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What exactly is wrong with Obamacare?

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Okay folks, it seems like this keeps coming up in other threads, so I thought the subject might be worthy of its own thread.

 

The title of my post, using formatting available to me in the post body is, "What exactly is wrong with Obamacare".

 

I don't want answers like, "it's socialized medicine!" since we had that already long before the new law was passed. I don't even want answers like, "it's even more socialized socialized medicine" unless you can tell me exactly what you mean. I'm looking for facts here, and I'm looking for the "big difference" between what we have now and what we had before.

 

From the high-level standpoint, Obamacare seems to me an "optimization" of the former system. If you start with the premise that all US residents will be taken care of no matter what--a premise solidified in the 1960s in the USA--then Obamacare is simply a more efficient way to execute on that premise. Or so goes my theory. Prove me wrong.

 

My assumptions thus far are as follows:

 

1. Since the 1960s we've had "socialized medicine" in the sense that we've guaranteed the medical help to anybody who needed it.

 

2. The above allowed lots of people to freeload off the system. Many people didn't buy insurance because they didn't want to (or couldn't, but OC doesn't change anything for them since poor people get free OC). Many employers too essentially freeloaded off of taxpayers by not providing health insurance to their employees, knowing that the public system would take care of them.

 

3. The individual mandate is necessary to fix the problem above, and also fix a core problem of insurance, which is that you need healthy people to pay into it in order to make the system work. In a very direct way we've already had an individual mandate in that I am mandated to pay my income taxes which pay for other people's health care, and I have been for decades.

 

4. That operating under the premise in #1, there is generally no better way to solve the practical problem presented by this premise.

 

Would love to hear what people have to say on this...

 

 

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Caveat; I haven't done a lot of thinking on this topic.

 

If the reports are correct I think its the effect the parasitic law is having on its hosts work schedules, costs of premiums, change in networks etc. I personally find the IRS involvement to be the worst aspect of it.  In a more general vein though, I think that its simply that Americans are finally getting tired of paying for others needs. If this is true, then its would explain the general resistance to more "duty" based parasitism. The sudden/dramatic increase in the drain/load on the host has caused it to realize the parasite has been on its back the whole time? Have there been any other programs that have so rapidly increased the cost of others needs on the productive in any recent times? 

 

Could it be that the selfish desire to keep the fruit of ones own labor is actually becoming  part of the sense of life in a greater part of the general American mind? Its not going to be an over night, complete integration in any one individual. Has this administration pushed so hard and fast that the frog has leaped from the pot of rising temperature? I have long noted how crisis (rapid change in the value achievement scheme) is usually the main catalyst to the unprincipled mind to finally seek causal explanations in the form of principles.

 

Will the right realize that the president quoted their bible, and not Marx, to persuade the looters that he was his brothers keeper?

Edited by Plasmatic

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What you said is essentially what Obamacare is and why it is wrong.

 

Technically though, when someone didn't have health insurance, the hospital had to in cases of emergencies "stabilize" you, but anything further would be based on your finances, i.e. you would get billed even for the stabilizing as well as any further work done. The problem came when you could apply for mercy from the state government or federal government for relief from those bills, which in some ways is unknowable how exactly that is determined. It could work in some circumstances but not in others. This is all from personal experience with my mom's lack of health insurance, and subsequent bills, which she did pay for, and does today. As well as my sister's, but she got some of that mercy.

 

This is my take on the history of health care in America. It used to be that health insurance was for catastrophic occurrences, i.e. heart attack, cancer, etc. And everything else was paid out of pocket when needed. If you broke your arm, you would go to the hospital and they would fix it for some fee, not that expensive, and not through insurance. Then in the government's infinite wisdom, they started to subsidize health insurance by encouraging it be tied to your employer, and making it so that certain costs are covered culminating in pretty much anything being covered from doctor's visits to prescription drugs today. Obamacare wants to finalize this transformation by making it a requirement to have insurance, or as the supreme court puts it only penalizing for not having it. In essence it is the capstone of the movement of transforming healthcare from a pay as need be individually, to a pay for anybody's healthcare needs collectively through health insurance pools. It is analogous to collectivizing farms in the Soviet Union, the stronger (healthier), are going to be forcibly strung out for the weaker (unhealthier). We are all truly in this together now, if you pay for health insurance.

