02 April 2010

This is a mandate

That crap the federal government calls a mandate is weak sauce.

"Pre-existing condition exclusion periods can last up to 6 months."

I had to bring this up as well when people were arguing that a "small financial penalty" was enough to get people to buy insurance.

1) Meanwhile this "small financial penalty" is higher, much higher, in Massachusetts than the one the federal government uses anyway (unless you're dirt poor and somehow can still afford to live in Massachusetts).
2) That's a potentially ginormous obstacle. If you're sick, in many cases six months is less than the length of treatment for a major condition. You could be going without insurance on it (the entire reason you needed or got insurance in the first place) the entire time, or conversely, going without treatment. Of any reasons I could come up with why people would get insurance, that would be reason #1: that you couldn't use it unless you bought it ahead of time. That, along with the relative education level, employment levels, and hence previously high insurance purchase rates are probably better explanations for why Massachusetts has something like 97% compliance rates for its health insurance mandate. Not that they send out a bill if you don't have it.

Consider when states require people to buy car insurance, what do they do when you fail to comply with this request? They often take away your car and driving privileges until you do it AND then there's this financial penalty in the form of a bond or additional insurance that must be purchased or whatever. The simple fine method or the "small financial penalty" doesn't do squat. The fine is there to cover the administration of some sort of actual penalty upon people who don't follow these laws, it's not the penalty itself. As it is, the fine would be cheaper than buying health insurance for myself. Much (and this assumes that the government goes around delegating resources and effort to collect those fines, something the bill is highly vague about, indicating this mandate may be toothless anyway). It's even likely that small business employees that already get health insurance from their employers will find those plans will lapse on December 31, 2013, and that those small businesses will just pay the fines instead too (and put their employees out on the public exchanges which I believe start in 2014). One of the dangers of large scale reforms is that there are unintended consequences. Many of these, the things I am describing are perfectly predictable consequences, it's just an example of how sloppily laws are written to account for the political calculus.

I suppose one could suspect more nefarious goals from their government on these economic proposals. I do not. I suspect they (Congress) are just as dumb about economics, or its cousin of "socioeconomic/political incentives", as the public, for the most part, and outsourced these things to powerful political lobbies who benefited at our expense. Consider things like insurers were now required to cover pre-existing conditions on children. But they were not required to cover any children and in a few cases are now trying to weasel out of doing so. That's the kind of loophole that comes when insurance lobbies write the bill. The thing about the accounting done by some mega-corporations is just political theater (much like hauling the heads of the banks in or Toyota's CEO or the commissioners of major sports leagues). This is something else.

Left un-discussed by people in favor of these mandates were those inconvenient things like cost. Health insurance costs in Massachusetts, in part because of mandates on what must be included in those plans and in part because everyone must be covered, are almost a quarter more expensive than the average insurance plan anywhere else in the country (NY is a pretty close second, and they're regulated up too). They do (at least did) have HSAs as an option there. But considering that people got livid over the 39% hefts a few insurers did on their own, one suspects a 25% heft imposed by government regulations wouldn't be that popular either.
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