Apropos to the looming tax day, Sheldon Richman discusses the tax implications of Obamacare:
Now that President Obama’s health-insurance overhaul has become law, we can brace ourselves for the new taxes. What new taxes? Aren’t they only on the “rich” and on large companies?....
[T]hose are not the taxes I am not referring to when I say we should brace ourselves. The taxes I mean are the implicit taxes that ObamaCare will impose on most productive people. What’s an implicit tax?....
ObamaCare will tax much of the middle class. Under the new law, everyone everyone will have to buy government-defined medical coverage or have it bought for him by his employer, reducing cash wages. Thus, anyone who would not have bought insurance or would have bought a less-expensive policy will pay an implicit tax.
Read his full arguments on the implicit taxes of Obamacare here.
Paying what I already do for two catastrophic policies -- I fear not just higher prices for the "full policies" being FORCED DOWN MY THROAT -- but I fear not being able to afford coverage under obamacare at all for my whole family.
I give the commentary a 2 out of 4 stars for its obvious bias.
Typically conservative critics choose the exaggerated view that the plan will bankrupt insurers, not fatten them. I think a more even-handed view is that it will help some and hurt others.
To call the mandate a tax is pushing it, IMO. You don't pay extra, and you don't pay the government for your policy unless you opt for the penalty. The insurance mandate is about as much a tax as is the insurance mandate on car drivers.
And I don't see how enforced consumption of insurance will drive up prices if insurers still have to compete for your business. A larger consumer risk pool will allow them to drop prices to win more business.
We will still be able to choose among products, but we are given incentives to not gamble on our good health and leave the mess for others to clean up when we declare bankruptcy. The losers among consumers is more likely the healthy young who have better odds of not needing costly care.
Obvious bias? Well...yeah... Richman wrote an opinion piece and this is a blog, not a news organization. A distinct perspective is expected in both cases.
Many here at YAL wouldn't call themselves conservative. I certainly would not -- I'm a libertarian.
You've noticed, no doubt, that insurance companies overwhelmingly support this plan? They now have a legally mandated consumer base.
Some insurance companies may be hurt, yes, but in general having the government require people to buy your product will make you richer, not poorer.
You do pay extra if you were paying nothing before. Personally, for instance, I am offered a very generous plan by my employer which I could well afford to use but choose to turn it down because I prefer the extra money instead. So yeah, once I have to get insurance by law it will be a tax to me -- it will be the government forcing me to dispose of my money. And the insurance mandate on car drivers is a tax too -- good connection there; most people don't make it.
Basic economics here -- increased demand, prices go up. But it's important to note that these price increases will probably not be equally distributed across the board -- a number of studies have shown they'll disproportionately fall on the young and healthy to a greater or lesser degree depending on what state you live in.
We'll be able to choose -- but the choice will be limited. We won't be able to choose any insurance company offering any plan anywhere, and we won't be able to choose to have no insurance at all. Not really into the whole "my body, my choice" thing, are you?
The definition of a free society is allowing real choice, including, sometimes, real choice to make poor decisions. If bankruptcy laws allow people to unfairly skip out on their contractual obligations, perhaps we should take a look at those instead of mandating health insurance. After all, it kind of goes back to the whole "innocent until proven guilty" thing: Let's not assume that everyone will probably default on their contracts and bill them for failure in advance; let's bill the ones who actually fail.
Exactly. And this is a blog largely read by young people, most of whom are presumably healthy.
Well said. I don't think the person you responded to you has read the bill.
Lets also not forget that the mandate will do more than artficially increase demand, the fact that you will have to buy insurance means they can jack up price beyond that set by the natural supply and demand price. No, one company probably can't do it alone if there are competitors, but, and especially in states with only one insurance provider and no competititon (because congress doesn't do it's job of regulating interstate commerce), if there is only one provider, than they have a government sponsored monopoly in the area and can just keep jacking up prices with no loss of business and even start lowering wages, cutting workers that were in that margin between absolute necessity and convenience, etc.
Or, the insurance providers could wise up and realize that if they all start jacking up prices they won't lose business because the government is forcing a purchase of their product.
@Bonnie
"You've noticed, no doubt, that insurance companies overwhelmingly support this plan? They now have a legally mandated consumer base."
They support the mandate element, but they have lobbied hard against increased regulation. So I don't think 'overwhelming support' is the right description.
"You do pay extra if you were paying nothing before."
Theoretically I pay less if you can go see a doctor when you need to. And I pay even less when you chip in.