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1. Since the 1960s we've had "socialized medicine" in the sense that we've guaranteed the medical help to anybody who needed it.

This is a small point of contention, but the system is more accurately described as fascist medicine. The only real distinction I see between what we have now in healthcare and mixed-economy fascist healthcare are notions of egalitarianism. I'd argue that we didn't really reach the point of fascism until Obamacare, but like I said, this is a small point of contention. I have a larger point of contention that speaks directly to your point number 1.

The guarantee of which you speak was secured with medicare/medicaid. That is to say, ERs were only required to see patients if they accepted medicare/medicaid payments. If the free-rider problem became too much for a hospital, they could stop taking medicare and free themselves of the requirement to treat any and all comers to the ER. Individuals also had a way to avoid paying extra for the free riders. It is said that the hospitals who chose to accept medicare often raised rates on private insurance to make up for the shortfall in medicare payments. Well, an individual never had to go to such a hospital. Granted, the options were few, but concierge medicine coupled with insurance for catastrophic events was one such avenue of escape. Under Obamacare, "catastrophic insurance," doesn't satisfy minimum required coverage standards and provokes a tax penalty. After passage of the ACA, there is no longer any way to avoid the free-rider problem. Obamacare has insured this is a problem for everyone, not just for people who elected to deal with it. That's bad.

 

 

 

2. The above allowed lots of people to freeload off the system. Many people didn't buy insurance because they didn't want to (or couldn't, but OC doesn't change anything for them since poor people get free OC). Many employers too essentially freeloaded off of taxpayers by not providing health insurance to their employees, knowing that the public system would take care of them.

Employers choosing not to offer healthcare is not an example of the free rider problem. People are largely responsible for their choice of employers. Under Obamacare, the "employer mandate" has been delayed for a year. But employers have already begun cutting hours of employees in an effort to have those employees become part time workers, because employing uninsured part time workers does not provoke a penalty. This is not conjecture; this is a real-life effect of Obamacare that would not have otherwise happened. Once again, Obamacare interferes with individual choice (read individual rights) in new and unique ways. This too is bad.
 

 

3. The individual mandate is necessary to fix the problem above, and also fix a core problem of insurance, which is that you need healthy people to pay into it in order to make the system work. In a very direct way we've already had an individual mandate in that I am mandated to pay my income taxes which pay for other people's health care, and I have been for decades.

 
As I've shown earlier, the Obamacare problem does not fix the free rider problem. But your point seems to be that Obamacare is going to lower costs by increasing the risk pool, is that right? If so, please source your data that shows these new, lower costs. I will have to see them to believe in them. The data I am aware of points to higher costs. In fairness to your point, these higher costs may not be an effect of the increased risk pool, but rather an effect of minimum required coverage standards that mandate payments for things like addiction counseling, prenatal care, coverage for pre-existing conditions and other highly personal risk factors. Either way, Obamacare is the law that gave us these increased costs, which are bad.
 

 

4. That operating under the premise in #1, there is generally no better way to solve the practical problem presented by this premise.

 

 

Again, you don't solve a problem by victimizing more people with it. For practical solutions, see the options I outlined above that are now no longer practical ways of avoiding the problem due to the individual mandate.

I have a lot more to say about why this bill is a complete train wreck, but I thought I'd limit myself to responses to your questions.

Edited by FeatherFall

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What you said is essentially what Obamacare is and why it is wrong.

 

Technically though, when someone didn't have health insurance, the hospital had to in cases of emergencies "stabilize" you, but anything further would be based on your finances, i.e. you would get billed even for the stabilizing as well as any further work done. The problem came when you could apply for mercy from the state government or federal government for relief from those bills, which in some ways is unknowable how exactly that is determined. It could work in some circumstances but not in others. This is all from personal experience with my mom's lack of health insurance, and subsequent bills, which she did pay for, and does today. As well as my sister's, but she got some of that mercy.

 

Interesting. I know there were a lot of details, and clearly the government made sure having health insurance was much more pleasant than not having it, but at the end of the day millions of people--a sizable percentage of the population--was uninsured. The taxpayers had to pay for them whether we wanted to or not.

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What you said is essentially what Obamacare is and why it is wrong.

