# Conservatives: What should we do about people who can't pay for medical care? **URL:** \ **Category:** Great Debates\ **Created:** [March 31, 2012, 3:36am UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350 "2012-03-31T03:36:04Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [April 1, 2012, 3:35am UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/81 "2012-04-01T03:35:04Z")
> [@Fear\_Itself](#): > > Do you think young, healthy people percieve the need for health insurance the same as older people with health problems? Given the choice, would young, healthy people voluntarily buy health insurance for the same premiums that older, sicker people pay? Some would. Some would not. So there would be some cost pressure. But I believe most people who currently have group coverage would still want health insurance if given the option, and this would be an enormously large group(s) to pool risks, without a precedent in any previous unaffiliated group insurance program. So, portable health insurance would IMO be costlier, but not materially so, and would have the added benefit of not disappearing when I lose my job. Therefore, I see it as a peachy idea. Feel free to think otherwise, of course. For a guy who agreed this should be portable, you sure don’t seem to think much of the concept. ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [April 1, 2012, 9:37am UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/82 "2012-04-01T09:37:50Z")
> [@Fear\_Itself](#): > > Do you think young, healthy people percieve the need for health insurance the same as older people with health problems? Given the choice, would young, healthy people voluntarily buy health insurance for the same premiums that older, sicker people pay? They might if they show up at a hospital and get stuck with an enormous bill they have to pay, because they didn’t buy insurance. That would be a painful, but useful, lesson to learn. Young people voluntarily set aside money for retirement, and for their kids schooling, and for down payments on homes, and for dream vacations some years in advance, and for lots of other things. They do so because they know there are consequences of not doing so. What makes you think they won’t spend money on insurance premiums, if there are similar consequences for not doing so? ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [April 1, 2012, 12:22pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/83 "2012-04-01T12:22:14Z")
> [@Stratocaster](#): > > For a guy who agreed this should be portable, you sure don’t seem to think much of the concept. I am not so enamored with portable insurance that I am willing to overlook the very real problems that will have to be dealt with by more than blind faith in the free market. > [@IdahoMauleMan](#): > > What makes you think they won’t spend money on insurance premiums, if there are similar consequences for not doing so? Because in my experience, the vast majority of young people don’t demonstrate the forethought you seem to thing they do. Hell, most middle aged adults don’t; look at the savings rate for people approaching retirement. So what you say, it’s a good learning experience? So you don’t care that learning experience is costing you higher insurance premiums and higher taxes when they default on medical debts? Someone is being very short-sighted. ---
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [April 1, 2012, 12:28pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/84 "2012-04-01T12:28:37Z")
> [@IdahoMauleMan](#): > > They might if they show up at a hospital and get stuck with an enormous bill they have to pay, because they didn’t buy insurance. That would be a painful, but useful, lesson to learn. > > Young people voluntarily set aside money for retirement, and for their kids schooling, and for down payments on homes, and for dream vacations some years in advance, and for lots of other things. They do so because they know there are consequences of not doing so. > > What makes you think they won’t spend money on insurance premiums, if there are similar consequences for not doing so? The problem is that the few who won’t will be the ones that are the very least likely to have medical expenses–the ones for whom insurance is not a good bet. So even if you only have 5% fewer people purchasing insurance, it’s the 5% that were paying the most in terms of net premiums. Furthermore, those 5% will tend to purchase insurance when they start to suspect they will need it: when they decide to have a baby, or take up skydiving, or feel the first twinges of their mother’s arthritis. There is a fundamental imbalance of information when it comes to buying health insurance, and it makes for an inherently skewed market. I am all for separating insurance from employers–if nothing else, I think it really inhibits entrepreneurship because the sorts of people that ought to be striking out on their own are the same that are too practical to do so without insurance–but I don’t see how that’s possible without an individual mandate. ---
