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POLICY: C’mon Don; how we going to fix this safety net?

So yesterday I poked a little at Don Johnson from the Businessword in an article called What’s wrong about Don Johnson? Like the sporting gent he is, Don has replied in kind. So please go over there and read it first, then come back.

As is his right (after all I had called him mean) Don was somewhat feisty in his post.  I’m not going to get into the rights and wrongs of invading Iraq, other than to point out that it showed that we could as a nation come up with $100bn a year  if we felt it was important. I’m not ever going to comment on Don’s lack of understanding about what it means to be left-wing–after all he didn’t have the benefit of a Cambridge education on the subject and I did! I’m not even going to say much about his desire to get all those uninsured immigrants out of the country, although for a guy who runs a parenting magazine I assume Don knows something about parents employing cheap labor as nannies– but suffice it to say that the illegal immigrants are not flooding over the border to get cheap health care (although the Canadians are seeing that phenomenon to a minor extent). I’m not even going to ask Don to explain how the government by definitively regulating the price and purchase quantity of something in a particular way when pressured into it by a strong lobbying group (in this case raising doctors fees under Medicare) is creating a "market" when the determination of price and quantity by buyers and sellers without the interference of a third party is the hallmark of a market, as understood by generations of free-market conservatives who railed at government interference from FDR’s time onwards.

Instead I’m going to pose a simple question for Don to answer. He claims the problem is that a relatively small number of people (some 7% of the population) are uninsured for a full year or more.  That is roughly true.  But what Don doesn’t mention is that over 80 million people or more than 25% of the population are uninsured for up to 4 months in a two year period. Furthermore, once you are uninsured, if you have a chronic health condition becoming insured again is very hard and very expensive. But let’s ignore all that and let’s ignore the hordes of Latin Americans overrunning our country and stealing those $4 an hour jobs from the Americans queuing up to pick vegetables and work in meat packing plants.

Instead given the current state of the market for the individual in which family insurance can run up to $1000 a month for those without health conditions, how does Don propose to enable (and force) poorer families and sicker individuals to buy insurance without giving them a subsidy (i.e. taxing someone else)? And how is that taxation different than what I suggest we need to get to universal (and compulsory) health insurance?

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JCtheorajonesJohn P.David HansenDonald E. L. Johnson Recent comment authors
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John P.
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John P.

Geez … the tension is palpable around here, ain’t it? Okay Don, ||you’ll see that in the next post I found the sources of the numbers IBD was using. And it’s 11 million out of 19 million, or 58% of those uninsured for a full year || I didn’t realize there was more to the argument than contained in your original post and I’ll accept it rather than going into a stupid “my statistic is better than your statistic thing.” I’ll also avoid the “you know why there are illegal immigrants?-don’t-you-dude?” response. The thing that worries me is this. (Feel… Read more »

Ron Greiner
Guest

David Hanson, You say, “Talk about “lying with statistics”. This is a good one, Ron. Take rates for a young healthy family and compare them with rates given groups filled with older, sicker families: That’s good retoric, but pathetic economics…..The differences are far from as dramatic as you would “LIE” us to believe, Ron.” David calm down. A quote of $150 a month for HSA health insurance for the above family, on file with the state, is not a lie, geeesh. Every 30 year old family makes exactly this choice when they are sold health insurance from their employer. Let’s… Read more »

JC
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JC

I am not a fan of HSA’s because they are tax shelters. I believe they will help professional and middle class people who were previously counted as “uninsured”. I doubt the take-up numbers for HSA of the previously uninsured. I think HSAs are great for self-employed or small business owners, but in an employer setting they suck. First, HSA contributions from an employer are automatically vested with the employee. Hence the employee can quit tomorrow and take the money and run. Second, the types of medical services that HSA funds can be spent on are broad and would include non-emergent… Read more »

gadfly
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gadfly

//How can you argue when you don’t know what you are talking about?// I’m just learning about HSAs now, so I’m raising questions rather than arguing from a position of expertise. I did, however, work in a bank call center that dealt with IRAs for a couple of years. My working impression is that HSAs are Roth IRAs with contribution amounts related to income. Let me know if I’m wrong about that. //In order to have a tax free HSA you must have Qualifying Health Insurance. // I take the insurance is the “coverage” for a catastrophic situation, and the… Read more »

Ron Greiner
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Gladfly,
In order to have a tax free HSA you must have Qualifying Health Insurance. The insurance must pay 100% after the deductible.
How can you argue when you don’t know what you are talking about?

gadfly
Guest
gadfly

//admit that citizens should save for retirement health care expenses don’t you?// I think the worry is for citizens who don’t have the resources to save in this way. And furthermore for people who have to deal with a catastrophic health crisis and find the HSA isn’t enough to cover the situation. Based on what I’ve read here, I suspect people who are arguing for HSAs are the affluent members of society who benefit from the tax shelter. If I happen to get cancer, it probably won’t be diagnosed until it’s too late. There will probably be a big hassle… Read more »

gadfly
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gadfly

//By law the coverage pays 100%//
My current understanding of HSA is that it’s an IRA for health care – but the contributions can be a lot larger than IRAs, so even if they don’t cover a health crisis, they are awesome tax shelters. However, if an HSA is an IRA, I don’t understand how “coverage pays 100%”. Isn’t the coverage only as much as you’ve saved?

