ways in which Roy's articles are intentionally misleading. If Roy were comparing apples to oranges, and claiming that Obamacare would make the price of oranges 55-85% higher than the price of apples, unagidon would be perfectly within his rights to point out that Roy has proven exactly nothing about what Obamacare would do to the price of apples.In this case, as in many others in our political lives, it's *not* necessary to be a "certified policy wonk to have a prayer of understanding who's right". It is, in fact, one of the central insights of democratic political theory that "the masses" are capable of self-governance or, at the least, as capable of self-governance as any given monarch or collection of oligarchs.

The NY times had an article a couple of days ago on the new government health care exchanges. "Premiums and benefits for the multistate insurance plans will be negotiated by the United States Office of Personnel Management, the agency that arranges health benefits for federal employees.Walton J. Francis, the author of a consumer guide to health plans for federal employees, said the personnel agency had been extraordinarily successful in managing that program, which has more than 200 health plans, including about 20 offered nationwide. The personnel agency has earned high marks for its ability to secure good terms for federal workers through negotiation rather than heavy-handed regulation of insurers."A possible non-profit insurer to be included in the exchange is "the Government Employees Health Association, a nonprofit group that covers more than 900,000 federal employees, retirees and dependents, making it the second-largest plan for federal workers, after the Blue Cross and Blue Shield program.The association, with headquarters near Kansas City, Mo., was founded in 1937 to help railway mail clerks with their medical expenses, and it generally receives high scores in surveys of consumer satisfaction."http://www.nytimes.com/2012/10/28/health/us-to-sponsor-health-insurance-... can bitch about Obamacare as government takeover of health insurance, but if everyone comes out of this with insurance as good as the federal employees, I'm all for it.

In this case, as in many others in our political lives, its *not* necessary to be a certified policy wonk to have a prayer of understanding whos right. It is, in fact, one of the central insights of democratic political theory that the masses are capable of self-governance or, at the least, as capable of self-governance as any given monarch or collection of oligarchs.

Maybe you're up to it, Luke, but I'm not, and my best guess is that most of us aren't. We sway back and forth eternally in the winds of data and rhetoric.I agree that it's probably a coin toss as to what sort of government would be most likely to make the trains run on time. The single greatest advantage, perhaps, of the sort of representative democracy we're saddled with is that it's continually correctible from the base. Terribly inefficient, but open all the way down. The masses, incapable as I'm sure they are of understanding the relative merits of policy issues, are generally good at telling snake-oil salesmen apart. Unfortunately, as the trains turn into space ships, that may not be enough.

Irene, I have GEHA. It's OK, but nothing to write home about. Twenty years ago, I was a federal employee and my wife was employed employed by the state of Ohio. She had much better insurance. What you get through the intercession and moderation of the federal government is average and adequate. There's little to no hope of ever reaching excellence.

"What you get through the intercession and moderation of the federal government is average and adequate. "Hey David, the article I linked to cited relatively high consumer satisfaction for your insurance (so your experience may not be typical). But (unfortunately) even "average and adequate" is a huge step forward for many of us. You need to compare your insurance to what everyone else has before you call it average. I use my husband's transit worker coverage, which several years ago would be "adequate", it hasn't changed much over the years, and today it is much better than anything I could buy myself or anything offered by the various small businesses where I've worked.So I think a lot of people might be just delighted to have "adequate" government-sponsored insurance since it beats our current inadequate private-market insurance.

The notion that government cannot do anything well is sheer hooey. The enormous popularity of politically untouchable Social Security, for instance, is based on broad-based, long-time experience.

By the way, what is Romney saying today about government's role in disasters? Bet he changed his tune. Again.

Individual insurance is what is called in the business heavily underwritten, which means that each policy sold is heavily scrutinized by underwriters. I would imagine that car insurance, homeowners insurance, and life insurance are also heavily underwritten, yet the market seems to function just fine. If you get in an accident every year, you pay more for car insurance. If youre accident free, you pay less. If your house is made of wood, you pay more for homeowners insurance, if its made of stone, you pay less. If you smoke, you pay more for life insurance. If you dont, you pay less. What could be fairer than that?Why dont we give it a chance when it comes to health insurance?

With health insurance, if you get in an accident every year or have a smoking related illness you can't get insurance at all in the individual market.The parallel to your example would be more like getting homeowner's insurance with your house built on the levee; getting car insurance when you have a dozen reckless driving citations; and getting life insurance when you have full blown AIDS.We already did give it a chance when it comes to health insurance. That's why there are tens of millions uninsured.

