Hits & Misses #3 – 2009/8/18

By Filed under Interesting Links on August 18, 2009 with 5 comments

Nine states already impose Obama-type insurance rules. Result: higher costs, fewer insured.

Tax increases sufficient to cover just one-quarter of the uninsured are supported by less than half of Americans.

New York Times apologizes to Washington Times: Front page story said WT is biased against Obama Care.

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  1. Devon Herrick says:
    August 18, 2009 at 7:45 pm

    Liberals are fond of saying that insurance will be affordable only when everyone has coverage. Of course, this makes no sense. Liberals also say the “death spirals” that drive up rates in states with guaranteed issue / community rating will not occur when everyone is required to have coverage (i.e. individual mandate). This illustrates two points: 1) liberals want to force young, healthy people into the insurance market to offset the cost of others whose cost would otherwise be higher. 2) They also seem to think an individual mandate will solve all problems with the insurance market. Of course, this also makes no sense.

  2. Ken says:
    August 18, 2009 at 11:42 pm

    Second item is interesting. People like the idea of universal coverage, but they don’t want to pay for it. This has been confirmed over and over again, by poll after poll.

  3. Neil H. says:
    August 19, 2009 at 1:10 am

    Re: NYT. Pot calls the kettle black.

  4. Bart Ingles says:
    August 19, 2009 at 2:40 pm

    From the first (WSJ) article:

    “Start with the reality that nine out of 10 people under 65 are covered by their employers, most of which cover all employees and charge everyone the same rate. President Obama’s horror stories are about the individual insurance market, where some 15 million people buy coverage outside of the workplace.”

    In other words, employer-sponsored insurance is community rated, yet doesn’t suffer from the adverse selection problems described for the individual market in the nine states. The reason? Obviously the tax exclusion keeps healthy people in the employer pools.

    “In 2007, the average annual premium in New Jersey was $5,326 for singles and in New York $12,254 for a family, versus the national average of $2,613 and $5,799, respectively.”

    This this seems to be comparing extremes on the adverse selection curve. The New York and New Jersey figures are inflated because young, healthy people are priced out of the insurance market. The national figures are artificially depressed because older, sicker individuals are priced out of the market or denied coverage, so that the average only includes healthier-than-average individuals. So neither average reflects the actual population, and apples-and-oranges comparisons between the two are simply invalid.

    “There are better ways to go. Tax credits to individuals to buy insurance would make it more affordable and thus strengthen the individual market.”

    Tricky. A general tax credit would strengthen the individual market, but only as it pertains to those individuals who are already qualify for the individual market, and would do so at the expense of the group market.

    “Other tax rule changes could also make it easier for people to join and form their own risk pools beyond their employers, such as through business federations, labor unions or, say, the Kiwanis Club. They would no longer be hostage to one job for insurance.”

    There you go. But for this statement to be true, the tax changes would have to provide incentives for people to join these pools even if they are more expensive than individual coverage.

  5. Bart Ingles says:
    August 19, 2009 at 3:01 pm

    Another thought: if it’s really true that “nine out of 10 people under 65 are covered by their employers,” and this coverage is largely made possible by the $250 billion employer exclusion, then shouldn’t the cost of extending similar tax treatment to the remaining ten percent be around ($250bn / 9), or $28 billion annually?