YPNation Debates: Health Care Reform & Mandating Health Insurance

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Late last night, the House approved by a narrow margin of 219 to 212 sweeping changes to the nation's health system. It was the final showdown of a long, bloody battle--one that sharply divided Congress, and even the nation. But the conversation about health care reform has really only just begun, as we implement the reform, witness its impact and build upon its foundation.
 
In anticipation of Sunday’s vote, YPNation contributor Ryan Lynch, 28, and a consultant at the non-profit Coalition Against Domain Name Abuse, asked of the YPNation team what they thought the impact of the insurance mandate would be.
 
THE PLAYERS
 
Jake Bolinger, 24, project management consultant in aerospace and defense
 
"You are looking at the moral aspect of health insurance, but not at the moral aspect of government intervention. The government plainly has no right to get involved in your personal health."
 
Ethan Pollack, 26, fiscal policy analyst at the Economic Policy Institute
 
"We can't end insurance abuses, like discriminating based on pre-existing conditions, unless we also mandate coverage."
 
Alexendar Hertel-Fernandez, 23, social policy researcher at the Economic Policy Institute
 
"A mandate is absolutely necessary for the sort of market reforms the legislation proposes. It is basic health economics."
 
William Schirano, 33, Washington, D.C.-based international security consultant.
 
"To mandate health insurance would be an unprecedented power given to Congress...and I don't think that the Supremes (perhaps minus Sotomayor) are going to allow Congress that power."

 
FOLLOW THE DEBATE HERE:
 
Do you think people will buy mandated insurance, or choose to pay a fine and wait until they are sick to purchase insurance?
 
Jake Bolinger: Or a third option, I'm just going to quit paying taxes altogether if it passes and I invite you all to join me.
 
 
Ethan Pollack: I'm curious, what taxes will you stop paying? Because if you're a young professional like the rest of us, chances are you won't actually be hit with any new taxes. On the flip side, you gain the economic security of knowing that if you lose your job, you'll still have access to affordable health coverage. And, of course, the fact that this bill cuts the deficit by $130 billion in the first 10 years and $1.2 trillion in the second 10 years is a positive development for us young 'uns as well, as it takes some of the debt burden off of us. All in all, seems like a good deal to me.
 
 
Bolinger: I want to illustrate the absurdity of fining someone for not buying health care. And that defiance is a real option. Thirty-seven states are preparing legislation to sue the federal government for requiring their citizens to buy health care.
 
And I would be taxed, I don't think I stand out in being the only YP with investments (even in this economy).  I think the rate was kicked up to 3.8 percent in negotiations [on Thursday night]? Also, gaming the CBO [Congressional Budget Office] by taxing us for 10 years before the "benefits" (being forced to do anything is never a benefit in my opinion) kick in doesn't impress me much. Even if you avoid being taxed, does that make it right for you to force something upon everyone in the country because it benefits you personally? Even if you feel it is "for their own good"... We don't have to look far through a history book to find what kind of things have been done with that justification.
 
It’s less about me sticking it to the man and more about trying to avoid getting stuck by the man...
 
 
Pollack: That new investment tax is only on investment income for filers making over $200k.
 
And you're right, the benefits don't kick in right away.  But for the second decade the benefits have kicked in in full, and the savings are nearly 10 times greater. The benefit delay doesn't change the fact that this cuts the deficit by over $1.3 trillion over 20 years.
 
As for the mandate, this has been an element of the Republican health care proposals for DECADES.  But like just about any other policy proposal, as soon as Democrats try to incorporate Republican ideas into their legislation, Republicans vote against their own ideas (see PAYGO, budget commission, middle class tax cuts, etc). This was also a key element of Mitt Romney's health care reform. You may disagree with the mandate, but it's certainly within the political mainstream.
 
And there's a reason for that. We can't end insurance abuses, like discriminating based on pre-existing conditions, unless we also mandate coverage. Why? Because it will create an insurance death spiral, whereby insurance companies jack premiums up for the health, which will push them out of the market and cause premiums to go up even more. You just can't do one without the other. And remember, it's not like there's sick people and healthy people. Healthy people BECOME sick people. Just because you're healthy now doesn't mean you'll always be that way, and good nutrition and exercise only goes so far.
 
Now you may of the opinion that it's ok for a person to become financially ruined because they got brain cancer, or ok for insurance companies to charge them through the roof for coverage because they happen to have been born with a heart palpitation... but I don't.
 