 

You basically said "it's even more socialized!" but how is that so? Is it just because you "have to" buy insurance? That's really not construed exactly right because well, it's not any grand new expense, it's just that it's not funded by taxes. It's more like you're buying insurance, instead of paying it as a tax. So, that's not a new step to socialism. It's just  a new program that runs with the same methods and premises.

In any case, Obamacare is *not* analogous to the collectivizing of farms by the Soviet Union. Government in that case essentially ran the farms with no private ownership at all. Farms were literally collectivizing because they were decollectivized for ownership by the people. Obamacare doesn't alter private ownership, it still exists, except with sets of regulations that aren't fundamentally new. In fact, it's easier for insurance to sell in more states, so it's not pure socialism. This is basic pragmatic welfare statism really, where there's a safety net funded by taxes paid by citizens. Really, I can't say that Obamacare is a new evil. I don't support it, but I'm worried about things that are more socialized than health insurance.

One consideration I've been thinking: is perhaps Obamacare a good system in order to transition into a free-er system? I agree as much as anyone here what I want eventually. However, it's impossible to leap all the way there without major catastrophe. To me, a transition would still have to be socialized to *some* extent to prevent chaos, while regulations are altered to allow for a greater variety of choice, more companies to be chosen from in this case (albeit with government funding to some people). My point is that it's possible to "hijack" a system intended to bring about a welfare system and transform it into a transitional system.

"to a pay for anybody's healthcare needs collectively through health insurance pools."

You just described how all insurance works.

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Individuals also had a way to avoid paying extra for the free riders. [...]

 

How? You mean, by not incurring any income, buying any goods, or owning any property? I.e. by trying to not pay any taxes? If a thing is paid for, and it's not paid for by the person consuming the thing, then in this context that means that we pay for it whether we want to or not. That's the "individual mandate" that's been on the books for decades.

 

As far as the optimization goes, ER care is a ton more expensive that normal care, and preventative care. I'm sure there's a financial case to be made as to whether waiting around for sick people to end up in the ER vs. treating them early may be cheaper. Is it? If it reduces my taxes by making more people pay for their own care, then it's a good thing.

 

 

Employers choosing not to offer healthcare is not an example of the free rider problem. People are largely responsible for their choice of employers. Under Obamacare, the "employer mandate" has been delayed for a year. But employers have already begun cutting hours of employees in an effort to have those employees become part time workers, because employing uninsured part time workers does not provoke a penalty. This is not conjecture; this is a real-life effect of Obamacare that would not have otherwise happened. Once again, Obamacare interferes with individual choice (read individual rights) in new and unique ways. This too is bad.

 

Good point--the employer thing is not really relevant to this discussion outside of having unintended consequences (viz. the 30 hour thing). This was poor legislation: it's never a good idea to have a pay/not pay threshold like that. Certainly we're going to have a lot of people who only work 29 hours per week now.

 

As I've shown earlier, the Obamacare problem does not fix the free rider problem. But your point seems to be that Obamacare is going to lower costs by increasing the risk pool, is that right? If so, please source your data that shows these new, lower costs. I will have to see them to believe in them. The data I am aware of points to higher costs. In fairness to your point, these higher costs may not be an effect of the increased risk pool, but rather an effect of minimum required coverage standards that mandate payments for things like addiction counseling, prenatal care, coverage for pre-existing conditions and other highly personal risk factors. Either way, Obamacare is the law that gave us these increased costs, which are bad.

 

Actually I missed where OC doesn't fix the free rider problem. I don't think either system "solves" the problem in the sense that we still pay for deadbeats either way.

 

In principle, OC attempts to get people who did not formerly pay for health insurance to pay for health insurance. That sounds like it will save me money (as a high-paying taxpayer). However it's certainly possible that the increased stuff you speak of will cost me even more. Does anybody have any breakdown of this?

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Much of the coverage of the ACA's negative effects has been focused on side issues, such as the incentives that it creates for employers to favor part-time workers (under 30 hours a week) over full-time workers, or the regulatory costs that it imposes on businesses.  While these are certainly issues, the core question is what will happen to insurance premiums over time under the system set up by the Affordable Care Act.

