The New Bailout: Individual Health Insurance Mandates and Greater Personal Debt

Behind the escalating debate on the health care between Senators Hillary Clinton and Barack Obama on individual mandate -- she's for it, he's against it -- is a critical policy battle that not only cuts across health care reform but also the neo-liberal privatization dreams, the home mortgage crisis, and the recession that is no longer looming, it's here.

Sound far-fetched? Take a closer look, starting with the millions of Americans staring at the loss of their homes due to the sub-prime loan debacle. It's not a loan or a mortgage crisis for those families; it's a debt crisis being forced upon them by the banks, hedge funds, and insurers who are desperate to shift their own mammoth debt onto someone else.

Banking, other financial institutions, insurance and real estate which make up the finance sector, now account for about half of U.S. corporate profits. And, they are in trouble with more than $2.5 trillion in outstanding consumer credit, $800 billion of that in credit card debt, and another $10.1 trillion in domestic mortgage debt.

Being thrifty won't solve that problem. The financial planners have identified two lucrative pots of money. Trading carbon credits for industries and employers that want to brand themselves as green while continuing to pollute. And, making a killing in health care, currently 16 percent of our national economic pie and rapidly growing.

The banks are already into health care in a big way, serving as a repository for health savings accounts and other tax credit schemes so beloved by the Bush administration and the Republican presidential candidates. But the financiers would like more.

Enter the neo-liberal think tanks and policy wonks and plans they hawk to expand the reach of the market, especially the financial market, in health care. Central to that approach is shotgun insurance, forcing everyone not currently covered to buy health insurance policies.

Compelling people to buy insurance, however, is not the easiest sell. Big insurers and HMOs have a well deserved bad reputation for heartless denials of care - that's how they make money. And, it's pricey. Premiums the past decade have gone up 87 percent, not to mention the ever climbing bills for deductibles, co-pays, and a host of other transaction fees.

The finance industry is over the moon with this scheme.

For insurers, it means millions of new customers marched into their offices with the force of law. With no controls on costs, many consumers will just add on more debt. That's a boon for the credit card companies and other financial institutions, but a heavy new burden on many of the same people now losing their homes or struggling with other financial hardship.

Moreover, it doesn't work. The carrot is public subsidies for those least able to pay, but that approach has noticeable flaws, best evidenced in Massachusetts, the individual mandate pioneer and model.

As a result of the state's failure to control premium hikes, costs of the subsidized program are projected to double over the next three years to $1.35 billion, the Boston Globe reported February 6, and Massachusetts is debating whether to slash the health services offered through the subsidized plans or cut payments to doctors and hospitals.

To shroud the colossal problems and the real story of who actually makes out like bandits under this scheme, the proponents, including some liberal policy experts, have dressed it up with poll-tested rhetoric that mandatory insurance is "universal health care."

But "having" insurance is not the same as being able to use it. You're only being mandated to purchase the premiums; they're not mandating the insurance companies to make sure you get the care you need. Nor does "having" insurance protect you from financial ruin.

It accelerates the dismantling of group insurance plans with individuals forced to go it alone in the individual market, and institutionalizes risk and cost shifting on to the backs of individuals and families.

It distorts the role of government, which should be to protect people, not act as an insurance agent.

Finally, by expanding and entrenching the iron grip of the private insurance industry, it promotes the further privatization of health care, yet another crucial linchpin of the neo-liberal agenda.

Our health should not be a commodity, traded on the market like pork bellies or sold off to some hedge fund overseas to collect on medical bills we can not pay.

There's only one way to achieve genuine universal health care, the approach taken by every other industrialized country with a national health care or single payer system.

In the U.S. that would look a lot like an expanded and improved Medicare for all. With guaranteed health care, not mandated insurance profits, and insurance companies out of the way. Surely, Americans deserve no less.

Comments

[Ides]

A mandate is a carrot for the insurance companies and a stick for the insured. Insurance companies aren't facing punishment, WE are. WE have no ability to withdraw our funds to negotiate a better plan, but THEY have the ability to draw down coverage to negotiate a better deal.


Mandating private purchases is not the same as PROVIDING government subsidies.

[CAPTAINSKIPPY]

Yes we need REAL health insurance, why? Health Savings Accounts/plans - an insurance plan that forces consumers to know in advance what their health care needs are, and penalizes them for being wrong. Of course the financial and insurance industries enjoy benefiting from this horrific scam. Congress, please outlaw such "coverage". Thanks Hillary for moving forward on real coverage.