And if you really believe health insurance is so damn tyrannical, what about car insurance? We live in a society where it's pretty much impossible to live in most places without operating a car, so it's not like this is a voluntary mandate. People need cars, and people are forced by the government to get insurance.  And yet, America remains free. Imagine that.
 
 
Bolinger: I can see that you assume health care is a right, I don't. If someone wants to get fat as hell I'm not going to force them into government-mandated jumping jacks... That’s how [George Orwell’s] "1984" starts out, right? (Right after the clock chiming 13 part...)
 
Since I don't view health insurance as a right, I don't see it being abused. It’s a business--just a way for you to hedge against the high cost of health care, that’s all. You are looking at the moral aspect of health insurance, but not at the moral aspect of government intervention. The government plainly has no right to get involved in your personal health, and I can't fathom why anyone would want that...
 
 
Pollack: Your objections, while I don't agree with them, are substantive and not misleading, and I really do thank you for that.  If only all conservatives had your intellectual integrity.
 
I completely understand that you ideologically oppose the mandate. Truthfully, the idea doesn't particularly sit that well with me either. The government telling me that I need to purchase a product from a private company? No thank you. One of the reasons I supported creation of a public option, but that's another story...
 
But my uneasiness with a mandate is dwarfed by my concern for the economy writ large. There's a moral case to be made that unavoidable health emergencies shouldn't potentially bankrupt anyone, but I think the economic case is stronger. That is, it is harmful to the economy if everyone is worried about losing their benefits. Providing a strong safety net allows people to take more risks in the economy, such as quitting their job and become a self-employed entrepreneur. Think of a circus acrobat. Take away the net and he'll be a lot more cautious, and the show won't be as good.  Economic growth is a similar story. We WANT people to take risks, to try out their ideas in the marketplace, to innovate on their own, absent the sclerotic shackles of the big business bureaucracy.
 
We also don't want people to descend into poverty, which is another drag on economic growth. And rising health care costs mean that in 75 years, health care will represent HALF of the economy.  Think about that: half of our national income will be spent keeping us healthy, pulling resources away from other productive sectors. That's a recipe for economic stagnation and disaster. This bill bends the curve--some say a little, some say a lot.  But it slows the excess cost growth, and that's a very positive sign for the economy writ large.
 
Finally, there's wage stagnation. In the last ten years, real median wages haven't grown at all, and that is almost exclusively because of health care cost growth. You bend that curve and that means more money in the pockets of middle class families across the country.
 
This isn't about charity or morality.  It's about self-interest.
 
 
Bolinger: Thanks for the integrity compliment, the real issue I have with the debate is that no one even tried to frame it in a moral context, we are looking at "should" not "can"...
 
But driving below that I agree that there are real economic concerns, and I am all for reform. I will even grant that having that type of coverage will allow people a certain degree of greater economic freedom--but that is hard to empirically measure... and are you really saying that you want to impose massive constraints upon 18 percent of the economy to allow people "more freedom" in the other five-sixths? How does that balance out? 
 
 
Pollack: Think about it another way. That five-sixths of the economy, which represents everything non-health related that we do that has any market value whatsoever, will shrink to half of the economy, a 40 percent shrink relative to a steady-ratio baseline. That's the status quo. So the question is: a) do you think that's a problem (I do!), and b) if so, what can be done to avert that problem?  If you think it's a problem, then how else would you stop its growth other than by implementing policies that affect it?  That'd be like saying I really want to stop the cancer that's spreading in my body, but I really don't want to do anything that affects the cancer.
 
Of course, my "affects" is your "imposes massive constraints." But at least now we agree that in order to prevent economic doom, we have to reform the health sector. The question is how.
 
I'm sincerely curious how you would propose to slow health care cost growth. So far I've seen a variety of proposals from the Democrats that they say slow cost growth, and the Congressional Budget Office has agreed with them. But I've seen nothing on the other side, besides a few marginal proposals that the Republicans say will substantially slow the growth and everyone else says probably not, and even if they do, the savings will be tiny. In fact, the only serious proposal I've seen from conservatives is the Wyden-Bennett proposal, which was co-sponsored by seven Republican senators, including the very conservative Trent Lott.  And guess what?  It contained an insurance mandate. And even Trent Lott supported it.
 