@Mark Proska (10/30, 3:13 pm) "Why don't we give it a chance when it comes to health insurance?"1 - We did. It didn't work. (That's why elderly people tended to be poor before Medicare.)2 - It doesn't work because the factors that affect health care costs are beyond an individual's control. If you're a non-smoking, non-drinking, physically active and fit middle-aged adult in the United States who lost the genetic lottery (e.g., you have a hereditary heart condition or a predisposition to certain cancers) then, depending on where you live, you'll have between few and no options for buying health insurance.

Even professionals are being fooled by some of these lies: A year ago I was assured by a nurse that it was going to be "next to impossible" to find specialists who take Medicare thanks to the effects of Obamacare. She said specialists "simply can't afford it anymore." After checking with a number of clinics in the Portland, Oregon area (where, indeed, the impact of Obamacare's cutbacks in payments to providers -- really, overpayments or double payments to providers billing Medicare Advantage plans -- apparently affects more providers than in most other states), I couldn't find even ONE specialist who no longer accepts Medicare. Yet that nurse was so sure of "the facts" she was passing the misinformation on to patients.

The parallel to your example would be more like getting homeowners insurance with your house built on the levee; getting car insurance when you have a dozen reckless driving citations; and getting life insurance when you have full blown AIDS.UnagidonBut, we dont want to encourage people to build their houses on levees, do we? Wouldnt cheap insurance for a home built on a levee be, not only unprofitable for an insurance company, but also bad for the country (though, admittedly, good for the levee dweller, but that hardly seems fair).I think a better parallel would be life insurance. We cant expect an insurance company to offer life insurance t someone near death, except at a rate that compensates for the risk taken. However, the market addresses the need by offering, for example, guaranteed policiesyour rate cant go up regardless of what disease you may get, but you pay a little more upfront to compensate the underwriter for the risk you will die young. I see no reason why the same cant happen with health insurance, do you?The problem is, weve never given the market a chance to work, because of the tax-subsidies granted to employers to purchase healthcare insurance for their employees. When the consumer of the service (the sick employee) is not the buyer of the service (the employer), the market cant function properly.Maybe thats why you so rarely hear people complain that their life insurance premiums are too high.

@Mark Proska (10/30, 4:52 pm) On the other hand you do hear about lots of people who don't buy life insurance because the premiums would be too high.Health insurers---quite wisely if they want to stay in business and make a profit---refuse to sell insurance to people with "pre-existing conditions", conditions over which the individual often has no choice (e.g., congenital heart disease, genetic predisposition to certain cancers).One difference between life insurance policies and health insurance policies is that the insurer has far greater certainty about their cost if/when they have to pay off a life insurance policy. Health care costs are notoriously unpredictable...unless the insurer caps their liability and now we're back to the problem of folks being unable to get insurance.(Of course, it's not a problem if a society places a higher value on markets and corporate profits than it does on the health and well-being of its citizenry.)

I see no reason why the same cant happen with health insurance, do you?

I think that Luke has answered this one pretty well.

The problem is, weve never given the market a chance to work, because of the tax-subsidies granted to employers to purchase healthcare insurance for their employees. When the consumer of the service (the sick employee) is not the buyer of the service (the employer), the market cant function properly.

This is part of an interesting meme that is also being used by Paul Ryan when he talks about Medicare vouchers. The logic goes that if the consumer was directly making the buying decisions (that is, companies get out of the insurance business and the elderly have vouchers) this will somehow stimulate providers to lower their costs and compete for the (reduced number of) dollars that would be out there. The "tax-subsidy" (strange to hear a conservative call a tax break a "subsidy") had nothing to do with the creation of the main free market problem, which is that there is no price or quality transparency in American healthcare. No transparency, no market.Insurance companies have some knowledge of price and quality. But even so, there is still the "problem" of utilization of services. It is in the interest of the insurance company to make sure that services are of high quality efficiently used (because this is most cost effective for the insurance company). But if you took businesses from the equation, you would be removing the one thing that allows some people with pre-existing conditions to get insurance; the fact that they work for a company. Change this to a market where all insurance is individual, then an insurance company can decide to sell or not to sell on the individual health status of each person. Who do you think they will sell to?Right now there are millions of uninsured people who have money they would pay for insurance. Why hasn't an insurance market grown up for this demand? The answer is that these people are not profitable, so they are cut loose.

