How the Democratic Health Care Plan Could Really Work

Sam Smith in the Progressive Review ( has come up with a lively idea for solving the health reform issue. Journalists, stumped by who’s for what when, should read this and then search for the conspiracy:

Central to the success of the Democrats’ healthcare plan is the fact that it massively subsidizes the health insurance industry through mandatory mandates and other devices. Neither the president nor anyone on the Hill has honestly reported the size of this subsidy but it is undoubtedly one of the largest earmarks ever enacted in return for campaign contributions.

Pleased with this, the insurance industry has agreed to accept numerous restrictions on their dubious past practices – which restrictions are, on their own, positive improvements in national healthcare. The unanswered question is: how much are we paying for these worthy improvements through subsidies to the industry?

Mulling this question, it occurred to me that there is one way this baroque, affair could end up on the clearly positive side. The bill is passed with its mandates and restrictions but someone sues on the clear grounds that mandatory insurance is unconstitutional. Remember, this is not auto insurance, where citizens do not have an inherent right to drive on public roads. This is a government order that citizens must pay a private firm for insurance just to live unharassed in America. There is nothing in the constitution that permits this.

So the bill goes to the Supreme Court which throws out the mandates. Voila. Totally against the intent of Obama and the Democrats we then have a decent bill, full of new restrictions on insurance companies without the cost of subsidizing them.

On the other hand, maybe this is Obama’s secret plan. If so, I’ll have to admit he’s a lot smarter than I thought.

2 responses to “How the Democratic Health Care Plan Could Really Work

  1. One of us is missing something me thinks.

    Insurance is about spreading risks, over time, over space, among those who may be more or less “at risk” – it’s ultimately all the same. The difference is the nature of what underwrites call the “hazard”. Other hazards occur suddenly and then they are over. The car is stolen, the house catches fire, the hurricane strikes.

    In health insurance there is little risk of place – illness doesn’t strike one year in Boston and another year in San Diego. There are no dramatic year to year cost fluctuations, so risk at the group level is not spread out over time. Risk is only spread between the healthy and the sick. We healthy people pay for the sick now, with the understanding that other healthy people will pay for us if we get sick.

    So why would any healthy person pay gobs of money for health insurance? Insurance companies know that their prospective customers aren’t stupid. So they ask they converse of the same question – why would they insure unhealthy people? In the most academic sense, their behavior is perfectly rational. And, in my opinion, it does not matter whether it is a for-profitor not for profit insurance company.

    A major reason why our system is as broke as it is is because there is no mandate. There is no efficient patient delivery system. A mandate of some sort is a must.

    Yes – requiring individuals to purchase (affordable or not) health insurance – a social good – from a private, for profit entity is a bad idea. Certainly as currently imagined. {Other countries like The Netherlands seem to do it OK, though. But that is a distraction.)

    But expecting any “insurance reforms” to survive the sinking of a mandate is naive at best.

    Unless the plot is to nationalize the whole process after the Supreme Court ruling. Maybe that’s what I’m missing.

  2. Pingback: How the Democratic Health Care Plan Could Really Work « Unsilent … | Today Headlines

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