**Author:** ![aux203](https://avatars.discourse-cdn.com/v4/letter/a/77aa72/32.png) [@aux203](https://boards.straightdope.com/u/aux203)\ **Post date:** [April 1, 2012, 12:40pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/85 "2012-04-01T12:40:59Z")
> [@Martin\_Hyde](#): > > Take my “out there” solution above, of extending Medicare to cover everyone. That would institute massive savings in Administrative costs, because Medicare is vastly more efficient than any private insurer. People need to stop saying this. It’s not true. There will be some savings, but the idea that opening Medicare to the general population will drastically reduce administrative costs has to die. The per patient administrative cost isn’t that different between CMS and private insurers. As a percentage, the difference is huge, but people who qualify for Medicare generate far more charges than the average person on a private plan. They also don’t spend much on fraud detection, rarely challenge claims, have terrible IT infrastructure, have terrible customer service… the list goes on and on. And the idea it would save providers or hospitals any administrative costs is pretty humorous. Ask any doctor if he’s trade his Aetna patients for more Medicare patients. > [@](#): > > However, unless you actually get serious about controlling that Medicare reimbursement rate, and unless you allow Medicare to say “no” to certain types of treatments, even that would just be an initial improvement. Over the long span it would still be unsustainable without serious rationing. Heh. What do you mean by controlling Medicare reimbursement rates? I mean, the only thing worse is Medicaid reimbursement rates. There’s a reason most providers try to phase Medicare patients out of their practice after a several years. But to your broader point, I agree. Rationing, or something of that nature, is needed if we want to control costs long term. > [@](#): > > Snipped odd example of a 35 and 75 year old You know, while I agree in general with making rational decision with our health care dollar, examples like the one you provided aren’t going to win over many seniors to your new plan. The 35 year old might have about 3-4 more years left than the 75, but having the government make value judgements on the meaningfulness of your life is something I imagine most people find very, very distasteful. You could just as easily argue (and many do) that the 75 year old has paid into the system for many more years than the 35 year old and deserves to reap the benefits. To address another point in this thread: Individuals can’t buy insurance because insurance companies have noticed that people are actually fairly good at predicting their need for healthcare. Even with the elevated premiums, individuals who purchase individual policies usually get more back than they paid for. In other words, if a 30 year old goes to the trouble of buying an individual premium, there’s usually a reason. This pushes premiums up to the point where even sensible, healthy 30 year olds decide not to buy it if they can’t get it through work. They’re willing to take the risk. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [April 1, 2012, 12:42pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/86 "2012-04-01T12:42:37Z")
> [@Fear\_Itself](#): > > I am not so enamored with portable insurance that I am willing to overlook the very real problems that will have to be dealt with by more than blind faith in the free market. It’s not blind faith. You were questioning whether or not an unaffiliated group was viable, and I see no actuarial reason why a group that large wouldn’t be. That’s certainly opinion at this point, but it’s got a basis in fact. Very, very large groups tend to dissipate risk. But I guess that doesn’t fit well with a “you conservatives and your blind faith in the free market” non sequitur counter. So fire away if it makes you feel better to describe the [Law of Large Numbers](http://www.irmi.com/online/insurance-glossary/terms/l/law-of-large-numbers.aspx) as some sort of conservative article of faith, but the free market is not the relevant issue in a discussion of group risk. The Law of Large Numbers: > [@](#): > > A statistical axiom which states that the larger the number of exposure units independently exposed to loss, the greater the probability that actual loss experience will equal expected loss experience. In some instances, insurers can virtually eliminate their risk of loss by securing a large enough number of units in an insured group. ---
**Author:** ![ElvisL1ves](https://avatars.discourse-cdn.com/v4/letter/e/5daacb/32.png) [@ElvisL1ves](https://boards.straightdope.com/u/ElvisL1ves)\ **Post date:** [April 1, 2012, 12:53pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/87 "2012-04-01T12:53:55Z")
I’m impressed by the fervency of those who are ardently opposed to “Obamacare” but themselves espouse an approach that is essentially _the same fucking thing_. Not surprising really, since mandatory purchase is a Heritage Foundation idea first implemented under Mitt Romney, but still disappointing. So when do we get that “repeal and replace” stuff the 'baggers promised in the last election? You know, the Don’t Let the Democrats Get Credit for Doing Anything So Let’s Do the Same Thing Ourselves Instead Bill? Still waiting. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [April 1, 2012, 1:17pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/88 "2012-04-01T13:17:20Z")
> [@Stratocaster](#): > > It’s not blind faith. You were questioning whether or not an unaffiliated group was viable, and I see no actuarial reason why a group that large wouldn’t be. As I have already demonstrated, adverse selection makes your large group weighted towards high risk individuals. > [@](#): > > So fire away if it makes you feel better to describe the [Law of Large Numbers](http://www.irmi.com/online/insurance-glossary/terms/l/law-of-large-numbers.aspx) as some sort of conservative article of faith, but the free market is not the relevant issue in a discussion of group risk. The Law of Large Numbers: If you think the Law of Large Numbers trumps adverse selection, I can only conclude you also think you can lose a little on each transaction, but make it up in volume. ---