Ron Greiner
Guest

theorajones HSAs are the first account with tax free deposits, growth and withdrawals. Now citizens can save for retirement health care expenses. therajones how is that like eating rotten food? You will admit that citizens should save for retirement health care expenses don’t you? Money that is never taxed will last longer in retirement. You are correct that employment-based health insurance sucks. Individual insurance where you can’t be singled out for rate increases or termination is were true security is. My client is lucky he lives in America with his bone cancer with insurance that pays to $8 million. He… Read more »

theorajones
Guest

Ron, you’ve successfully argued that compared to our incredible suck of an employer-based system, HSAs can be a better deal for some individuals. Let me be the first to agree with you–having an HSA is better than having no insurance. I’m pretty inspired by that–I now plan to argue that eating rotten food is better than starving to death. I don’t mean to give you a hard time–it sounds like you’re doing a really good job helping people make the best of many poor choices. I am glad that your friend isn’t facing financial ruin or death because he made… Read more »

Donald E. L. Johnson
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John P,, if you read my home page at http://www.businessword.com, you’ll see that in the next post I found the sources of the numbers IBD was using. And it’s 11 million out of 19 million, or 58% of those uninsured for a full year. And the more accurate estimate of the number of people uninsured during a 12-month period is 36 million, or 80% of the inaccurate 45 million number. Check out the post and the links.

Ron Greiner
Guest

Sorry Gadfly and Lin, you are both wrong. Neither HSA or MSA funds are lost if not used. My effective date on my MSA was 1/1/97, the first day. My MSA automatically became an HSA on 1/1/04. Lin asked what I would do if one of my HSA clients got cancer. Funny you should ask because I have a friend and HSA client who was diagnosed in December ’04 with bone cancer. He is a doctor who now can’t work because he had a stroke in his first surgery to remove a tumor. His previous health insurance was a group… Read more »

John P.
Guest
John P.

Don: By the way, I’m going to have to call you on your impact quote from Monday’s post, which has gone completely unchallenged up to this point. In your rebuttal, you cite a recent editorial from Investor’s Business Daily as evidence that 58% of the uninsured are “illegal immigrants.” You write: “The problem with the editorial is that it doesn’t cite all of its sources. The Census Bureau survey can be found here. This is the closest I could come to finding the source for IBD’s numbers.” http://www.businessword.com/index.php/weblog/social_security_retirement_bill_will_hit_house_in_jun/ Your cite on this do not back up your argument. And you… Read more »

gadfly
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gadfly

Lin – thank you for explaining the difference between HSAs and MSAs. //The health plan doesn’t care – it’s not their money!! Are you going to intervene and fix that for her?// I heartily agree that a consumer advocate has to be part of any solution. *Wonders how new bankruptcy laws will affect eventual bankruptcy filing to deal with Summit’s Hidden Billing scheme…* //Stick with the HSA, they are less protected from financial ruin// This raises another question. If HSAs accrue, then the longer you are investing in one, the harder it is to opt out and choose another health… Read more »

lin
Guest

Gadfly – no HSAs accrue. MSAs are use it or lose it. I have recommended HSAs to some of my clients – for some people it can be an approprite choice. I never said people don’t save money on premiums in an HSA. But that is not all the costs, and you, as a broker, should know that. What will you do for your client who comes to you with a miscoded visit for which she is about to over pay $750 because it is in her deductible? The health plan doesn’t care – it’s not their money!! Are you… Read more »

gadfly
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gadfly

//HSAs aren’t bad (except for the poor who will to some extent avoid needed preventive and early treatments)// Forgive me if I’m wrong about this – but aren’t HSAs “use it or lose it” accounts? For healthy people, I think this feels psychologically like throwing money away instead of the surplus going toward shared health costs. I decided to put in toe in this approach by putting in $100.00 under an employer plan. I used all but $10.00, but it really bothered me that the $10.00 was just surrendered. I’ve heard of people doctoring receipts just to make sure they… Read more »