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More Math

April 9th, 2014 by roy sasson

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We all know the story of the young woman who is treated for breast cancer and then changes jobs and then loses her coverage for her “preexisting condition.” Each and everyone of us knows some variation on that story and universally, we think it stinks. I would say most of us know of a story where someone was quite ill and their benefits ran out. Now sometimes that happens in absurd end of life decisions and I’ll write about that another time. I’m again thinking of our young woman with breast cancer who survives her disease, but loses everything else. If you don’t think that these events are wrong, please stop reading this and don’t read anything else that I ever write. In fact, please don’t talk to me or anybody in my family. If you belong to a church, temple or mosque; quit. There’s no hope for you and any higher power would be embarrassed by his creation.

If you’re still with me then you have a thread of human compassion and decency and I think that is all that I am going to need. This brings us to “the mandate.”

How can basic human decency be equated with a government compelling its citizens to buy a product; in this case health insurance. Well, once again it comes down to math (with an ‘a’). Let us say that Congress passes the “Human Decency in Health Care Law” which states that no insurance company can deny an individual health insurance or cap the benefits what would be the decision of the rational consumer. Well, clearly, everybody who is sick and has been denied coverage will rush to their computer and sign up. What will the rational healthy people do? Nothing. If you cannot be denied coverage the logical person will not be paying for insurance when they are healthy. They will pay their occasional costs out of pocket, but the minute that they get sick, they would quickly purchase insurance. in fact, I am sure that there would be a special insurance broker in this setting. Just as we once bought “flight insurance” from a kiosk in the airport (what a scam that was), we could imagine insurance being purchased in emergency room waiting areas.

I know that healthcare is expensive. The point is that by having a large pool of covered lives, expenses can be predictably managed. Costs are kept reasonable by having a fairly healthy group of people. When the pool consists of only the sick, insurance can only become more and more expensive and ultimately unsustainable. We can only have our insurance equivalent of basic human decency by compelling the healthy to be insured.

Sure, we could have done this all through tax dollars and funded a single payor Medicare-Universal (wouldn’t that name have worked better than the Congressional Democrats term “public option.”) We have opted, for now, for a “free market” approach. The biggest problem is the fine is too little. In 2014 it’s only $95 or 1% of income. Over the next few years the fine will increase. Ultimately, it will need to be more expensive than basic bronze level insurance for people to be rational and be insured.

I know. Sometimes after going through insurance issues you feel a desire to reach for Walter White’s blue crystals. It’s understandable and we won’t count it as a preexisting condition.

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