**Author:** ![brickbacon](https://avatars.discourse-cdn.com/v4/letter/b/898d66/32.png) [@brickbacon](https://boards.straightdope.com/u/brickbacon)\ **Post date:** [April 1, 2012, 1:34pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/89 "2012-04-01T13:34:02Z")
> [@Stratocaster](#): > > It’s not blind faith. You were questioning whether or not an unaffiliated group was viable, and I see no actuarial reason why a group that large wouldn’t be. That’s certainly opinion at this point, but it’s got a basis in fact. Very, very large groups tend to dissipate risk. What you pointing out is irrelevant. There are few problems with individual markets that would necessarily raise prices: 1. Selection bias. As pointed out, employment groups are, for all intents and purposes, a random (healthier) portion of the population. When you group people in way that are non-random (eg. people who really fucking need insurance, like right now) you are going to see far more variation in costs. 2. Individuals would only get health insurance once they are at a higher risk of injury or illness. Spreading costs only works when you have a sufficiently healthy portion of the people to, in essence, support the unhealthy portion. 3. Employer-based insurance means there is a fairly static client base, which results in more predictable revenue. That predictability lowers costs. 4. Employer-based insurance means lower administrative costs are there are fewer negotiations and less oversight since there are, in essence, fewer consumers (eg. HR reps at companies) than there would be if individuals purchased them. 5. Even if you had lower premiums for healthy people, the sick people could not afford individual health insurance. The reality is sick people CANNOT AFFORD the healthcare they consume. We all know this. A diabetic, or a family with 2 autistic kids, cannot afford a plan that in any way accounts for the costs they are going to incur. This happens with car insurance too btw, where certain drivers cannot find insurance at any reasonable price. That why many states have uninsured motorist coverage, and/or state insurance plans. Again, a plan that reflects the real costs of coverage sounds good, but ultimately breaks down because most chronically ill people cannot afford care. ---
**Author:** ![gamerunknown](https://avatars.discourse-cdn.com/v4/letter/g/6bbea6/32.png) [@gamerunknown](https://boards.straightdope.com/u/gamerunknown)\ **Post date:** [April 1, 2012, 1:55pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/90 "2012-04-01T13:55:42Z")
Well, if I were a conservative, I’d advocate that all hospitals be shut down and simple Darwinian selection come into play. Except I’d be a rich conservative, so I’d also advocate taking the guns off the poor in order to make it fairer. ---
**Author:** ![monstro](https://avatars.discourse-cdn.com/v4/letter/m/ba9def/32.png) [@monstro](https://boards.straightdope.com/u/monstro)\ **Post date:** [April 1, 2012, 2:40pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/91 "2012-04-01T14:40:39Z")
> [@aux203](#): > > You know, while I agree in general with making rational decision with our health care dollar, examples like the one you provided aren’t going to win over many seniors to your new plan. The 35 year old might have about 3-4 more years left than the 75, but having the government make value judgements on the meaningfulness of your life is something I imagine most people find very, very distasteful. You could just as easily argue (and many do) that the 75 year old has paid into the system for many more years than the 35 year old and deserves to reap the benefits. I’ve thinking about this too. If I’m a 75-year-old retiree, a picture of health for my whole life, and then I’m diagnosed with stomach cancer, I’m going to be pissed that I’m being the denied the use of the healthcare I’ve paid into my whole life. So let’s say I get treated for cancer over the next three years and it’s successful. But then I break a hip, develop Parkinson’s, and then diabetes. I suppose a heartless person could regret having decided to treat the cancer, but we can’t go back in the past and fix that. So do I continue to get coverage for the current crop of problems? Or does some stone-faced committee rule that I can get my hip replaced, since that’s urgent, but I’m on my own for everything else? I would hate to make that judgment call. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [April 1, 2012, 2:42pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/92 "2012-04-01T14:42:41Z")
> [@brickbacon](#): > > What you pointing out is irrelevant. There are few problems with individual markets that would necessarily raise prices: > > 1. Selection bias. As pointed out, employment groups are, for all intents and purposes, a random (healthier) portion of the population. When you group people in way that are non-random (eg. people who really fucking need insurance, like right now) you are going to see far more variation in costs. > > 2. Individuals would only get health insurance once they are at a higher risk of injury or illness. Spreading costs only works when you have a sufficiently healthy portion of the people to, in essence, support the unhealthy portion. > > 3. Employer-based insurance means there is a fairly static client base, which results in more predictable revenue. That predictability lowers costs. > > 4. Employer-based insurance means lower administrative costs are there are fewer negotiations and less oversight since there are, in essence, fewer consumers (eg. HR reps at companies) than there would be if individuals purchased them. > > 5. Even if you had lower premiums for healthy people, the sick people could not afford individual health insurance. The reality is sick people CANNOT AFFORD the healthcare they consume. We all know this. A diabetic, or a family with 2 autistic kids, cannot afford a plan that in any way