By Uwe E. Reinhardt
The New York Times, December 9, 2011
The continuing debate over the Affordable Care Act and the commentary on this blog have convinced me that nothing can ever unite Americans on their vision of an ideal health system.
We need different health insurance systems for different Americans. I mean by this not Americans who differ by age or ability to pay but Americans with different notions of a just society.
Closing the Door to Statutory Insurance
By law, every German must have coverage for a prescribed benefit package. German employees and pensioners earning less than 49,500 euros ($66,350) per year (in 2011) are compulsorily insured under the statutory system.
Employees and pensioners above that threshold are free to opt out of the statutory system and purchase private, commercial coverage, but if they do, they cannot ever return to the statutory system unless they are paupers. The intent is to minimize gaming of the insurance system by individuals.
It is this feature that intrigues me, as it has my colleague Paul Starr, in his proposed alternative to an individual mandate to be insured.
What if Americans at, say, age 26 (beyond which they can no longer be included on their parents’ insurance policy) or even as late as age 30 were offered the choice of:
1. joining the community-rated health insurance offered through the insurance exchanges called for in the Affordable Care Act;
2. remaining in a private insurance system that is free to charge in any year “actuarially fair” premiums, that is, premiums that reflect the applicant’s projected health status and spending for that year and is free to refuse issuing a policy altogether;
3. simply self-insuring, by remaining uninsured?
For want of better terms, we might call the exchange system the “social insurance track” (because it leans heavily toward social insurance) and the second and third options the “rugged individualist tracks,” because they cater to Americans with individualist preferences.
For people choosing the rugged individualist tracks, Professor Starr proposes to shut the door to the social insurance track for only five years.
I believe his stricture is too weak and propose instead to follow the German example by shutting the door permanently to social insurance to any individual who chose one of the two rugged individualist tracks, unless such individuals were truly pauperized. A return then would have to be allowed, because, for better or for worse, our civic sentiments preclude letting anyone – even a myopic rugged individualist — die for want of critically needed health care.
Admittedly, this approach would confront young Americans with a serious life-cycle choice. But life-cycle choices are made all the time, and choices do have consequences that people in their mid-20s should be mature enough to think about. Adults must realize that individual freedom has its price.
The American health insurance system now is structured as a paradise for clever adolescents, inviting gaming of many sorts that makes sensible health policy almost impossible. It is time to move away from such a system.
http://economix.blogs.nytimes.com/2011/12/09/social-insurance-and-individual-freedom/
Published comment:
Don McCanne, San Juan Capistrano, CA
Those of us who have great admiration for Paul Starr were disappointed by his recommendation to require anyone who opted out of coverage to be prohibited from having coverage for the next five years.
Under this policy, many of these very healthy young people will decide to take the chance that they will not need expensive care, and most will win that bet.
There are two problems with this. Some will have major trauma, some will develop serious disorders such as cancer, and some will develop severe chronic problems such as type I diabetes. These people should receive the care that they need regardless of the fact that they made the unwise decision to decline insurance. Who pays for that care?
The other problem is that we do need the many who are healthy to pay into the risk pools to cover the fewer with greater health care needs. Otherwise those pools end up with a death spiral of ever higher premiums.
Just as our nation does not allow me, a pacifist, to not pay through my taxes the costs of our ill-considered wars, our nation should also prohibit the rugged individualists from not paying their share of our collective national health expenditures.
The nation will continue to disagree on this, which is precisely Professor Reinhardt’s point. But that won’t stop some of us from continuing to advocate for what is right.