Matthew Holt

Uwe and Heritage agree: we need a tax-funded universal pool

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.

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rbarMGBarry CarolEllenRFrank Recent comment authors
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archon41
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archon41

But just remember: any relief you get from the trial lawyers will come, not from the people yearning for their Battleship Potemkin moment, but from the guys sporting
Women Want Me
Fish Fear Me
stickers on the rear bumpers of their Tundras.
Got to run for my survivalist meeting. We’re doing edible roots and Locke’s Second Treatise today.

Peter
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Peter

“The labor unions, of course, have made their position clear on this issue – reform healthcare and health insurance but don’t cut us.”
Agreed Barry. Same old, reform the other guy, not me.

Peter
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Peter

archon41, here’s more on Premier Danny Williams (Millions) and his excellant adventure in U.S. healthcare.
http://www.thestar.com/news/canada/article/759760—danny-millions-williams-heads-south-for-heart-surgery
Stay tuned for the truth to come out eventually about whether he needed to go to the U.S. or not. I will post as this unfolds.

Barry Carol
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Barry Carol

“However it still remains that the “evil”, “going broke government”, subsidizes mortgage interest for homeowners who do not need it and are not in the business of rental property. Would you be willing to give up this entitlement to lower the deficit?” Absolutely Yes! However, I haven’t paid any mortgage interest in over 31 years.:) In all seriousness, I would also be willing to give up the tax preference for employer provided health insurance even though it would cost my family over $5K in higher federal and state income taxes as well as FICA taxes assuming federal income tax rates… Read more »

Peter
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Peter

“property owners right off their interest which allows them to lower their rent so in fact renters do get subsidized” As an Ex landlord who had to price the rent based on market conditions, the interest deduction, or any other deduction, did not factor into determining rental rates, it did however make going into the rental business easier due to the write offs. What was the highest determining factor was supply and demand. You can argue that tax deductions do soften rental rates, but rental rates are more sensitive to location and renter income, irrespective of the interest deduction. Florida… Read more »

archon41
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archon41

I stand cheerfully corrected on the “progressive” beverage of choice. As for the “boilerplate,” sure you’re not confusing me with Frank? (No offence to Frank, who seems to be spot on).
You rub salt in old wounds with your mention of Novartis and Glaxo. Some years ago, seduced by progressive assurances that Big Pharma is reaping obscene profits, I made modest investments in each. Left a smoking hole in my IRA.

rbar
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rbar

archcon, a lot of your stuff is conservative boilerplate and already known as such by most readers here (e.g. is the rest of the world really “freeloading” on US pharmaceutical research? Have you heard of companies like Glaxo, sanofi, novartis, Bayer etc.? Does taxpayer money play a role in US medical research? Moreover, is social mobility higher in the US or in current bolshevikh Germany? and so on). But some stuff you clearly get wrong. The liberal’s drink is not “frapuccino” (a starbuck’s drink), but maybe cappucino, or more typical, as in the famous club for growth 2004 ads, latte.… Read more »

Nate
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Nate

” it’s called the mortgage tax deduction, which by the way is not available to renters to subsidize their shelter costs.”
Hello Peter , how are you sir? Please note for future reference property owners right off their interest which allows them to lower their rent so in fact renters do get subsidized

Nate
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Nate

MG this is THCB if you want to hear my rants on defence spending then go to TDSB, someone of us do post on topic

Peter
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Peter

“O Canada! Why is your son, Danny Williams, Premier of Newfoundland, coming to the U.S. for heart surgery? This is like shooting birds on the ground.” I wondered how long it would take for you to post this one. Here’s the link to the Toronto Star article. http://www.thestar.com/news/canada/article/759116–u-s-bloggers-weigh-in-on-danny-williams-surgery?bn=1 Nothing so far has indicated he could not have been treated effectively in Canada or why he chose whatever hospital he did. Some background on NewFoundland. It traditionally been considered Canada’s most severe “Have Not” provinces which means it receives more tax dollars from the rest of Canada than it pays. Much… Read more »

archon41
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archon41

O Canada! Why is your son, Danny Williams, Premier of Newfoundland, coming to the U.S. for heart surgery?
This is like shooting birds on the ground.

archon41
Guest
archon41

Ach, now Barney Frank is saying the Party is in “full, fake cheerleading mode” over HCR, just to let the “base” down easy. And we came so close…so close. . . It’s those angry white pickup driving males, and, you know, they slap their women on the bottom and tell them how to vote, and they do as they’re told. Sure, a lot of them are “educated,” but you know what passes for education in flyover. How many of them could intelligently discuss gender identity crisis over a cup of frappuccino? Primitive and unteachable, the lot of them. Surely they… Read more »

Frank
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Frank

DOES NOT MAKE SENSE
“The United States of America cannot afford to provide its citizens the same level of health care that the Mother Country affords its citizens.”
Uh .. the USA is not Germany. People here have FREEDOM to be more than their parents. If that offends you — shouldn’t you live in Germany?
More to the point: Europe and Asia have been *freeloading* off USA medical research for decades. (And the USA nuclear umbrella – different subject)
Why don’t you get them to pay their fair share?
Y’know — do something positive?

Peter
Guest
Peter

“I really think we need a tax-funded universal housing pool. I could use an “upgrade.” You already do, it’s called the mortgage tax deduction, which by the way is not available to renters to subsidize their shelter costs. “It is most refreshing to see these admissions that “health care reform” will increase the financial burdens of those who are presently insured.” archon, from reading your posts it appears that you are covered by a company plan – if so would that be an insurance company’s plan where you pay no premiums? “and content ourselves, beyond that, with the quality of… Read more »

MG
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MG

“We don’t have obligations on fighter jets 40 years out”
Do you think weapon systems magically remain themselves over 40 years? There are incredibly expensive operating and maintenance costs on fighter plans (or any military unit) as they age.