 
Bolinger: Well, I think that projecting that far into the future is always a dubious exercise. We are supposed to be all dead from overcrowding by this point, according to old Tommy Malthus. Thankfully we didn't listen to him, or go read the original literature from the first "Earth Day." We are supposed to be screwed by now according to those guys as well. In my industry there is a famous graph projecting unit cost from the Wright flyer through modern jets, which says that on a linear projection one single fighter jet will cost something like three times the entire GDP of the U.S. by 2050... I don't think it is economically possible for health care to increase to that size, there simply isn't enough money in the rest of the economy to support it, especially at the rate the public sector is growing...
 
What would I do to reform health care? Simple tort reform. When doctors and hospitals can be sued for multi-million dollar amounts over relatively minor incidents, then the cost of health care is going to stay ridiculously high. [But tort reform] would bring down cost substantially.
 
However, I think health care is always going to [be] relatively expensive in America because there is such high demand here for elective operations and treatments, and we also carry the vast majority of the R&D expenses of the world... Government regulation will certainly drive down cost on this front because it will decrease the profitability and availability of elective treatments.
 
 
Pollack: On deficit reduction projections:
 
Every single plan to reduce the deficit relies on projections. If you're going to dismiss those projections, and argue that those savings won't eventually materialize, then how do you expect everyone else to take seriously your plan to reduce long-term deficits? And how do you expect to combat any policies that inflate long-term deficits based on long-term projections? Pooh-poohing deficit projections is a dangerous game to play because it cuts both ways and makes the entire political system indifferent to what happens past the 10-year window.
 
On tort reform:
 
Let's not even talk about the implications of being denied the opportunity to seek justice in a court of law. Let's only talk about whether or not tort reform would actually slow health care cost growth.
 
The Congressional Budget Office looked at this issue. They found that it would reduce total health care spending by about 0.5 percent, or $11 billion in 2009. That INCLUDES reductions in defensive medicine, not just reductions in malpractice premiums and damages. Part of the reason this was so low is because one-third of the states have already implemented caps on non-economic damages, and about two-thirds have reformed their rules regarding joint-and-several liability. So there's not a huge amount more that federal regulation can do. Furthermore, while it reduces the level of health care spending, it doesn't really reduce the growth, which is the real problem. Here's a link to the CBO report (pdf).
 
So you said that it would "bring down costs substantially," which I imagine you meant to mean more than the half a percentage point that the CBO found.  Look, I'm not saying you're wrong, but I'm curious, why do you believe this despite CBO's research to the contrary? Do you disagree with their methodology? Do you think they ignored other studies that showed the savings would be higher? And if so, why do you believe those studies over the CBO? I'm not trying to trap you here, I just really can't understand why tort reform is always the first thing mentioned when most evidence points out it will accomplish very little in the way of cost containment.
 
 
Bolinger: The projection I referred to wasn't the deficit projection but rather the rising percent of health care as a total of the economy reaching 40 percent, and that being unattainable for structural reasons. We won’t talk about the questionability of CBO reports... Let’s just say they never low ball anything...
 
The CBO report found that tort reform would reduce total health care spending by .5 percent. Doesn't sound like much, but the report also states that medical malpractice liability accounts for 2 percent of total medical expenditures--so you are reducing medical malpractice costs by 25 percent, $54 billion over 10 years. Substantial to me, anyway... I know, billions are so 2008 now that we have the stimulus package.
 
My problems with their methods: My vision of tort reform would include us switching to the "English system," meaning loser pays... That’s not accounted for in that report. The report only analyzes the impact of tort reform on mandatory spending; they say that discretionary spending would be minor, basically, but I don't see the numbers on it.
 
The English system aspect is huge. The Harvard School of Public Health lists 40 percent of malpractice suits filed in the U.S. as without merit. If the filer had to pay costs upon losing, that number would drop substantially and malpractice insurance might not necessarily be a given anymore.
 
I also think the CBO underestimates the proliferation of "defensive medicine," as a recent study by the Massachusetts Medical Society found that 83 percent of doctors admit to ordering tests as a defense against malpractice, including 22 percent of total x-rays, 28 percent of CT scans, 27 percent of MRIs, and 28 percent of specialty referrals and consultations. Read it here. 
 
 
Alexander Hertel-Fernandez: I've been trying oh-so-hard to refrain from getting into this (I was enjoying the Ethan-Jake exchanges too much) but I feel like I have to interject on the matter of cost savings, especially as it relates to tort reform.
 