This is sort of off topic, but speaking of Halloween scariness and Romney :) .... http://youtu.be/6TiXUF9xbTo

I dreamt up a scene in which Obama and Romney would together go and visit the worst hit areas. Because, when the country gets hit, adversaries set aside their differences. But that's just a fantasy.

This is part of an interesting memeI do not think this type of rhetoric is conducive to a fruitful exchange.No transparency, no market. Agreed, more transparency is needed. Do you think Obamacare will increase transparency? I do not.Who do you think they will sell to?I think, greedy SOBs that they are, they will sell to anyone and everyone who can afford to pay the freight for their insurance. If they cant pay the freight, its not a healthcare problem, its a welfare problem. But Obamacare supporters know welfare doesnt sell, so they look the other way.

LukeThanks, but I have no idea what your point is in your 5:19 response. For example, you say:the insurer has far greater certainty about their cost if/when they have to pay off a life insurance policy.Really? What makes you say that? Unless its the Mafia Insurance Company, Ltd., the insurer does not know when you will die, just like the health insurer does not know when you will get sick.

Really? What makes you say that? Unless its the Mafia Insurance Company, Ltd., the insurer does not know when you will die, just like the health insurer does not know when you will get sick.

But you can just die once, whereas you can get sick often and for extended periods of time.

"Irene, I have GEHA. Its OK, but nothing to write home about"I suspect that the millions of people in this country without any insurance would think that they had died and gone to heaven with insurance that you consider "nothing to write home about." Sure as heck beats emergency room medicine when you are absolutely desperate.

Agreed, more transparency is needed. Do you think Obamacare will increase transparency? I do not.

Yes, I do think that the exchanges, since they require each participating payer to offer a completely similar product, will force the insurers to force the providers to become transparent.

I think, greedy SOBs that they are, they will sell to anyone and everyone who can afford to pay the freight for their insurance. If they cant pay the freight, its not a healthcare problem, its a welfare problem. But Obamacare supporters know welfare doesnt sell, so they look the other way.

You talk about insurance like it's buying a car. It's a different animal. Eventually everyone becomes unable to pay their personal freight. Are you saying "welfare for everyone?"

UnagidonBut eventually everyone is unable to pay their own freight for life insurance too, if they buy 1-year term policies. But do you notice people dont complain about their life insurance premium becoming prohibitive as they age? Thats because insurers offer, and people purchase, longer term life insurance, or whole life policies. You have not shown why the same would not be true for health insurance.

But you can just die once, whereas you can get sick often and for extended periods of time."Yes, but what relevance does this have to the conversation?

Yes, but what relevance does this have to the conversation?

Life insurance is one payout per customer. Health insurance isn't. And that makes all the difference.

Why?

Holy crap, guys, are you really arguing about insurance with somebody who only has to buy it for the bridge he lives under?

But eventually everyone is unable to pay their own freight for life insurance too, if they buy 1-year term policies. But do you notice people dont complain about their life insurance premium becoming prohibitive as they age? Thats because insurers offer, and people purchase, longer term life insurance, or whole life policies. You have not shown why the same would not be true for health insurance.

For one thing, the payout on a life insurance policy doesn't keep going up year after year. And as I mentioned before, it's one payout.

Why is it always the liberals who resort to such comments?

Why?

Mark, what would life insurance look like if you could die multiple times and get paid different amounts each time?

Why is it always the liberals who resort to such comments?

What have I supposedly said now?

For one thing, the payout on a life insurance policy doesnt keep going up year after year. And as I mentioned before, its one payout.UnagidonI dont understand the point of this comment, please explain.

Sorry, that was in reference to Mr. Rosenzweig.

Life insurance is a single fixed payout. The likelihood of when the payout occurs can be measured pretty accurately in a normal population. It's very straightforward.Health insurance is a payment for services whose price fluctuates. Even if actuaries can predict with some accuracy when an illness or event will occur in a population, they can't predict what the economy is going to do nor what innovation is going to do. So they can't predict what the future payout is going to have to be.

A liberal? Never. Orange Crush!!!!

"Mark, what would life insurance look like if you could die multiple times and get paid different amounts each time?"unagidongives a whole new meaning to double indemnity, doesn't it?I wonder if Lazarus had life insurance.