 

The core problem rises from the combination of the 'community rating' regulations with the 'guaranteed issue' requirement.  Under the ACA, insurance providers are forbidden from denying insurance coverage to individuals regardless of their health status.  Additionally, they are severely restricted in their ability to charge different prices to individuals based on differing health risk.  In particular, there are three considerations that allow insurance providers to charge different prices in every state: they can charge differently based on age (but can charge the elderly no more than three times the amount that younger people are paying), they can charge higher premiums in higher health cost areas (like cities), and they can charge higher premiums for family insurance plans that cover more people.  Some states will also allow smokers to be charged a higher rate (up to 50% higher).

 

And that's it.  Insurance companies are not allowed to offer lower prices to healthier, lower-risk individuals for any reason not listed above, and they are required to offer coverage to everyone, no matter how sick.  The result is that premiums will be significantly lower for high-risk individuals and significantly higher for low-risk individuals.  Additionally, if I found out next month that I have cancer, it will be just as cheap for me to get insurance then as it is for me now.  The obvious result is that many young, healthy individuals without health insurance will choose not to purchase it.  As these low-cost people drop out of the insurance pool, insurance premiums will have to rise to reflect the higher average cost to the insurance companies of paying out on their policies.

 

One other factor that exacerbates this problem is the fact that, under the ACA, all insurance policies are required to offer coverage for an incredibly wide array of health care services.  Under the ACA, insurance companies will no longer be able to offer so-called 'catastrophic' coverage to young people: coverage that only extends to extreme health care needs, such as a severe car accident or cancer treatment.  Instead, every single policy must offer to cover numerous routine services that young people rarely need.  In essence, the ACA limits the menu of policy choices to include only the most expensive options.

 

The result of all of this is that insurance premiums will be significantly higher than they are now for young, healthy people, and many of these people will decide to drop out of the insurance pool altogether, at least for a few years.  Now, this is quite an obvious problem for the law to have, and there are several measures in the Act that attempt to solve it.  The first is the infamous 'individual mandate;' simply require everyone to buy health insurance or pay a penalty, in order to keep young, healthy people in the pool.  Theoretically, this would work, but politically it was by far the hardest sell in the bill.  As a result, by the time the bill made it into law, the penalty had been lowered to a fraction of what was originally intended.  As it stands, the penalty associated with the individual mandate is a fraction of the average cost of health insurance itself.  Additionally, the penalty is essentially unenforceable; it will appear as an income tax liability, but those that do not pay it will not be subject to criminal penalties, liens, or levies.  Also, there are numerous ways to become exempt from paying the penalty altogether.  In short, in its current form, I would be surprised if the individual mandate was even remotely effective in fulfilling its purpose.

 

Another way that the bill tries to prevent individuals from waiting until they fall ill to purchase insurance is the 'open enrollment' policy.  Under this policy, the only time that you can purchase insurance on the exchanges is from October 1st to December 7th (except for this first year, when the period spans from Oct 1st to March 31st).  Aside from the obvious problem that most people thinking about buying insurance don't know that this policy exists, 'open enrollment' only influences people who are consciously trying to game the system.  For young healthy people who look at the high premiums and simply decide to take their chances (which was the major concern in the first place), open enrollment does not give them an additional reason to purchase insurance.

 

One way for me to ground this discussion is to think about what I, personally, would do if I did not already get health insurance through my university.  Based on a precursory look, it seems like buying health insurance for myself in the exchanges would cost about as much as my rent does (certainly much more than the mandate would cost me, if I even had to pay it).  Meanwhile, I haven't been admitted to a hospital since the third grade, when I split my eyebrow open playing catch and needed eight stitches.  I am precisely the kind of person that the Affordable Care Act is relying on purchasing insurance, but I think I'd go without, at least for a few years.

 

Finally, it's worth mentioning that we're not talking about capriciousness here.  This isn't about people consciously trying to not make the system work.  Although there are a few Republican hacks that are trying to make that happen, the simple fact is that the structure of the ACA disincentivizes young, healthy people from buying insurance.  Even if most people want the system to work, on a personal level it won't make sense for many of them to purchase insurance.  The more young people opt out, the higher premiums go, and the more expensive it becomes for those still purchasing insurance.

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1. Since the 1960s we've had "socialized medicine" in the sense that we've guaranteed the medical help to anybody who needed it.

 

2. The above allowed lots of people to freeload off the system. Many people didn't buy insurance because they didn't want to (or couldn't, but OC doesn't change anything for them since poor people get free OC). Many employers too essentially freeloaded off of taxpayers by not providing health insurance to their employees, knowing that the public system would take care of them.