accounts for the costs they are going to incur. This happens with car insurance too btw, where certain drivers cannot find insurance at any reasonable price. That why many states have uninsured motorist coverage, and/or state insurance plans. Again, a plan that reflects the real costs of coverage sounds good, but ultimately breaks down because most chronically ill people cannot afford care. I have no idea what argument you think you’re countering, but it looks like there’s a boatload of stuff in there. Maybe you’ll listen since Fear Itself won’t. If health insurance is portable, that means that the large population of people currently shackled to their employer will no longer be so. That group of people would be enormous, and though there would be more adverse selection in play (and some cost as a result) the large numbers would make this work effectively as group insurance does, albeit with slightly higher loss experience. I’m not discussing at all in this exchange what people who can’t afford insurance will do. I am reacting to the notion that portable health insurance is inherently unaffordable (or something), when it would be largely the same people insured, or at least an enormously large percentage of them. It’s okay to disagree with this, but replies like “how about people who can’t afford insurance” or “there goes your blind faith in the free market” means that people are having a tough time with the concept I’m discussing, which is a rather narrow one in the realm of health care issues. Adverse selection is always an issue, but less so when the group in question is enormously large and peopled in the majority by those who may have a catastrophic illness, but don’t currently. Namely, most of us. I would purchase portable health insurance, for example, and I have no health issues currently. This is getting silly, and it’s clearly the talking points of people who refuse to accept any solution that doesn’t fit with the current orthodoxy (e.g., we must have a mandate, pre-existing conditions must be covered by insurers, etc.) and can’t concede the simplest of points. ---
**Author:** ![brickbacon](https://avatars.discourse-cdn.com/v4/letter/b/898d66/32.png) [@brickbacon](https://boards.straightdope.com/u/brickbacon)\ **Post date:** [April 1, 2012, 2:52pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/93 "2012-04-01T14:52:51Z")
> [@Stratocaster](#): > > Again, which state is it that you feel has an inadequate systems of insurance regulations? How are they inadequate? Explain it in detail please. This is a highly subjective question, but I will give you some specifics. For example, 35 states currently have laws related to coverage for [autism](http://www.insureme.com/health-insurance/autism-health-insurance) related interventions and treatments. In Missouri, benefits include up to $40,000 in treatments a year, covering things like, “psychiatric care, psychological care, habilitative or rehabilitative care, applied behavior analysis, therapeutic care, and pharmaceutical care.” In [Missouri](http://www.hispanicbusiness.com/2012/3/30/autism_rate_rises_to_1_in.htm), 1 in 72 kids is on the autism spectrum. That is a huge cost to insurers. Why would any insurance company cover that if they didn’t have to? They could just set up in another, less restrictive state. Another example is California. They require all insurers to [cover](http://www.cdph.ca.gov/programs/CLPPB/Pages/CACodeofRegsfull-CLPPB.aspx) [lead poisoning](http://voices.washingtonpost.com/ezra-klein/2010/02/selling_insurance_across_state.html). This is because exposure to lead-based paints and other things has become a problem there. Coverage of [diabetes](http://www.ncsl.org/issues-research/health/diabetes-health-coverage-state-laws-and-programs.aspx) is another issue. To quote this article on the disparities between states: > [@](#): > > States have recognized the major effects diabetes plays, both in its impact on patients and on society. As of mid-2009, 46 states and the District of Columbia have some law that requires health insurance policy coverage for diabetes treatment. Laws in Mississippi, Missouri and Washington require only that insurers offer coverage, but not necessarily include the coverage in all active policies. Most states require coverage for both direct treatment and for diabetes equipment and supplies that are often used by the patient at home. The four states that do not have a mandate or insurance requirement are Alabama, Idaho, North Dakota and Ohio. State tables include the enacted state laws passed since the first California mandates in 1981 and New York’s in 1993, through early 2009. For more information about diabetes legislation, visit NCSL’s Diabetes - State Legislation Overview. Again, why would any company locate in a state like Missouri, which require up to 40k/year in autism coverage and mandate diabetes care, when you can set up in Idaho? This is just small slice of the numerous things that would not be covered if you were given your druthers. It’s fine, I suppose, if you don’t have an autistic kid, or a spouse with diabetes, but if you do, you would be fucked. To your other intimation that one state would not likely have the perfect storm of lax regulation, I would counter that such an environment would naturally occur because companies would lobby for it. For the same reason why many small islands become tax havens. Insurance companies would do what credit card companies [did](http://www.pbs.org/wgbh/pages/frontline/shows/credit/more/rise.html): > [@](#): > > Had circumstances been less dire, the news of four urgent phone calls from a New York bank in a single day likely would have been easier to ignore. "Nobody’s historically more suspicious of outsiders than South Dakotans,‘’ Bill Janklow, the former governor of South Dakota, told FRONTLINE in a recent interview. > > But it was 1980, South Dakota’s economy was a mess, and suspicion was an instinct that Janklow could not afford. "We were in the poor house,‘’ he recalled. "It cost 42 cents a bushel in 1980 to haul wheat. When something’s only selling for $2.20 a bushel, you certainly can’t afford to be paying almost 50 cents a bushel to ship it.