Unagidon, Avik Roy aside, oughtn't we be concerned about the fact that those of us who cannot now afford individual policies (and who won't qualify for them anyway b/c of pre-existings) can expected to pay 55 to 85 percent more than the market charges now?Obamacare is supposed to help us folks pay for basic coverage if we can't afford it. But how long will the government be willing or able to provide these subsidies if there are no regulations on insurance company premiums? As long as insurance companies are getting paid, there's no incentive for them to reduce premium costs, is there? So won't the government have to raise the bar on who gets the subsidies or start diddling with what's included in "basic coverage" (which is what has happened to Medicare over the years)? The counter-argument to my perpetually gloomy view on this issue is that once everyone has insurance, the insurance companies will start pressuring health care providers to reduce costs (which they do for the insured through group policies now), and that will hold the line on premium costs for everyone.Which do you think is more likely to happen?

No one gripes about life insurance premiums? One reason for that might be because people typically reduce life insurance to burial-only costs once the dependents are out of the house, the mortgage is paid up, and debt is paid down. As you age, you can do with less life insurance; as you age, you need more health care insurance.(I would also note that if you were stupid like us and had children after age 40, you'll find your premiums will jump when the kid is 10 or 15 years old. We opted to cut the amount of coverage to keep the premiums affordable.)

"People who before could not purchase insurance at any price will now be able to buy individual policies regardless of their pre-existing condition status and with the same benefit levels that people with group policies have. These new policies will cost about 55 percent to 85 percent (in Ohio) more than the cut-rate policies that can only now be purchased by the very healthy ... By way of comparison for small commercial groups (employers with 100 or fewer employees), the same things that will be increasing individual rates will be increasing small group rates by 1 percent to 3 percent. In the case of groups larger than 100 employees, rates wont go up at all."I suppose this is just hypothetical, because I don't think Obamacare will be repealed regardless of Tuesday's outcome, but ... why hasn't the industry figured out a way to create groups out of individuals? I say this only partially tongue-in-cheek: the financial industry figured out how to spread the risk of an individual default by making securities out of individual mortgages. Seems to me the same could work for people.

"why hasnt the industry figured out a way to create groups out of individuals"It seems to me, the industry works very hard to prevent that. I led a coalition of small group employers that, together, we were able to get a large group rate. Because it was a young workforce, our claims were very low and the premiums were actually going down from year to year. Then someone at the insurance company figured out we weren't really a large group, so instead of being claims rated, they broke us up and stuck us all with more expensive community rating. I'm told the insurers worry about "adverse section". I think it's just that they have us over a barrel; less covered lives, less leverage.

Which do you think is more likely to happen?

People tend to forget that Obamacare is about private insurers in the market. Whether it works or not depends on whether it creates a workable business environment. The environment Obamacare is creating is vastly different from the market today (which is the point). And there is no shortage of people who, used to the old ways, are predicting disaster.But I think it will succeed. The insurance exchanges are heavily regulated in that they are quite specific about what the products sold need to look like. Each payer playing on the exchange will produce a product that looks like all the other ones on the exchange. We know that transparency about what the consumer gets is going to be a big selling point. But we expect that the biggest selling point of all will be price.The exchanges have mechanisms (which I won't go into here) for creating a level playing field for risk. Should one insurance company inadvertantly pick up sicker people than the rest, it will be compensated by the rest. The big difference between insurance companies, I believe, will be in the kind of contracts they have with the providers. So the pressure that you point out for insurance companies to push their prices down is definitely going to be there.But will there be room to reduce prices? I think so. One thing that will go away (not, perhaps, quickly) is the subsidy that providers make commercial insured pay because of the uncompensated care they give out to the uninsured. More of the uninsured will be covered, so this need goes away. One might argue that the providers will simply want to keep the present system going, but they won't be able to do so in the face of the clout and competition between insurance companies.Costs will also come down because the exchanges are (finally) going to force more rationality in insurance administration. Claims will have to be submitted on standard forms. Medical information will have to be made so that it can be shared. And when this happens, there will be advances in studying qualities and quantities of treatments and outcomes. We will get a more transparent picture of what works with treatment and who is most efficient and successful.These are not cost cutting mandates that are in Obamacare (for those who like to claim that Obamacare does not address costs). But they are part of the logic of Obamacare and they will channel the energies of insurance companies towards cutting costs in these directions. And I believe that this will work and we will end up with a more efficient and cost effective medical system in the United States.Will the government continue to provide premium support? I think we are at a watershed point in our national discussion about what we as a country want to support with a public infrastructure. We have to decide whether we need a massive military any more. We have to do something about the scandal of education, which is in as bad a shape as the health care system and for much of the same reasons (market failure). I am an optimist about this conversation, because we are actually moving towards having it and away from the culture wars. The conversation will be intense. The Right tries to manipulate it by disaggregating social programs in the public mind; by in effect commmoditizing them so that they cause people to think they are being ripped off if their personal tax dollars do not benefit them in every way personally dollar for dollar. But I think that overall we are moving in a direction where people will better understand social responsibility (and citizenship). In any case, as a businessman I am optimistic because from a business point of view we will become less able to compete with countries that have better developed more efficient systems of education and health.