[jdm58]

Universal Healthcare is the obvious goal, but we must take smaller steps to attain it. Universal Health COVERAGE is the first step. As long as the Insurance industry can refuse treatment of previous existing conditions, or employers can refuse to hire someone because their premiums will rise due to that person being perceived as a "health risk", we will get no further than Hillary did in the '90's. This may mean premiums will go up for everyone. This may mean we all will have to make sacrifices for the greater good. It may also mean that people won't lose their homes when faced with a medical crisis. When people lose their jobs and continued healthcoverage becomes unattainable, their medical problems don't magically go away. Anyone who is covered today runs the risk that tomorrow they too will be faced with the choice of "keep the house", or "buy the meds". Guaranteed universal healthcoverage is the only step being offered today that will address that fear. Even though it is inferior to HR 676, which currently has no chance of passing, it is better than the status quo.

[LeftRight]

No, universal COVERAGE is not the first step! The first step is to make insurance more affordable, while still providing a reasonable level of care. Therefore, the first step is similar to the Obama plan, with the gov't providing the option of buying into a Medicare type option. This will end up being cheaper for almost everyone, and will therefore be used by many people. The other thing that needs to be considered, however, is that whatever plans may be available to individuals, their employers may switch to a new plan which is cheaper, at any time. Therefore, we need to be able to change to the gov't plan if our employers will suddenly drop our plan!

[jdm58]

Exactly my point! If we are to stay with "Healthcoverage" instead of Universal Healthcare, it must be AVAILABLE to everyone, regardless of pre-existing condition, loss of job, or ability to pay.

[lynnn]

This post misses one thing that can't be over stated. Bill Clinton did banking de-regulation. He let the banks write the rules (for a fee of course). He Knew the public didn't want the repeal of Glass-Steagal (which FDR had made) so he waited till after the mid-term elections.

That's the link right there (Glass Steagal repeal=housing crisis). Bill let the Banks write the rules how do we know HRC won't do the same thing (bc she tells us, Bill lied to us how do we know she's not lying?)

[Dameon1976]

There is no misunderstanding here. I'm still waiting for liberals or progressives to explain to me why and idea that was first promoted in theory by Milton Friedman, hardly a left leaning economist, has now become the litmus test for universal healthcare. The ugly truth here is that a mandate is a trade off to convince insurance companies to buy in to the system. The free rider issue can be solve with a penalty. In Massachusetts not only the costs have not gone down, but taxpayers have to pay twice for themselves and for the 20% exempted.

[usna73]

Medicare for all would assume that Americans actually cared for one another. It just isn't so.

The Bush Gang has brought out the meanest spirited attitude shift in my lifetime.

The poor schmucks who have been influenced would rather die unnecessarily just to be able to make fun of France.

[heywhat]

While I have many problems with the current health care system and with the financial institutions this post makes way too many blanket statements and I think fundamentally - perhaps intentionally - misunderstands the mandates as spoken about by HRC.

[FullMontyHall]

The author is so right that "our health should not be a commodity, traded on the market like pork bellies."
But trading the current system for a single-payer system will not prevent arbitrary or heartless things from happening. Case in point is what's happening in Massachusetts: after three years the government is considering reducing benefits. One could argue that's heartless, and the fact the legislature is making the decision may make it even more arbitary, not less.
Health care has always come down to "Who pays?" Whoever pays the bill, whether employers via health insurance companies or the Department of Health and Human Services in a single-payer system, will have to control costs. It will require denial of benefits. It will mean government bureaucrats several zip codes away will be making treatment decisions (to borrow Michael Moore's phrasing).
FDR created Social Security and Lyndon Johnson created Medicare in situations where there was no meaningful, broad-based private sector activity. There were few, few pensions. And hardly any health insurance for seniors. A 100% government solution made sense, because there was market failure. That is not the case in health care for the broader population.
Scrapping what is good in the current system is a huge mistake.

[beau23]

You've got some of your facts confused, The Mass plan isn't a single-payer system, but is mostly similar to Hillary's plan. A single payer system would go a long way to reducing cost by removing redundant administrative structures (which are about 60% of the cost in the open market) and in terms of reducing cost, i hate to give the republican credit for a good idea; a main problem with our system is that doctors get paid to run test, not to for instance try to figure out what is wrong with you with words, so they just throw a bunch of test at you (which is hugely expensive) a hope one comes up with something. If Mass had a single payer system they would save some 40% (I forget where that figure comes from) overall, that is both what the state is paying and what individuals are made to pay. And as for the market failure, the same argument can be used today - anyone without insurance is free to go buy some in theory, and furthermore FDR and LJ did what they did out of compassion for the less fortunate, it had nothing to do with the state of the market (i guess if the elderly could get health care for little or nothing they might not have done it).