 

3. The individual mandate is necessary to fix the problem above, and also fix a core problem of insurance, which is that you need healthy people to pay into it in order to make the system work. In a very direct way we've already had an individual mandate in that I am mandated to pay my income taxes which pay for other people's health care, and I have been for decades.

 

4. That operating under the premise in #1, there is generally no better way to solve the practical problem presented by this premise.

 

What you're missing here is the simple solution to getting healthy people into the system, which is allowing insurance companies to charge lower-risk people lower premiums.  The community rating aspect of the Affordable Care Act eliminates this, as I have described above.  In its place, it establishes a watered-down 'individual mandate' which I think will be highly insufficient in getting healthy people into the system.

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You basically said "it's even more socialized!" but how is that so? Is it just because you "have to" buy insurance? That's really not construed exactly right because well, it's not any grand new expense, it's just that it's not funded by taxes. It's more like you're buying insurance, instead of paying it as a tax. So, that's not a new step to socialism. It's just  a new program that runs with the same methods and premises.

In any case, Obamacare is *not* analogous to the collectivizing of farms by the Soviet Union. Government in that case essentially ran the farms with no private ownership at all. Farms were literally collectivizing because they were decollectivized for ownership by the people. Obamacare doesn't alter private ownership, it still exists, except with sets of regulations that aren't fundamentally new. In fact, it's easier for insurance to sell in more states, so it's not pure socialism. This is basic pragmatic welfare statism really, where there's a safety net funded by taxes paid by citizens. Really, I can't say that Obamacare is a new evil. I don't support it, but I'm worried about things that are more socialized than health insurance.

One consideration I've been thinking: is perhaps Obamacare a good system in order to transition into a free-er system? I agree as much as anyone here what I want eventually. However, it's impossible to leap all the way there without major catastrophe. To me, a transition would still have to be socialized to *some* extent to prevent chaos, while regulations are altered to allow for a greater variety of choice, more companies to be chosen from in this case (albeit with government funding to some people). My point is that it's possible to "hijack" a system intended to bring about a welfare system and transform it into a transitional system.

"to a pay for anybody's healthcare needs collectively through health insurance pools."

You just described how all insurance works.

 With the collectivized farms comment I was talking about the process, not really its legal meaning (nominal private ownership or fascism vs. government owned and controlled or socialism), the process being the sharing of the costs of running a farm. In the case of our skewed health insurance, we are forced to pay each others health care expenses (doctor's visits, medicine, etc.) that used to be just out of pocket. I admit it is not the most clear analogy.

 

I should have been more clear with "to a pay for anybody's healthcare needs collectively through health insurance pools.", I was meaning the non-catastrophic care. Which I think is skewing the health insurance market. Health insurance pools are good for catastrophic care, where the products and services are used less readily, than day-to-day care.

 

Basically, what needs to be done to fix the problems we are facing:

 

1) Get rid of trade barriers between states for buying health insurance

2) Get rid of every single mandate in what has to be covered through health insurance (This would allow for people to potentially buy health insurance say for just cancer)

3) Get rid of any subsidy by the government, i.e. pushing employers to offer plans

4) Phase out medicare and medicaid overtime

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Okay, slightly tangential, but I find this "free rider problem" patently absurd.

 

If someone else enjoys the view of my house, the smell of my lawn or even my secondhand smoke, how does their benefit harm me?  The fact that someone else is happier automatically makes me unhappier, in the process?

If you can't collect payment for using a road you've built then that's too bad; don't build another road.  If your lighthouse can't charge people for the benefit of light then shut it off.

 

Anyway.  It was blatant collectivist drivel when I first read about it and it hasn't improved by being tossed around on an Objectivist forum.

There is no problem with free riders.  There's a problem with the welfare state, but moochers are another matter entirely.

Edited by Harrison Danneskjold

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Okay, slightly tangential, but I find this "free rider problem" patently absurd.

Though the same term is being used, the "free rider" of economics textbooks are very different from the "free rider" in the context of pre-ACA healthcare law. Under the law, hospitals that took medicare/medicaid (almost all, since this is a majority of hospital revenues) had to offer "emergency" care to people who showed up, regardless of ability to pay. This is radically different from the text-book, anti-freemarket examples.