"We'll be able to choose -- but the choice will be limited."
More so than before? How so?
"...and we won't be able to choose to have no insurance at all."
Motorists do it all the time.
"The definition of a free society is allowing real choice, including, sometimes, real choice to make poor decisions. If bankruptcy laws allow people to unfairly skip out on their contractual obligations, perhaps we should take a look at those instead of mandating health insurance..."
The flipside of freedom to risk is the requirement to endure the results...and the expectation of no help. That means student X with the bad credit score gets left by the road to die. Tough break, kid. :(
The alternative to bankruptcy law is indentured servitude or debtor's prison.
I'm hesitatant to take the side of insurance companies -- particularly the large ones -- but yes, it would make sense that they would both 1. want a guaranteed customer base and 2. want to be able to run their businesses however they please. In this case, it seems like the desire for the former has outweighed the desire for the latter.
...or I could just pay for my doctors' visits myself, as indeed I do, and not have you pay at all. Just like I don't pay for your doctors' visits since we don't share insurance. Unless we are contractually obligated through something like insurance to pay for each other's health care or otherwise desire to do so out of the goodness of our hearts, why would either of us do so?
That said, is health care too expensive now in part because the costs of some people's care get passes on to others? Yeah. Does it need reform? Yeah. But recall that we've not started from a free market position -- health care is already incredibly regulated and full of gov't-created perverse incentives. And I'd argue that this is the cause of much of our troubles and high prices, not the little bit of choice we have left.
I was under the impression I'd explained that?
Not if they want to be able to legally drive, they don't. Unless things are markedly different in your state than in any state I've ever lived in, insurance is mandatory to get license plates.
Well, yes. Any libertarian will tell you that freedom expects responsibility, and that some people will undoubtedly be irresponsible, and that the results will sometimes be tragic.
However, I for one am not only calling for a just society but also a merciful one. And indeed I think to some extent we have a merciful society already -- many hospitals have free clinics, some medical schools will treat patients for very little or nothing, and there are a number of charitable organizations which help the impovershed. So no, student X will not be left by the road to die. (You take such a poor view on human nature! And I though I was pessimistic!)
Would a system of freedom be perfect? No, undoubtedly not. But neither the system we have now nor the system that Obamacare will bring is an improvement. Both are systems of coercion, regulation, and theft. And both do/will still provide what I suspect we can all agree is in many ways a sucky health care system.
Contractual obligation and fraud are serious matters. I don't know that I'd advocate these punishments exactly, but yes, people should be responsible for the debts they incur.
"...or I could just pay for my doctors' visits myself, as indeed I do, and not have you pay at all. Just like I don't pay for your doctors' visits since we don't share insurance. Unless we are contractually obligated through something like insurance to pay for each other's health care or otherwise desire to do so out of the goodness of our hearts, why would either of us do so?"
If you are part of the same insured risk pool, you share costs. If you are uninsured and can't pay, you pass along more costs to the community because you are probably only getting crisis care which is more expensive in the long run.
"Not if they want to be able to legally drive, they don't. Unless things are markedly different in your state than in any state I've ever lived in, insurance is mandatory to get license plates."
True. I didn't have a good point there.
"However, I for one am not only calling for a just society but also a merciful one."
Merciful societies cost money. And then your freedom to risk also becomes your freedom to assign cost to others.
"(You take such a poor view on human nature! And I though I was pessimistic!)"
I know people are charitable, but reliable charity might as well be institutionalized, right? Unreliable charity results in student X dying on the road...or in the hospital when no one can foot the bill.
"And both do/will still provide what I suspect we can all agree is in many ways a sucky health care system."
We do rank rather low for an industrialized country. But I don't know of any good examples of a purely free-market health care system. So I can't say what is possible or how it would work. But it does sound nice.
"Contractual obligation and fraud are serious matters. I don't know that I'd advocate these punishments exactly, but yes, people should be responsible for the debts they incur."
The goal is to procure lost monies. Failure to do so is cost spread to others. Mere punishment can't get blood from a turnip...unless you are the Mafia. They have ways of incentivizing loved ones with your body parts.
@Creighton
"...and especially in states with only one insurance provider and no competititon..."
That's why the bill included health care exchanges. I guess we'll see if that works.
"Or, the insurance providers could wise up and realize that if they all start jacking up prices they won't lose business because the government is forcing a purchase of their product."
That's illegal, isn't it?
"That's why the bill included health care exchanges. I guess we'll see if that works."