Jim, Irene is basically right. Also, the "free market" has thoroughly segregated out higher risk people and has more or less cherry picked the healthier ones. To put everyone in the same basket will cause all of these cheap individual insurance premiums to move to the average (i.e. go up). Much more profitable to have two classes of people.

Irene and unagidon, thanks for the replies."Also, the free market has thoroughly segregated out higher risk people and has more or less cherry picked the healthier ones. To put everyone in the same basket will cause all of these cheap individual insurance premiums to move to the average (i.e. go up). Much more profitable to have two classes of people."So, in a sense, the price that the insurance industry charges society to provide insurance coverage to high risk individuals is that the risks associated with that coverage be transferred to the federal government, which presumably will be subsidizing the premium payments of a large percentage of these high risk individuals (I'm guessing here that the serious and chronic health conditions that make these individuals unattractive to insurers also interfere with the individuals' ability to work - it makes sense, they're uninsured because they're not working for an employer that offers group coverage - and so on the whole they also earn less).If a doctor refuses to treat anyone who can't pay, we call him a sonuvabitch.If an employer hires only the young and cheap workers, they're charged with age discrimination.I don't know where I'm going with this. But it does seem that there is some special treatment in this for the insurance industry.To extend the logic of Obamacare to the labor market: an employer would agree to hire over-50 people who are unemployed, have a mortgage and have kids in college ... but only if the government will subsidize their wages.I'm not saying anything is more right or less right here. But the parallel seems apt.

There is not much to worry about. Once Romney is elected president, Obama-care will be shut down thank goodness!

Ken seems excited about throwing 35 million uninsured people to the dogs.

Of course - to the dogs!

This is taking us somewhat off-topic (for which I apologize), but Ken's assertion (10/31, 10:06 am) just scrapes the surface of what's at stake with this election. Jonathan Chait of New York magazine has a detailed article examining what would happen in the first 100 days of 2013 in the event of either of the two most likely electoral scenarios: Romney surges to victory and his coattails help elected a Republican Senate or, Obama wins re-election with a Democratic Senate and Republican House.Chait argues the consequences would be more significant than either campaign is talking about.Chait's article: http://nymag.com/news/politics/elections-2012/obama-romney-economic-plan... (shorter) post based on Chait's article: http://masscommons.wordpress.com/2012/10/29/the-first-100-days-whats-at-...

So, in a sense, the price that the insurance industry charges society to provide insurance coverage to high risk individuals is that the risks associated with that coverage be transferred to the federal government, which presumably will be subsidizing the premium payments of a large percentage of these high risk individuals (Im guessing here that the serious and chronic health conditions that make these individuals unattractive to insurers also interfere with the individuals ability to work it makes sense, theyre uninsured because theyre not working for an employer that offers group coverage and so on the whole they also earn less).

This is partially true. There are a lot of people who can't obtain insurance but who could afford it if they were given the same sort of rates that small groups get. The influx of these people into the system will provide part of the funding. And in fact, while we believe that the morbidity of people coming in in 2014 will be higher (and maybe much higher) than average due to pent up demand for services by sick people, we think that by 2016 the risk levels of the formerly uninsured population will be the same as the currently insured population.The Feds will probably have to pay more at the beginning but less as time goes on for this reason.As far as the equity of sharing risks is concerned, we as a civilization have been doing this for a long time. I think the parallel to the current health care situation is the rural electrification on the South and West in the 1920's and 1930's. These were people who were either too poor to afford the infrastructure themselves or too dispersed to afford it. We would think it ridiculous nowadays to say that Wyoming doesn't get electricity because their long distances and low population requires the rest of us to subsidize it. Nor would we say that southern Mississippi should go without because of its relative poverty. The parallel holds, I think, for electricity, sewerage, roads, railroads, internet, cell phones, postage and other things. We are now starting to look at health care as this kind of thing. Perhaps some day we will look at higher education the same way.

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