Options for Healthcare even if the mandate is shot down

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UtahOwl
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Options for Healthcare even if the mandate is shot down

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Some other options for salvaging healthcare reform, if necessary :twisted: From NYT Jan 22
Adding Clarity to Health Care Reform
By RICHARD H. THALER

NOW that House Republicans have voted to repeal health care reform, in full knowledge that their bill has no chance of passing in the Senate, much less avoiding a presidential veto, it is time for constructive action. There is an opportunity to improve health care and reduce uncertainty, a Republican mantra.

Perhaps the most unpopular feature of the health care legislation now in place is a provision that requires nearly everyone to buy insurance. It is known as the mandate, and it is the aspect of the bill that could end up before the Supreme Court. In contrast, nearly everyone seems to approve of the provision ensuring that pre-existing medical conditions won’t prevent you from finding affordable insurance, as well as the rule that prevents insurers from dropping you if you get sick.

Unfortunately, it is hard to have the popular features without some version of the mandate. A health insurance system cannot work unless most healthy people participate.

The major source of uncertainty arises not from the bill itself, but rather from the lawsuits filed by states that object to the mandate. The legal issue is subtle, given that states have long imposed mandates of various kinds themselves, including those requiring children to go to school or requiring drivers to have liability insurance. So the states are not questioning the legality of mandates but whether it is constitutional for the federal government to foist one on state governments.

The Supreme Court may make the ultimate decision in the next year or two. If it rules the mandate unconstitutional, the viability of the rest of the plan is not clear. Until the legal issues are settled, the status of health care reform will be uncertain.

In this light, here are three thoughts about constructive steps we might take now:

SEAMLESS ENROLLMENT The first step is not really a substitute for mandates, but rather a supplement to whatever system we adopt, including the law as now written. The goal of having nearly everyone insured requires two steps. We have to get most people to enroll, and we have to keep them enrolled even if they move in and out of the labor market.

To address that second goal, we need to make it as easy as possible for people who lose jobs to remain insured. The setup I propose is that as soon as an employer submits a form notifying a laid-off worker that she has been dropped from its health insurance coverage, she would be automatically enrolled in a plan offered by her state insurance exchange, and directly billed at a rate that reflects her now-reduced income. Ideally, the default option would be an inexpensive, catastrophic policy that provides real insurance for major events.

Of course, she could choose another plan, or she could opt out of insurance altogether, but she would have to take some specific action in order to do so. And once she landed another job, she would be automatically enrolled in a plan from her new employer, again with the ability to opt out.

In a perfect world, all of this would be seamless, with one insurance ID number and no change in how claims are filed. If the Internal Revenue Service can keep track of you when you move from one job to another, the health care system should be able to do the same.

FORFEITURE, NOT FINES After 2014, when the main components of health care reform kick in, the important question will be what happens to people who do not enroll initially, or do not stay enrolled. Under the current law, they will be fined an amount that depends on their income, payable when income taxes are filed. Fines are what differentiate a mandate from a suggestion.

But fines are not the only way to give people an incentive to join. One alternative is based on a proposal by Paul Starr, the Princeton sociologist and health care expert. Instead of facing a financial penalty for not buying health insurance, people would lose some of their insurance rights. For a stretch of time — say, five years — people would no longer have the right to buy insurance at rates subsidized by the government, nor would they be protected from price discrimination based on pre-existing conditions.

Under these rules, waiting until you become sick to buy insurance would have substantial risks. If the details are set properly, this arrangement could provide as big an incentive to join as a cash penalty. And because that cash penalty is imposed only when income taxes are due, the alternative plan may be easier to enforce.

MY “REAGAN PLAN” If you don’t like that idea, here’s another. In 1984, President Ronald Reagan signed a bill encouraging all states to adopt a minimum drinking age of 21. To nudge states into going along, the plan said that any state that didn’t join would have its highway funds cut by a certain percentage. Although Mr. Reagan initially had misgivings about the plan, he would later come to embrace it, saying that the harm caused by teenage drunken drivers was “bigger than the individual states.”

All of the states ended up complying, although some were reluctant — and South Dakota, in fact, sued. But in that case, the Supreme Court ruled 7 to 2 that the law was constitutional.

Here is how the Reagan plan could apply to health care: Adopt a new bill that says that if a state doesn’t want to accept a mandate — or some alternative like the one described above — it may opt out of health care reform. But a state that chooses this course would lose a percentage — or perhaps all — of the federal funds that the health care bill would funnel to state governments. In other words, states would be permitted to turn down the health care program, but they would then give up a share of the revenue, as well as other features of the law that are popular.

BOTH political parties could benefit from a civil discussion of these issues. By creating a viable alternative to mandates, Democrats could ensure that an adverse decision by the Supreme Court would not create legal chaos. Republicans could get a seat at the table if they engaged in a constructive way — and they might try to make progress on tort reform, which has the potential to help reduce health care costs.

As the recent tax compromise has shown, negotiations between the parties offer the potential for gains. In this situation, we can learn more from Ronald Reagan than from the slogan popularized by his wife, Nancy. It is not always the best policy to “just say no.”