‘’ > > The calls were from Citibank, which was having a serious problem of its own. "It was very simple,‘’ said Walter Wriston, then the chairman of Citibank. "We were going broke.‘’ > > The bank had lost more than $1 billion on its audacious foray into the credit card business, and the future looked even worse. The trouble, simply put, was that the rate of inflation exceeded the amount of interest Citibank was allowed to charge its credit card customers under New York usury laws. > > But the bankers saw opportunity and salvation in the plains of South Dakota. Within days of those first phone calls, a team of top executives arrived from New York with a proposal for Mr. Janklow: If South Dakota would quickly pass legislation that would enable Citibank to move its credit card operations to the state, they would bring hundreds of high-paying white collar jobs to the state. > > The unlikely alliance would clear the way for Citibank to turn a money-losing credit card operation into a vastly profitable business. "All of their senior people used to say it,‘’ Mr. Janklow said. "That South Dakota saved Citibank. I believe it did. That South Dakota saved Citibank.‘’ > > In an effort to stimulate the local economy, South Dakota was in the midst of eliminating its usury laws. Mr. Wriston told Mr. Janklow that if South Dakota would quickly pass a bill inviting Citibank into the state, he would bring 400 jobs. To preempt concerns from local banks about new competition, Citibank also promised to open only “a limited” bank. “We’ll put the facility in an inconvenient place for customers and we’ll pay different interest rates,” Mr. Wriston recalled telling Mr. Janklow. "All we want to do is use it to issue cards.‘’ > > For Mr. Janklow, it was an easy decision. > > “To me, this wasn’t a credit card deal, it was a jobs deal,” he said. “It was an economic opportunity for the state. I was slowly bleeding to death.” > > With bipartisan support and backing from South Dakota’s banking association, Janklow proposed a special "emergency’’ bill. "Citibank actually drafted the legislation,‘’ he said. "Literally we introduced it, and it passed our legislature in one day.‘’ > > The arrangement ultimately brought 3,000 high-paying jobs to South Dakota and a host of new suitors from banks across the country. Citibank seemed to just be the beginning. > > "It did fall out of the sky,‘’ Mr. Janklow said. "I was going to sleep at night thinking that we were the new financial center of America.‘’ > > But other states were quick to catch on. Delaware, which passed similar legislation the following year, would foil Mr. Janklow’s dreams. “By that time, we’d captured a lot, but we thought we were going to get them all. Chase, Manufacturer’s Hanover, Chemical – they all went to Delaware. They were coming here,” he said. > > South Dakota would never become the next New York or Hong Kong, but Bill Janklow carved out a niche in credit card operations that remains one of the largest sources of jobs in the state. “The tragedy to me is that if Delaware would have waited one year,” he said, “we would have had 20,000 more jobs in this state today.” Profit-seeking companies will always go towards the path of least resistance. That’s fine in general, but the concern would be that insurance companies typically do that by limiting care, or rather, limiting the way the subsidize care, which in effect rations care. That is usually a bad thing. More importantly, selling across state lines will not really save money, or produce better outcomes. The CBO looked at this during the debate over H.R. 2355, Health Care Choice Act of 2005. The conclusion was as [follows](http://www.thedailybeast.com/newsweek/blogs/the-gaggle/2010/02/18/selling-health-insurance-across-state-lines-won-t-work.html): > [@](#): > > As it happens, the Congressional Budget Office looked at a bill along these lines back in 2005. They found that the legislation wouldn’t change the number of the uninsured and would save the federal government about $12 billion between 2007 and 2015. That is to say, it would do very little in the aggregate. > > But those top-line numbers hid a more depressing story. The legislation “would reduce the price of individual health-insurance coverage for people expected to have relatively low health-care costs, while increasing the price of coverage for those expected to have relatively high health-care costs,” CBO said. “Therefore, CBO expects that there would be an increase in the number of relatively healthy individuals, and a decrease in the number of individuals expected to have relatively high cost, who buy individual coverage.” Doesn’t sound so bad until you look a little deeper. To quote Princeton health care economist, Uwe Reinhardt: > [@](#): > > Reinhardt says the places where purchasing out-of-state insurance is most tempting—New York for example, where the market is heavily regulated and plans are community rated—are places where the cost of care itself is also expensive. A New Yorker might choose to purchase a plan from Texas, where the insurance market is less regulated and cheaper. But the New Yorker with a Texan plan still has to pay for New York–based health care. Allowing insurers to cover people in other states does nothing to bring down the cost of care itself. Texan