Saturday healthcare blogging pt. 1
The push-back on my Baucuscare post basically broke down to this: why complain about subsidy amounts when people now aren’t really getting any help to pay for their insurance to begin with? A family making $48,000 now would have to pay more now because they don’t receive any subsidies at all. So what’s the problem?
Well, that’s very true, and in that respect I think the reform currently in Congress will certainly help a lot of people. Then again, right now people aren’t required to buy insurance at all. They can wait until they get a job that provides benefits or they can cross their fingers and hope nothing goes wrong. Often enough, if you’re in your twenties or thirties, unless there’s some sort of catastrophe, people don’t have that much need for comprehensive medical insurance, and a very basic preventative service plus catastrophic coverage may be enough. By the time they start a family, they’re usually employed and receive somewhat more comprehensive coverage anyways.
Indeed, of the 45 million Americans without insurance, 40% of those are young people. And under the mandate all these young people would need to purchase insurance in the exchanges unless they received it from an employer. So the question is, even if they can afford it, how will this effect the rest of the economy? A good portion of what is now being spent on consumer goods, dining, and entertainment will by necessity move into health insurance. If a twenty-five year old without health care is suddenly forced to spend five thousand dollars a year on coverage, that might add up to pretty much all their expendable income. And that’s just the premium. Out of pocket expenses could reach much higher depending on deductibles, and high caps on out-of-pocket expenses.
And that will translate into a pretty big hit to the service economy which, ironically enough, employs quite a few of the people we’re talking about. This is a mandated transfer of funds from one sector to another. In a sense, it’s a huge gift to private insurers from the government, and quite frankly I’d prefer that we avoid giving gifts to the insurance industry at all costs.
So whether the mandate can really be considered a tax is debatable, but it can certainly be seen as a direct transfer of funds out of the entertainment and service industry and into the health sector. Something to think about.