 

If you can't collect payment for using a road you've built then that's too bad; don't build another road.

The pre-ACA "solution" has been to make those who do pay, pay more: enough to cover the cost of caring for those who cannot pay, but who have to be treated under existing law. Edited by softwareNerd

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What you're missing here is the simple solution to getting healthy people into the system, which is allowing insurance companies to charge lower-risk people lower premiums.  The community rating aspect of the Affordable Care Act eliminates this, as I have described above.  In its place, it establishes a watered-down 'individual mandate' which I think will be highly insufficient in getting healthy people into the system.

 

How would that solve the problem? First, you still can't beat "free" no matter how low-cost you go. Second, you can't squeeze blood from a turnip: the system needs more money somehow (again, given that nobody in DC is going to challenge the "prime directive" outlined in the first post). If you (allow?) insurance companies to charge young people less, then older people will pay more. There's no way around this. It's simple math. If you charge older people more, then you'll have a bigger chance of them not being in the system, and again paying nothing at all.

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Basically, what needs to be done to fix the problems we are facing:

 

1) Get rid of trade barriers between states for buying health insurance

2) Get rid of every single mandate in what has to be covered through health insurance (This would allow for people to potentially buy health insurance say for just cancer)

3) Get rid of any subsidy by the government, i.e. pushing employers to offer plans

4) Phase out medicare and medicaid overtime

 

1. Fine. I'm not sure how that could drastically change things, but fine.

 

2. As long as you first get rid of the 50-year-old law that basically says that the government will take care of you no matter what. Without getting rid of that, we're right back to where we started, which is to say people sticking me with their medical bills because they didn't feel like buying the right insurance and then, "oops".

 

3. I don't quite understand this one.

 

4. See #2. Until we do that, our slavery should be more optimized, no?

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Basically, what needs to be done to fix the problems we are facing:

 

1) Get rid of trade barriers between states for buying health insurance

2) Get rid of every single mandate in what has to be covered through health insurance (This would allow for people to potentially buy health insurance say for just cancer)

3) Get rid of any subsidy by the government, i.e. pushing employers to offer plans

4) Phase out medicare and medicaid overtime

 

1. Fine. I'm not sure how that could drastically change things, but fine.

 

2. As long as you first get rid of the 50-year-old law that basically says that the government will take care of you no matter what. Without getting rid of that, we're right back to where we started, which is to say people sticking me with their medical bills because they didn't feel like buying the right insurance and then, "oops".

 

3. I don't quite understand this one.

 

4. See #2. Until we do that, our slavery should be more optimized, no?

 

 

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The real solution is to move to a structure that is place in countries like India and many other third-world countries. Though the health-care is not great in those places, the structure of the system is great and would deliver great healthcare in a rich country. Of course, the first step has to be a willingness among voters to accept that there is not just a "two-tier" system (as in Britain), or a "three-tier system" (as in U.S. K-12), but an N-tier system where everyone gets the healthcare he can afford.

The only addition to the structure in India would come naturally if implemented in a country like the U.S.: more robust legal enforcement of true insurance contracts, though even these are doing pretty well in India in the last decade.

Edited by softwareNerd

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How? You mean, by not incurring any income, buying any goods, or owning any property? I.e. by trying to not pay any taxes?

 

Dude, it's in the ellipse you cut out of my quote. I'll take the opportunity to fill you in with more detail, but first I want to say that I think you are conflating free riders with medicare/medicaid users. Most Medicare users pay into the system at some point. I suppose those that don't pay in can be fairly conflated with free riders. But the free rider is generally defined as someone who gets ER care and either refuses or is unable to pay for it. I suppose we could distinguish between the two by calling the ER free rider the "general free rider" and the medicare patient who doesn't pay in the "special free rider."

Anyway, back to how. When I use a physician that doesn't accept medicaid/medicare, I use a physician that is not a "participating hospital" bound by the rules set forth in the Emergency Medical Treatment and Active Labor Act. This lets me escape the costs of general free riders. Only if I must use an ER that's part of a "participating hospital" will I be subject to the higher costs of general free ridership. And then, only for a limited time, during that one emergency. Part of that ellipse included an example of how to avoid the general free rider:

 

Concierge medicine coupled with insurance for catastrophic events was one such avenue of escape.