insurers, unused to paying such high costs, have little incentive to cover expensive New York procedures, except if they can cherry-pick the young healthy people. That leaves an older, sicker, more expensive pool in the already pricey New York market. “The bargains just won’t be there. The profit margin on top of what providers charge is not that great. Insurers can’t afford it,” says Reinhardt. “Republicans claim to have all these solutions, but they’re nonsolutions.” > > In short, Texan insurers can’t afford New York health care any more than New Yorkers can. Even if they could sell into that market, why would they want to? His last point is the most important. Insurance premiums are highly correlated with actual health care costs, not administrative overhead and regulatory burdens. This is because the health outcomes and the care given vary wildly even within [states](http://www.newsobserver.com/2009/11/06/176892/insurance-across-state-lines.html). > [@](#): > > I suspect that an insurance company selling a policy in Arkansas wouldn’t mind if I purchased such a policy so long as I went to Arkansas to use health care. If I wanted to buy a policy developed for consumers in Arkansas, but wanted to use care in North Carolina, they likely wouldn’t sell it to me because the premium is based on the health care experience of someone living in Arkansas. Similarly, car insurance rates are based on loss rates in the ZIP code in which you live, because that is where you car is most often at risk of becoming a loss. > > An individual health insurance premium is based on several factors: the health of the customer and therefore the expected use of care, the benefits covered, the provider network (doctors and hospitals) that patients can use and how medicine is practiced where the patient lives. State regulations influence benefits and therefore premiums. However, the way medicine is practiced (called practice patterns) where the insured person lives has a tremendous influence on premiums, but it greatly affects the expected losses of an insurance company. > > For example, in 2006, Medicare beneficiaries in McAllen, Texas, received an average of $15,000 in Medicare-financed care; in El Paso - an area with similar demographics and health status - Medicare beneficiaries received half as much, around the national average. Medicare includes the same benefits across the nation and sets payment rates. This expenditure differential cannot be explained by even indirect effects of health insurance regulation because these cities are in the same state and therefore subject to the same regulations. > > The twofold difference is due primarily to practice patterns, or differences in how medicine is practiced in these two locales. This variation in how care is practiced is the main reason a premium quoted in one state won’t hold in another. So you will never get Alabama prices in New York, because the underlying costs (eg. NY property costs, taxes, etc.) and standards of care, are very different. Furthermore, what you are often buying with health-insurance is the provider network. Why would any doctor accept lower payments that don’t cover the costs? So even if your out of state company can attract customers via lower costs, they don’t necessarily have a local provider network that will agree to accept their rates. Think about it. Let’s say some rich guy wants to start Joe’s discount insurance company. I can do a few things to be profitable: 1. Charge more in premiums than I pay out in fees and admin costs 2. Negotiate discounts with providers in exchange for customer volume It’s very hard to achieve #2 because it raises admin costs, thus raising premiums, which chases away customers… This idea you have that this is come panacea doesn’t really pan out. More importantly, why can McDonalds, Home Depot, WalMart, and every other company navigate this regulatory nightmare of state mandates and laws, but health insurance companies can’t? ---
**Author:** ![Lobohan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lobohan/32/79_2.png) [@Lobohan](https://boards.straightdope.com/u/Lobohan)\ **Post date:** [April 1, 2012, 2:54pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/94 "2012-04-01T14:54:10Z")
> [@Stratocaster](#): > > This is getting silly, and it’s clearly the talking points of people who refuse to accept any solution that doesn’t fit with the current orthodoxy (e.g., we must have a mandate, pre-existing conditions must be covered by insurers, etc.) and can’t concede the simplest of points. You’re the one who doesn’t believe that the race to the bottom will happen and that via magic prices will lower and quality of care won’t if insurance companies get to look at a list of 50 sets of regulations and move to the state that’s the most profitable to them. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [April 1, 2012, 2:56pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/95 "2012-04-01T14:56:32Z")
> [@Lobohan](#): > > You’re the one who doesn’t believe that the race to the bottom will happen and that via magic prices will lower and quality of care won’t if insurance companies get to look at a list of 50 sets of regulations and move to the state that’s the most profitable to them. What a dishonest summation. Typical. ---