First, let's set the record straight when it comes to CBO scoring of health reform proposals. The CBO has consistently underestimated savings from health care reform over the past thirty years, every time. The CBO has a very difficult time estimating the savings from procedures that have only been done on a small scale, or are combined with other overlapping proposals. Jon Gabel (of the nonpartisan Commonwealth Fund) has done a great report on this, available here.
 
There is thus every reason to believe that the "everything AND the kitchen sink approach" to cost control in the current legislation will produce greater savings than the CBO expects. 
 
As for tort reform, it's not just the CBO that thinks that the overall effect of defensive medicine/malpractice is small. The Robert Wood Johnson Foundation compiled a comprehensive literature review on this issue and also concluded that taken as a whole, national malpractice reform is unlikely to produce significant cost savings. We have rich evidence from states that tried to place caps on non-economic damages and it all points to the negligible effects of tort reform on premiums.
 
If anything, we need to strengthen the malpractice protections offered to patients. Most wronged patients don't file suits, and those who do only receive compensation in one out of every six cases and must deal with extraordinarily lengthy case times (five to ten years).
 
 
William Schirano: I think that one thing I'd like to see is an analysis of what will happen should the Supreme Court reject the insurance mandate. At this point, I see that as a strong possibility given that the legal arguments for it are little more than, 'well, your state mandates auto insurance.'
 
To mandate health insurance would be an unprecedented power given to Congress...and I don't think that the Supremes (perhaps minus Sotomayor) are going to allow Congress that power.
 
 
Pollack: On Constitutionality:
 
Imagine that instead of calling it a mandate, Congress passed a head tax on everyone, but made an exception for people that hold health insurance. Substantively, that's the EXACT same thing as this health mandate, which doesn't actually mandate coverage, but rather taxes people that don't have it (it's called a fee, but same thing). So if that hypothetical tax-with-exemptions is still unconstitutional, aren't any taxes that have special exemptions unconstitutional? That's like every single tax known to man. If the Supreme Court ruled that this was unconstitutional, it would potentially shatter our entire system of government.
 
And given that the minimum wage, Americans With Disabilities Act, auto insurance mandates, and taxes of all kinds are all considered constitutional, it would be pretty shocking if the Supreme Court declared the insurance mandate unconstitutional.
 
But that said, I would imagine that they'd just re-write the mandate to pass constitutional muster. A lot of times you just need to change the wording.
 
 
Schirano: But I think that people would like to know whether the rejection of the insurance mandate puts a wrench in the works.
 
 
Hertel-Fernandez: As a health policy wonk for EPI I can take a stab at this. A mandate is absolutely necessary for the sort of market reforms the legislation proposes. It is basic health economics.
 
One of many reasons why the current individual insurance market is so unstable is that it suffers from adverse selection--that is, it is mostly the people who need (or anticipate needing) care who purchase coverage. This raises the cost of insurance. On the current individual market, insurers can raise the rates of people who become sick or just simply drop their coverage.
 
However, in the context of the new insurance market reforms--eg modified community rating, guarantee issue, and nondiscrimination--insurers have to raise rates on all (or large tranches) of enrollees since everyone is in the same risk pool (or at least in big risk pools--states or regions). Under the new marketplace, if adverse selection occurs, the cost of insurance for everyone in the exchange goes up and more people will leave, prompting the process to repeat itself. Moreover the cost to the government of the new insurance credits will also increase as it is left on the hook for ever-growing premiums.
 
This is called a death spiral and we've seen it before when state governments have tried to implement insurance market reforms without a mandate.
 
So technically speaking, you need a strong mandate to get a sufficiently large enough pool for these reforms to work. Otherwise they'll result in premium increases. Health policy experts of all ideological leanings agree on this.
 
I might add that there are other ways of getting a sufficiently large group of people to enroll in insurance pools without a mandate penalty, but the current reform effort has largely shied away from them.
 
For example, if you had a stronger employer requirement to offer coverage (something like the original House bill's pay-or-play mandate) coupled with auto-enrollment of individuals into their employers plans or a default plan in the new insurance exchanges, you could conceivably get significantly more people into the risk pools. But given that the Senate was so reluctant to have a strong employer mandate, you're pretty much left with having to impose an individual mandate with financial penalties.
 
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