When you’re at a party and someone explains to you that they just read a great article in the NY Times explaining why Peggy Noonan doesn’t understand basic math, and you know that they’re referring to Uwe Reinhardt, then you’re over-wonked. That’s surely my condition
Here’s what Uwe said—you can’t just ban medical underwriting as Noonan suggested, because the individual insurance market will collapse. Both the history of New Jersey (and Washington state) in the 1990s, and in current Massachusetts where people can buy insurance or pay a lesser fine, show that healthy people won’t buy insurance until they need it.
The answer is to force everyone into a universal insurance pool
But of course, that means younger and healthier people will likely pay more. For the good folks from Heritage writing on the WSJ Opinion page this is an outrage. Using their complex model they came up with the amazing analysis that if you give uninsured younger people with no health condition the choice of paying a smaller fine or a higher premium—surprise surprise—most will pay the fine. And of course that’s exactly what’s happened in Massachusetts.
The problem is of course that most younger people who have no insurance are in low wage jobs, They therefore place a much higher value on receiving money now than forgoing it to later stave of a potential risk of catastrophe from having no insurance
So we deal with this in a very sensible way in the rest of society’s transactions.
We tax people who have money, and spend it on public goods like education, social security for seniors, defense, roads, prisons, mailmen, firemen, airline security, etc, etc, etc. Many of us would argue that we spend too much or too little on one sector or another. Almost everyone has ideas for how we could better spend what we do spend. But implicit in all of this is that people pay more than they receive at certain times of their lives and vice versa. And equally implicit is that if you have more money you pay relatively more. Therefore the uninsured low wage twenty-something of today can expect to pay much more in a couple of decades, and then be a recipient of the largesse of the succeeding generation about thirty years later than that when they line up for social security.
However, the concept of using a tax system which manages to redistribute money between generations and collects from those with different incomes—and more or less succeeds in every other sphere of society—for health care is apparently far too appalling for Americans to contemplate. But it’s the only rational answer to the problem that both Uwe and the Heritage folks point out
Instead we end up with the irrational answer. And today’s version is that if you want to marry a hot blonde, you can—so long as you can add her to your group health insurance. And of course the group (i.e. employer) who ends up insuring the lucky blonde via her future husband is of course effectively going to be redistributing its money to him and her.
This really would be funny if it wasn’t so tragic.
Categories: Matthew Holt