**Author:** ![Lobohan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lobohan/32/79_2.png) [@Lobohan](https://boards.straightdope.com/u/Lobohan)\ **Post date:** [April 1, 2012, 2:59pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/96 "2012-04-01T14:59:04Z")
> [@brickbacon](#): > > This is a highly subjective question, but I will give you some specifics. For example, 35 states currently have laws related to coverage for [autism](http://www.insureme.com/health-insurance/autism-health-insurance) related interventions and treatments. In Missouri, benefits include up to $40,000 in treatments a year, covering things like, “psychiatric care, psychological care, habilitative or rehabilitative care, applied behavior analysis, therapeutic care, and pharmaceutical care.” In [Missouri](http://www.hispanicbusiness.com/2012/3/30/autism_rate_rises_to_1_in.htm), 1 in 72 kids is on the autism spectrum. That is a huge cost to insurers. Why would any insurance company cover that if they didn’t have to? They could just set up in another, less restrictive state. > > Another example is California. They require all insurers to [cover](http://www.cdph.ca.gov/programs/CLPPB/Pages/CACodeofRegsfull-CLPPB.aspx) [lead poisoning](http://voices.washingtonpost.com/ezra-klein/2010/02/selling_insurance_across_state.html). This is because exposure to lead-based paints and other things has become a problem there. Coverage of [diabetes](http://www.ncsl.org/issues-research/health/diabetes-health-coverage-state-laws-and-programs.aspx) is another issue. To quote this article on the disparities between states: > > Again, why would any company locate in a state like Missouri, which require up to 40k/year in autism coverage and mandate diabetes care, when you can set up in Idaho? This is just small slice of the numerous things that would not be covered if you were given your druthers. It’s fine, I suppose, if you don’t have an autistic kid, or a spouse with diabetes, but if you do, you would be fucked. > > To your other intimation that one state would not likely have the perfect storm of lax regulation, I would counter that such an environment would naturally occur because companies would lobby for it. For the same reason why many small islands become tax havens. Insurance companies would do what credit card companies [did](http://www.pbs.org/wgbh/pages/frontline/shows/credit/more/rise.html): > > Profit-seeking companies will always go towards the path of least resistance. That’s fine in general, but the concern would be that insurance companies typically do that by limiting care, or rather, limiting the way the subsidize care, which in effect rations care. That is usually a bad thing. > > More importantly, selling across state lines will not really save money, or produce better outcomes. The CBO looked at this during the debate over H.R. 2355, Health Care Choice Act of 2005. The conclusion was as [follows](http://www.thedailybeast.com/newsweek/blogs/the-gaggle/2010/02/18/selling-health-insurance-across-state-lines-won-t-work.html): > > Doesn’t sound so bad until you look a little deeper. To quote Princeton health care economist, Uwe Reinhardt: > > His last point is the most important. Insurance premiums are highly correlated with actual health care costs, not administrative overhead and regulatory burdens. This is because the health outcomes and the care given vary wildly even within [states](http://www.newsobserver.com/2009/11/06/176892/insurance-across-state-lines.html). > > So you will never get Alabama prices in New York, because the underlying costs (eg. NY property costs, taxes, etc.) and standards of care, are very different. > > Furthermore, what you are often buying with health-insurance is the provider network. Why would any doctor accept lower payments that don’t cover the costs? So even if your out of state company can attract customers via lower costs, they don’t necessarily have a local provider network that will agree to accept their rates. > > Think about it. Let’s say some rich guy wants to start Joe’s discount insurance company. I can do a few things to be profitable: > > 1. Charge more in premiums than I pay out in fees and admin costs > 2. Negotiate discounts with providers in exchange for customer volume > > It’s very hard to achieve #2 because it raises admin costs, thus raising premiums, which chases away customers… > > This idea you have that this is come panacea doesn’t really pan out. More importantly, why can McDonalds, Home Depot, WalMart, and every other company navigate this regulatory nightmare of state mandates and laws, but health insurance companies can’t? That right there is a beefy post. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [April 1, 2012, 3:03pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/97 "2012-04-01T15:03:44Z")
> [@brickbacon](#): > > This idea you have that this is come panacea doesn’t really pan out. More importantly, why can McDonalds, Home Depot, WalMart, and every other company navigate this regulatory nightmare of state mandates and laws, but health insurance companies can’t? Carriers can and do navigate the multi-state regulatory framework. I think we’ll continue to be at loggerheads, because I firmly believe that in an environment where choices are available, understood, and priced appropriately, people will buy what they want, assuming it’s available. It is not a given for me, as it seems to be for some, that there would be an inexorable progression to horrible coverage, that this is necessarily the end to a less restrictive environment. I think another fundamental disagreement is that I disagree the state should be able to compel a carrier what coverage they must provide. But setting that aside, if people want autism coverage, and are willing to pay for it, why wouldn’t a carrier provide it? Now, once someone already has someone with that condition, they no longer need insurance. They need someone to pay their medical bills. I don’t mean to trivialize that, but it’s not an insurance issue. It needs a solution that is not insurance. ETA: I also have no illusions that opening the regulatory borders solves all health care issues. ---