The question here is why couldn't they just allow interstate competititon? Why go down some convoluted route rather than enforce the actual meaning of the commerce clause, regulating interstate commerce. Just remove the barriers, why isn't that route taken? It seems like if we want competition than just allow natural competitition by not using law to give monopoly control to one company.
"That's illegal, isn't it?"
Its illegal if it's done as a conspiracy, like one company calls another and says lets keep our pirices high, but in the current health care market where private insurance barely competes with other private insurance companies, if at all, and now a mandate, how unlikely is it that the private insurance companies will just realize that they can both jack up prices and not lose business? There doesn't need to be a conspiracy for this to happen, they would just do it.
"The question here is why couldn't they just allow interstate competititon?"
The argument against buying across state lines was that the difference in price was driven mostly by variation in state regulation, not insurer efficiencies. It is feared that insurers would flock to states with the least regulation and the least protection for consumers.
"...how unlikely is it that the private insurance companies will just realize that they can both jack up prices and not lose business?"
That will be a dangerous game for insurers to play. There's already a bill passed by Congress to strip them of their limited antitrust status.
"The argument against buying across state lines was that the difference in price was driven mostly by variation in state regulation, not insurer efficiencies. It is feared that insurers would flock to states with the least regulation and the least protection for consumers."
So, wouldn't this cause for deregulatory measures in the states that lose a health insurance company? The residents of each state would be allowed to buy any insurance they want so ineffeciencies and under-insurance would eventually go away because the higher quality more efficient insurance companies would start getting all the business causing the ones losing business to follow suit.
And this differing regulation most definitely doesn't account for the difference in prices, if you are going to mention anything about price of actual care you have to mention the subsidization nature of insurance (its not insurance, its a bunch of subsidies) and the price fixing of medicare, medicaid, and va care, these two preoblems alone are without a doubt one of the if not the primary culprit in skyrocketing prices (outside of general inflation).
"So, wouldn't this cause for deregulatory measures in the states that lose a health insurance company?"
Yes, and that's what people who value consumer protection fear.
"because the higher quality more efficient insurance companies would start getting all the business causing the ones losing business to follow suit."
The opposite is what is feared. Consumers would choose the lower cost/quality plans (not necessarily more efficient) rather than the higher cost/quality plans that lose profit not screwing over the customer. The reason consumer protections have to be legislated is that companies don't consider it in their interest to protect the consumer.
"And this differing regulation most definitely doesn't account for the difference in prices,..."
If you say so. But that's what I've read.
@ BBQbrains:
It's only illegal if you can prove collusion between the healthcare providers. I think what Creighton is suggesting is that a given provider won't be afraid of losing clients for jacking up its rates if it sees that other providers are doing the same thing. Since there's no option to NOT have health insurance (has to be claimed on your tax return, so it's not a 1:1 comparison with auto insurance as another commenter suggested), you HAVE to buy it from someone, and even if there's a provider that's less expensive, deductive reasoning suggests that it will still be more expensive than if prices were decided by the market alone.
"...deductive reasoning suggests that it will still be more expensive than if prices were decided by the market alone."
Although I very much like free-market solutions, I haven't seen one that convinces me in the case of health care. Large medical purchases that a consumer may not be able to evaluate (especially in the moment of crisis) and can't predict for budgeting (most people don't do that well anyway) makes buffet-like insurance unavoidable. Insurers have no incentive to clarify their products and care providers have lots of incentive to oversell their goods. All this works against the consumer as an agent of selective choice.
It's no wonder costs go up and up when the market isn't working as we hope it would. Bad government policy doesn't help.
I think something people who use the car insurance mandate as a justification for the health insurance mandate are missing the point here, car insurance is mandated by the states, not the federal government. The federal government has expressly delegated powers that the states gave to it, they said they won't use these powers (in Article 1 section 8) and the federal government said they wouldn't do the rest. Therefore, the states have all the powers that the federal government does not have which includes the ability to mandate car insurance (all the powers not prohibited by their state constitutions).
So just because the states did it doesn't make it ok for the federal government. State law is easier to change should the public become upset with it. Also, states probably aren't going to be worried about anything other than their state, and, if the constitution was followed, they couldn't force their laws onto other states.
The main problem here, outside of the disastorous economic consequences of this bill, is that it will set precedent for the mandate of any private good or service. What if instead of GM getting a bailout, they get a mandate? How about carbon credits get mandted for purchase? The possibilities are endless and extremely dangerous when Congress is so in cahoots with lobbyists.
