Most people believe that government should subsidize health insurance. Liberals endorse this view with gusto, arguing for universal provision as in Canada or Western Europe. Conservatives endorse less government subsidy, but they routinely defend Medicare and the tax preference for employer-provided health insurance, the two largest subsidies in the United States.
Given this "bi-partisan" support for subsidizing health insurance, one might assume the arguments for such provision are compelling. Actually, no good case exists for universal provision, or for Medicare, Obamacare, and the tax subsidy. Reasonable people can defend some government role in health insurance, but one far smaller than current policy.
The standard justification for subsidizing health insurance holds that private markets will not supply "fair" insurance due to a phenomenon known as adverse selection. This perspective assumes that insurers cannot tell which applicants are healthy, so they must charge the same premium to everyone. Then, however, only the unhealthy apply, and insurers go broke.
Government can in principle fix this problem by mandating that everyone buy insurance, preventing any "adverse selection" of applicants. But this mandate must include subsidies for low-income households, who otherwise cannot afford insurance.
This argument for government insurance is standard, but it suffers a key flaw: insurers can readily determine applicant health via physical exams and medical histories. So, private insurers will offer health insurance to all applicants, with one key caveat: they will charge higher premiums to those in poor health. This is precisely what most people fear about a free market for insurance.
The real issue for health insurance, therefore, is whether policy should protect people against the differences in economic circumstance implied by their differences in health.
This kind of redistribution strikes many people as compassionate. And, behind a veil-of-ignorance -- before knowing one's future health -- most people would trade some consumption for protection against the possibility of a bad health outcome. Since markets do not seem to offer such insurance, government provision can make everyone better off.
Yet this view does not justify government health insurance for all. Any attempt in this direction would be costly, since everyone would demand unlimited health care. Full or substantial government insurance trades one problem -- the high cost of private insurance for some people -- for a different problem: an inefficient and expensive health care system.
The natural way to balance these concerns is to subsidize health insurance for the poor, but for no one else. Roughly, this mean eliminating Medicare, Obamacare, and the tax-subsidy for employer-provided insurance, but retaining a (scaled down) version of Medicaid.
This approach insures everyone against the worst case scenario in which poor health makes it impossible to earn income. This approach also means that even among the non-poor, some people will pay higher health insurance premiums than others.
This focus on helping the least fortunate is exactly what we do currently about the fact that some people cannot earn a reasonable income. Policies like welfare or a negative income tax protect everyone against extreme poverty, but they do not equalize all differences in income. Doing so would destroy the incentive to work and save, just as broad subsidies for health insurance would guarantee runaway expenditure and a distorted health care system.
So is it heartless and cruel to force people to become poor before they can qualify for subsidized health insurance?
Yes, but it is necessary. If policy tries to do more, whether by subsidizing health insurance broadly or by redistributing income beyond the truly poor, it insures that everyone has an equal share of a tiny pie. That is not the right balance.
Jeffrey A. Miron is Senior Lecturer and Director of Undergraduate Studies at Harvard University and Senior Fellow at the Cato Institute. Miron blogs at JeffreyMiron.com and is the author of Libertarianism, from A to Z.
united health Revenue
Net income US$3.82 Billion (FY 2009)
Total assets US$59.0 Billion (FY 2009)[
Total equity US$23.6 Billion (FY 2009)[2]
aetna
Revenue US$34.8 Billion (FY 2009)[1]
Net income US$1.28 Billion (FY 2009)[1]
Total assets US$38.6 Billion (FY 2009)[2]
Total equity US$9.50 Billion (FY 2009)[2]
unless you are indigent/chronic ill you can afford routine healthcare on your own and generic meds, which is almost everything soon, and have a 3-5k deductible plan for some major problems
that is INSURANCE what u pay is a scam, alll the market competition in the world doesnt matter when you are paying for more coverage then you need. just like buying car insurance, only buy what u absolutely need or you are a sucker getting ripped off. take those preium savings and put in a health savings accts/retirement fund/kids education
government and market competition has nothing to do with this, they are both taking more then you will get back in costs, yes I am counting poor/elder subsidy
their profits? where do they come from? that new drug that cured cancer? the 1000 patients they treated? no nothing. tens of billions, what would that cover?
When people work long hours full time and don't have enough discretionary income to pay for food, shelter, work transportation, health insurance, and their own retirement, it seems pretty obvious that they are subsidizing their employers.
Statistically when more individuals are insured the risk for claims decreases for each individual. Trying to stratify or "Cherry Pick" the individuals to be insured does not work well because our 19th, 20th, and 21st Century medicine doesn't yet have all the answers.
But thats completely wrong, they strategically drop people that underwriters think may make claims, they contribute nothing to healthcare system and are the only facet that has seen profits soar. Everyone else with actual healthcare skills barely kept up with inflation like everyone else.
And FACT any claim you make, you pay more in premiums in the head, if its a group plan its based on them. you always pay more then you give in
How else would there business model be sustainable?