**Author:** ![brickbacon](https://avatars.discourse-cdn.com/v4/letter/b/898d66/32.png) [@brickbacon](https://boards.straightdope.com/u/brickbacon)\ **Post date:** [April 1, 2012, 3:03pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/98 "2012-04-01T15:03:56Z")
> [@Stratocaster](#): > > I have no idea what argument you think you’re countering, but it looks like there’s a boatload of stuff in there. Maybe you’ll listen since Fear Itself won’t. If health insurance is portable, that means that the large population of people currently shackled to their employer will no longer be so. This is not an absolute good if the alternative is to buy it individually. The fact that is employer based makes it a more stable market, with more stable revenues for insurance companies. That stability and predictability reduces costs. Furthermore, it serves as a useful proxy for weeding out the sick and costly from the group. Those who cannot work will not be included in the group, and people who have very costly disease will often be fired. I know it’s illegal, but it happens enough to recognize it’s not a bug, it’s a feature. Obviously, there are downsides to employer-based insurance, but it’s not the absolute good for insurance companies that you present it as. > [@Stratocaster](#): > > That group of people would be enormous, and though there would be more adverse selection in play (and some cost as a result) the large numbers would make this work effectively as group insurance does, albeit with slightly higher loss experience. But it’s not a “group”, its a bunch of individuals. That is a very different thing. > [@Stratocaster](#): > > I’m not discussing at all in this exchange what people who can’t afford insurance will do. I am reacting to the notion that portable health insurance is inherently unaffordable (or something), when it would be largely the same people insured, or at least an enormously large percentage of them. It’s okay to disagree with this, but replies like “how about people who can’t afford insurance” or “there goes your blind faith in the free market” means that people are having a tough time with the concept I’m discussing, which is a rather narrow one in the realm of health care issues. But that’s the point. The main thing all of these people are trying to address how to deliver healthcare more efficiently. Leaving people uninsured raises the costs because the providers pass that on to insurance companies who then pass it on to the insured. Any system that increases the number of uninsured, as portable insurance without sufficient regulation would, is a net loss. > [@Stratocaster](#): > > Adverse selection is always an issue, but less so when the group in question is enormously large and peopled in the majority by those who may have a catastrophic illness, but don’t currently. Namely, most of us. I would purchase portable health insurance, for example, and I have no health issues currently. But many wouldn’t. Put it this way. Let’s talk about a typical diabetic. With portable insurance, could they afford coverage? ---
**Author:** ![Lobohan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lobohan/32/79_2.png) [@Lobohan](https://boards.straightdope.com/u/Lobohan)\ **Post date:** [April 1, 2012, 3:05pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/99 "2012-04-01T15:05:53Z")
> [@Stratocaster](#): > > What a dishonest summation. Typical. You literally believe that all states are equal, right? That with tens of billions of dollars on the line, that insurance companies won’t look for the state that allows them to make the most money by flocking to the most favorable (for the insurance companies) set of rules, right? You think that the competition will drive prices down, right? Where am I dishonest there? Specifically. What process would you call it where insurance companies go against their economic interests and lower costs and keep services even? You may not believe it is literally magic, but I’m not sure science has an explanation. 😃 ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [April 1, 2012, 3:11pm UTC](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350/100 "2012-04-01T15:11:45Z")
> [@Lobohan](#): > > You literally believe that all states are equal, right? That with tens of billions of dollars on the line, that insurance companies won’t look for the state that allows them to make the most money by flocking to the most favorable (for the insurance companies) set of rules, right? No! Why would you say that? I have said I believe there is no state whose regulatory framework is inadequate, or at least that no one has provided evidence for that conclusion. > [@](#): > > You think that the competition will drive prices down, right? Where am I dishonest there? Specifically. Where did I say competition will drive prices down? I said less regulatory restrictions tends to increase expenses. > [@](#): > > What process would you call it where insurance companies go against their economic interests and lower costs and keep services even? You may not believe it is literally magic, but I’m not sure science has an explanation. 😃 And the trifecta. I specifically explained to you that it is in the company’s economic interests to provide fair, quality coverage. You can disagree with that, but it is a dishonest summation to say I believe companies will ignore profits (or something, your posts are a bit incoherent, frankly). I realize it’s a given for you that “evil” equals “most profits,” but that has not been my experience in 30 years in the financial services industry. [Previous page](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350.md?page=4) [Next page](https://boards.straightdope.com/t/conservatives-what-should-we-do-about-people-who-cant-pay-for-medical-care/617350.md?page=6)