Richard H. Thaler is a professor of economics and behavioral science at the Booth School of Business at the University of Chicago.

solutions
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The Embarrassing NY Times Op Ed Piece

Post by solutions »

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Chicago Business School Prof. Richard Thaler’s NY Times Op Ed piece displays an utter lack of understanding of what is involved with the lawsuits by 27 states challenging the constitutionality of the 2010 Health Care bill.

As made clear in the e-mail correspondence posted under two other Topics (“Misreading 1978 Law Mandating Insurance Purchase by Seamen” and “2010 Health Care Mandate As Tax vs. Interstate Commerce”) and in the U.S. District Court opinion in the case brought by the Attorney General of the Commonwealth of Virginia (which is attached to the Topic of “2010 Health Care Mandate As Tax vs. Interstate Commerce”), the constitutional question is whether the mandate or requirement to purchase health insurance is a constitutional regulation of inter-state commerce or a constitutional tax.

Both the U.S. District Court in Virginia and the U.S. District Court in Florida (where 26 additional state governments have challenged the constitutionality of the health-care bill) are rejecting the U.S. government’s contentions that (1) a refusal to participate in interstate commerce by purchasing insurance is participation in interstate commerce, or (2) the U.S. government can regulate the lack of interstate commerce by imposing a penalty/tax on the lack of interstate commerce under its taxing power.

Thaler’s options for alternative funding methods are wishful thinking.

*****
His SEAMLESS ENROLLMENT policy fails for three reasons.

First, it would require enactment by Congress of a complete replacement for the 2010 legislation – rather than merely financing the 2010 legislation with a European-style gasoline tax that promotes four laudable goals.

Second, it permits everyone to opt out of having any health insurance at all – which is antithetical to the goal of the 2010 legislation.

Third, it tries to entice citizens to purchase health insurance in the form of “an inexpensive, catastrophic policy that provides real insurance for major events.” This turns a wilful blind eye to the fact that if the insurance is available regardless of pre-existing conditions, nobody will purchase it until they have a catastrophic illness because the only persons in the insurance pool are other people who have gamed the system in the same manner. Accordingly, an “inexpensive policy” that is “voluntary” and provides insurance regardless of “pre-existing conditions” is an oxy-moron. Unless the federal government is going to foot virtually the entire cost. In which case, why don’t we simply proceed to a single-payer system financed by a European-style gasoline tax?

*****
Thaler’s FORFEITURE, NOT FINES policy.

This policy attempts to address the fatal flaw in Thaler’s seamless-enrollment proposal that nobody will buy the insurance until s/he experiences a catastrophic illness/accident.

However, there are obvious problems with a forfeiture policy of threatening citizens with a loss of the right to buy insurance for a period of years (his example is 5 years) if they stop buying health insurance at any point.

First, many citizens will stop buying the insurance when they lose their ability to pay for it, such as after the loss of employment.

Second, the 2010 insurance-mandate was trumpeted as necessary to compel healthy young people to pay high premiums to finance the cost of insuring older people and people with pre-existing conditions. THE PRIMARY REASON THIS WAS NECESSARY IS THE PSYCHOLOGICAL REASON THAT YOUNG PEOPLE DON’T THINK THEY NEED HEALTH INSURANCE BECAUSE THEY ARE YOUNG AND HEALTHY!!! Threatening them with a refusal to sell them insurance until they are 30 or 35 is no threat at all!!!

*****
Thaler’s REAGAN PLAN

Thaler’s Reagan Plan would adopt a new bill providing that any state (sic) that doesn’t want to accept the insurance mandate would lose some or all of the federal health-care funds provided to the state by the federal government.

THALER, ONCE AGAIN, DEMONSTRATES HIS IGNORANCE!!! THE INSURANCE-MANDATE IS AN INDIVIDUAL MANDATE THAT RESULTS, IF CONSTITUTIONAL, IN A PENALTY ON THE INDIVIDUAL TAX RETURN OF THE INDIVIDUAL THAT HAS REFUSED TO PURCHASE INSURANCE. It has nothing to do with any action taken by any state.

*****
A SEAT AT THE TABLE FOR REPUBLICANS

Thaler’s article closes with three paragraphs which demonstrate an utter lack of comprehension of political realities.

Republicans “could get a seat at the table if they engaged in a constructive way”???

They already control the House of Representatives so they have the “power of the purse” and no longer have to be nice in an attempt to influence policy – they are in a position to dictate policy.

On the contrary, the 23 Senate Democrats facing re-election campaigns in 2012 (please see Q&A No. 18) have to be responsive on budgetary matters in order to survive 2012. [In this regard, it should be noted that the normal Senate filibuster rule requiring 60 votes does NOT apply to budgetary matters – for the simple reason that requiring 60 votes would mean that the federal government would never have a budget.]

*****
CONCLUSION

It is obvious that the University of Chicago Business School needs professors who will do their homework!!!!! And the NY Times needs better editors!!!!!

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