A Medicare for all system will distribute risk across the entire population, the very model of having/providing insurance, whereas risk is becoming increasingly less distributed as the pool of private payers shrinks. Increased risk exposure drive costs up, further accelerating the demise of private health insurance.
Shall we wait for this private system to self destruct over profits or just do what every other government in the industrialized world has already done, and let the 6% overhead of Medicare be the model for our health insurance?
Private health insurers are monopolies precisely because regulation of a critical public service is mandatory, because like banks and other insurance companies, the public has to be assured that they are big enough, and legitimate enough, to cover substantial risks. Otherwise you'd have the same people who are defrauding Medicare defrauding private consumers of health insurance. The problem is that the regulators of the insurance companies are at the tender mercies of the insurers themselves who routinely threaten to boycott a region if their demands fro increases aren't met.
Health insurance is a legal monopoly. But the natural goal of business is to obtain a monopoly status so that it can fix prices. But price fixing happens every day monopoly or not. Free markets are no obstacle to price fixing. See Microsoft.
The not-for-profit Medicare works extremely well except for the drug coverage, which Bush implemented without provision for negotiating lower drug prices, which are themselves a profiteer center for the drug manufacturers in the US market.
The Cato Institute is backed by the Kochs, so it is no surprise that you would prefer privatized free-market profiteering health insurance to the much more affordable non-profit government (Medicare) insurance solution. It should surprise no one that you just don't give a damn whether less fortunate people get health care.
As long as we keep this "uniquely American system" we're going to have to keep right on subsidizing this failure.
AOL must be actually wanting to attract more readers.
but it is not a tiny pie. it's an unlimited pie. it has to do with direction of resources, that's all.
right now we have a huge pie called war. we all have a big piece of it.
we would all be better off if the huge pie was health care, and war was a tiny pie.
we would be better off if the huge pie was education, and war was a tiny pie.
we would be better off if infrastructure was huge pie, and war was a tiny pie.
redirect the resources to the pie you want, instead of the pie you have now.
Much of good healthcare is Prevention. Much of the HIGH cost of healthcare is abuse by patient and family, providers (doctors, hospitals, pharma etc.) and insurance carriers.
Learning from other countries (not copying them) we need a widely accepted healthcare budget for a given region based on demographics, geography, occupation etc. The region has to live within the budget by allocating resources (by those who work in healthcare) to where resources meet optimum use. This weeds out abuse at the grassroots rather than through Washington based bureaucracies.
Every region would have a 'healthcare board' with representative from all stakeholders (consumers, providers, govt, labor and employers) to monitor the care in the region. Their staff would be healthcare statisticians and IT techies.
Those who desire more that the needed care eg. breast reconstruction, use of un-approved treatments could purhcase their own additional insurance.
Washington and state capitals with computerized (instantaneous) data monitoring can encourage / enforce efficiency if they have a desire to improve the system for the patients and not for the providers within the system.
With real-time data from IT along with comparative published data from the local, regional, national and international sources, the waste will be eliminated. Healthcare costs will come down 20-30% (we spend 30% more of our GDP on healthcare than other countries).
Current payment systems will more than pay for healthcare (and save some) without re-inventing the wheel with a new payment system.
WE are the government, WE pay taxes for services. WE pay taxes but a lot of corporations do not, for example, GE.
WE pay taxes but yet the government takes our tax dollars and gives them to corporations for *subsidies*.
WHY should WE pay for the government to subsidize corporations that make billions in profits, yet pay no taxes, like the oil companies?
Does that give the oil company incentive to work harder to produce lower prices for taxpayers? LOL HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
You, sir, are a conservative hypocrite.
Yes, absolutely.
The government already does it, in the form of Medicare and Medicaid, VA Hospitals and the great healthcare the President and the Congress receive.
And the military receives.
The people should receive better care than their SERVANTS.
About innovation? Who do you think does the substantial amount of innovation now?
That's right, the federal government, with its NIH labs and laboratory funding at the nation's universities. Unfortunately, as soon as the innovation is done, the govenment essentially GIVES the technologies to companies for private profit from the publicly developed resources.
Think the human genome project, and non medical development of the internet.
The government has the responsibility to care for its people, not a for profit company, whose only responsiblity is to its owners, the shareholders, who may be foreigners by the way.
There is no sensable reason to allow a middleman to siphon off critical healthcare dollars in the name of "spreading risks" and innovation.
Both of which the government does already.
The expense of our care system is determined by our Pay-To-Play system in Washington and the state capitals. That system may be a built in flaw in our Constitutional order but can only be changed by an unlikely Amendment. Pending that a free-market insurance industry is not possible.
With DNA in the future and going forward through constructing family trees from electronic medical records insurance companies can forecast someone's health expectancy and life span accurately and charge accordingly. But then that's not insurance. It's the nature of insurance companies to make more by escaping the insurance business. In medical care this has become an unsolvable problem now.
The right's philosophy of medical care is that people die in net worth order. Medical technology may make that nearly possible going forward and we all pay for that R&D. Our debates omit that. In the time of the Framers of the Constitution the general view was "It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God". Times change.