 

Obamacare "solves" this problem by attempting to turn every general free rider into a special free rider. We have yet to see evidence showing the net cost of such a change in this thread. But one thing is certain; the costs of these free riders are now born by different people. In the last system, I could avoid these costs by avoiding "participating hospitals." Only hospitals that chose to accept medicare and people who chose to go hospitals that accepted medicare and insurance companies that chose to partner with hospitals that accepted medicare were effected. Now nobody has a choice. Every free rider is a special free rider. The costs are being shifted away from the fools who willfully opted in toward those who opted out. Special free riders are a bigger problem ethically speaking, and now there are more of them.

 

 

 

Actually I missed where OC doesn't fix the free rider problem. I don't think either system "solves" the problem in the sense that we still pay for deadbeats either way.

 

 

I hope I've cleared up how Obamacare spreads the free rider costs to people who bear less responsibility for those costs, rather than solving the free rider problem. The problem will only be solved when people aren't forced to pay for free riders. So no, the old system didn't really solve it, as there were still special free riders. But special free riders are worse, and now everyone up to 400% of the poverty level becomes a special free rider.

Edited by FeatherFall

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The result of all of this is that insurance premiums will be significantly higher than they are now for young, healthy people, and many of these people will decide to drop out of the insurance pool altogether, at least for a few years.  Now, this is quite an obvious problem for the law to have, and there are several measures in the Act that attempt to solve it.  The first is the infamous 'individual mandate;' simply require everyone to buy health insurance or pay a penalty, in order to keep young, healthy people in the pool.  Theoretically, this would work, but politically it was by far the hardest sell in the bill.  As a result, by the time the bill made it into law, the penalty had been lowered to a fraction of what was originally intended.  As it stands, the penalty associated with the individual mandate is a fraction of the average cost of health insurance itself.  Additionally, the penalty is essentially unenforceable; it will appear as an income tax liability, but those that do not pay it will not be subject to criminal penalties, liens, or levies.  Also, there are numerous ways to become exempt from paying the penalty altogether.  In short, in its current form, I would be surprised if the individual mandate was even remotely effective in fulfilling its purpose.

This is a really interesting point to me, one I've been mulling over for some time. The penalties aren't enough to force young people into the system. In fact, I remember reading or hearing a constitutional law expert critique the ACA ruling. That expert read the Chief Justice's ruling to say that if it actually changed behavior, it wouldn't be constitutional. So what we have is a tax intended to drive people into the system, that can't constitutionally function that way. What it will do is take money out of the system, sending it to Washington to keep things like medicare solvent, but away from the insurance companies that need that money for their risk pools.

Edited by FeatherFall

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How would that solve the problem? First, you still can't beat "free" no matter how low-cost you go. Second, you can't squeeze blood from a turnip: the system needs more money somehow (again, given that nobody in DC is going to challenge the "prime directive" outlined in the first post). If you (allow?) insurance companies to charge young people less, then older people will pay more. There's no way around this. It's simple math. If you charge older people more, then you'll have a bigger chance of them not being in the system, and again paying nothing at all.

 

In the most basic model of functioning insurance, a person's premium is set by his or her expected medical costs.  If I have a 20% chance of needing a $10,000 treatment in the next year (and that's the only medical care I might need), then my premium for the year should be $2000 (or at least close to it; the simplest models don't factor in profit and such).  The point of insurance is not for me to get a 'good deal' by riding off of someone else; the point is just to eliminate my risk.  If everyone like me pays their $2000 premium, and 20% of us need this procedure, then the insurance company is able to cover every procedure that is required.  If someone has a higher chance of needing the procedure, or they might need a more expensive procedure, they would pay more.  Notice that nobody here is 'free riding' off of anyone else; people pay according to their risk.

 

Two points are important here: first, under this system there is no concern of older people dropping out, as you mention above, because they're not getting a 'raw deal' by paying more.  They actually are higher risk, and they have to face that risk alone if they don't buy insurance.  Buying insurance under this system makes just as much sense for them as it does for younger people with lower risk and lower premiums.  Second, even if some people do drop out of the insurance pool, it doesn't matter.  That's because you're not using some people to subsidize other people.  You're basically breaking even on everyone (with a little room for profit, depending on the competitiveness of the industry), so if all the old people (or all the young people) dropped out, that doesn't affect the premiums you charge for the people still in the pool.