If it were up to you, would you do away with the car insurance mandate?
yeah, but of all the problems we have, the purchasing of car insurance isn't at the top of my list, the last thing I would do is let Washington mandate...it would be unconstitutional and, again, set the precedent
the federal government does not have this power as enumerated but the states do. what's great about the way our government is organized, is that if we don't like a law in a particular state, we can vote with our feet and walk away from the state and reside in a state that is more to your liking. If there was a mandate at the federal level, we would have to move to another country. We should also understand that mandates go against a free society. you can choose to disown a car, but you can not choose to disown your body.
"what's great about the way our government is organized, is that if we don't like a law in a particular state, we can vote with our feet and walk away from the state and reside in a state that is more to your liking."
A law would have to be enormously important to motivate someone to uproot their life as either a political statement or an escape. I can't see that being an effective form of resistance.
Btw, you can also move to a different country in exactly the same way. ;)
"you can choose to disown a car, but you can not choose to disown your body."
Most people who own a car depend on it for their livelihood. Requiring car insurance doesn't motivate many people to not own a car.
"A law would have to be enormously important to motivate someone to uproot their life as either a political statement or an escape. I can't see that being an effective form of resistance."
i don't know what other people's political sensibilities are, but when an all powerful federal government forces you to do something that you do not want to do or else face a fine or even jail time, you begin to have second thoughts.
all i'm saying is that it is much easier to reform a law at the local or state level than it is at the federal level.
"Most people who own a car depend on it for their livelihood. Requiring car insurance doesn't motivate many people to not own a car."
yes, but car insurance is different to health insurance in another sense. there is competition in car insurance and is run more efficiently. Health insurance on the other hand is already burdened with little or no competition and state regulations. Obama's regulations will make health insurance less competitive and health care even worse.
"Btw, you can also move to a different country in exactly the same way. ;)"
some people like the country as is, there are very few countries that protects the same rights let alone speak the same language.
all you need to do is look at the constitution sweetheart. ;)
"all i'm saying is that it is much easier to reform a law at the local or state level than it is at the federal level."
I agree, but voting with your feet is slow-motion politics.
"yes, but car insurance is different to health insurance in another sense. there is competition in car insurance and is run more efficiently."
It's not that there is no competition in the health insurance market. I personally can pick from many different products. But there is also legislation being pushed to increase competition by doing away with antitrust privileges. We'll see how that goes.
"some people like the country as is, there are very few countries that protects the same rights let alone speak the same language."
You mean voting with your feet is awfully inconvenient? I agree with that too.
"the federal government does not have this power as enumerated but the states do."
I guess that depends on how you look at it. If you are committed to the position expressed in the opinion piece that the mandate is an indirect tax, then the Constitution explicity grants Congress that very power:
"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;" - Article I, Section 8, Clause 1
And if you do not consider it a tax, the legislation could be considered an issue of interstate commerce. But the courts will probably have to rule on that.
"the legislation could be considered an issue of interstate commerce"
the interestate commerce, as i understand it, has the purpose of " To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes".
i didn't know the government can regulate commercial inaction.
"But the courts will probably have to rule on that."
that's the only thing i'll agree on with you
I don't have a definite opinion on the interstate commerce interpretation.
CONSTITUTIONALITY OF HEALTH CARE REFORM - DOJ
( http://www.justice.gov/olc/1stlady.htm )
It's something the courts will decide.
So in other words.. there are no taxes on the middle class. This article is absolute fear mongering. You can read the entire thing and see that the author keeps repeating his stance over and over then throws in the last 2 paragraphs at the end that are supposed to be the entire thing and its a big nothing. What a horrible waste of time.
the point hes making is that just because it isn't called a tax doesn't mean that the federal government's actions aren't forcing the people to surrender their money by coercion on behalf of the federal government, and surrender it in specific regards to this bill...a tax by any other name would still stink (to use a literary pun)
love these comments. there should be more debates on these posts. keeps everyone on their toes and not just rely on misconceptions. YAl keep up the good work
I have been doing a lot of research and have read through hundreds of posts. I will definitely have to keep coming back for more great info Emergency LED Lights
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I think I can, at a first glance, think of some factors that can increase the value of microinsurance policies, as a simple suggestion. First of all, I think employees should be granted more protection by means of their work insurance rights. I know that there aren`t to many policies like the Florida workers compensation insurance, but I think others should take this example if they want to subscribe to such a competitive market. Furthermore, employees should be made more amends to in case they are forced to leave their job or unable to continue with it, by some objective reasons.
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