 

Now, of course, there is no way for insurance companies to be able to predict with certainty the medical risks of different individuals.  However, when they are able to charge people differently based on any risk factor they want, they can usually get pretty darn close to the system that I've described above.  This is how insurance is supposed to work.

 

However, the Affordable Care Act is an attempt to subvert the insurance system towards an entirely different purpose: it attempts to use insurance to subsidize high-cost individuals with low-cost individuals.  If you place severe restrictions on the ability of insurance companies to do what I've just described (charge people differentially based on their risk factors), then in order to stay in business (and stay competitive) insurance companies have to charge premiums that are higher than the expected cost for low-cost people, and lower than the expected cost for high-cost people.  Of course, in this system, low-cost people are getting a bad deal, hence the concern that some will drop out.

 

If we indeed see young people drop out, and the average person left in the pool costs more, then premiums will have to rise to reflect this, which could cause more young people to drop out, and ultimately the market unravels.  In this scenario, we end up with a system where older, sicker people are still basically charged according to their expected cost (exactly as I described in the first paragraph), because there's no one left to subsidize them with.  Meanwhile, young people face these same (extremely high) premiums, and decide to forego insurance altogether.  Thus, we've ended up at a point where high-cost people are no better off than they were before, and low-cost people can't get insurance at all.

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The problem with obamacare seems essentially the same as the problem with Medicare in general (which seems to be crows underlying point): it's robbery. The difference is one of degree but not type.

There's nothing wrong with free money, as such; the problem is that there's no such thing. The money has to come from somewhere and this whole scheme is designed to evade just that.

I still object to calling welfare recipients "free riders" because they aren't. If they were then it wouldn't be a problem.

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[...]

Now, of course, there is no way for insurance companies to be able to predict with certainty the medical risks of different individuals.  However, when they are able to charge people differently based on any risk factor they want, they can usually get pretty darn close to the system that I've described above.  This is how insurance is supposed to work.

 

 

Good summary, and this underscores a bunch of problems with our current system all at once.

 

In particular, since the 1930s, the overall financial theme in the USA was for the young to subsidize the old. Today, the old have two problems one getting slightly better, and one getting massively "worse". The "good" news is that people are living longer, and old people can generally work longer as we move to a knowledge economy. The "bad" news is that medical costs are drastically rising for many good reasons (and some bad too). Medical technology is driving both of these things at once, but I daresay that costs are rising way, way faster than any gain we're seeing in aggregate from older people staying in the workforce longer (a problem which itself backs into an interesting discussion of the deflationary effect of technology).

 

So the net effect is that old people are staying alive longer, it's costing a lot more to keep them that way, and they aren't making any more money to make up for it.

 

Anyhow, with that aside, I'm still not seeing a big difference in the high-level "net-net" here. Somebody needs to pay for this mess, and according to the Prime Directive, that somebody is young, healthy, rich(er) people. That is essentially what is happening now with medicare, and what continues to happen with OC, right?

 

I guess the simplest way to ask this question is, is OC going to raise my taxes or not? (Assuming here I'm part of the so-called "rich" bla bla bla). I understand about hospitals who don't participate in Medicare, but that doesn't sound right to me: it sounds too easy. It sounds like the government wouldn't let some people skip out of taxes that easy.

 

What am I missing?

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OC truly takes "from each according to their ability" and gives "to each according to their needs".

Heres what I don't get. The prez himself has admitted that OC is going to benefit only 15% of the population (if all of the uninsured signed up), is, are the other 85% the dems are depending on, going to continue to truly embrace being their brothers keeper with the cost of such a principle being so blatantly obvious to those who are being saddled with said burden?

If the percentages are correct, how in the world could this work out for the Dems in the next elections? I dont see how such a burden would continue to be embraced.

Its hard to compartmentalize such a concrete effect.

Edited by Plasmatic

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OC truly takes "from each according to their ability" and gives "to each according to their needs".

 

 

So did the system we had before it. We're trying to figure out how OC is different than what we had before. 

 

From what I can tell, the difference is:

 

1. Many people who used to pay nothing for health care will pay for health care now, but we're not sure how many, or how much. There will arguably be more however.

 

2. Benefits will be expanded for the formerly uninsured, and this might not make up for #1, but we're not really sure.

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