Does Obamacare tax health?

Obamacare regulates health insurance markets such that the healthy subsidize the sick.

It is a casual rule of economics that it is best to tax what we want less of and leave alone what we want more of.

This rule seems upended in the health care debate. Basically, A != A, healthy people become sick people at the drop of a hat. We have to tax healthy people for their own benefit, and ride sick people onto them for the sake of Justice.

No, actually we need to leave the healthy alone, unencumbered, since that is what society wants: the healthy. Therefore, we ought to tax ______.

I don’t think it’s accurate to say it taxes health, as the tax requirements are intended to be independent of health.

It does make some sense to say that it pays people who are sick. Now, as perverse incentives go, this one is somewhat mitigated as most people tend to not want to get sick. The vast majority of the populace simply does not want to maximize their consumption of medical care. Therefore the market distortions of this subsidy are relatively small in comparison to most other forms of government subsidy. The experiment has been done in other countries, and actual single payer systems have been found to be much more cost effective than the current US model of public only-pay-for-emergency-room-care.

For rational people, experiment trumps theory no matter how many Randian buzzwords you throw at it.

Doesn’t the ACA tax uninsured people to subsidize people with medical insurance? Isn’t that taxing what we don’t want to subsidize what we do want?

That’s how ALL insurance works - the non-users’ premiums subsidize the heavy users.

Taxing poor health won’t make sickness go away. That’s now how health works.

Wait, I thought insurance pools risk, not punishes health…

Does this mean that fire insurance punishes people with non-burning houses?

I think people see insurance as punishment because you will often not need to use that insurance in your lifetime, but have to pay for it. I doubt I’ll ever be in a house fire, so I’m resentful of paying fire insurance, but of course if my house burns down I will definitely be glad I paid for it! A good driver might be unhappy that auto insurance is mandatory, but it’s a good way of managing risk for pools of drivers.

Health insurance is somewhat different. Even young, healthy people have medical needs. Where I work (a Canadian employer) we have a really good private health insurance plan (the province doesn’t cover everything, such as drugs or glasses/eye doctor visits). I’ve only gotten glasses and one other thing on that insurance, yet it has already paid for itself, at least for my first year when I had to pay for the insurance. (The employer decided afterward that they would cover the entire cost, which was even more awesome.) There are people at my office who are in far worse health, use up far more insurance, and are paying the same rates I’m paying. Getting that insurance is mandatory while working there, but I heard zero complaints about that when we had to pay for it. I doubt anyone sees that as “punishment”.

Tax policy is often used to “guide” consumer behavior. The government can’t get into someone’s face and force them to buy a health plan, but you can tax them for not having one. The person might conclude that a relatively cheap health plan costs less than the tax (or not too much more than the tax) and they might as well get that instead. If they get sick, or need to buy new glasses, or whatever, they’ll be somewhat thankful they had the insurance in the first place. Unfortunately any sort of reasonable plan is pretty expensive, relative to the value of services you might have used in a good year. I doubt you’ll have many people in the US in my situation where the relatively low cost of services that I pay out of pocket are still always more than what I’m paying for the insurance. Of course there will be resentment.

Missed edit window

Pretty sure that should be “I doubt you’ll have many people in the US in my situation where the relatively low amount of money saved because insurance covers most of the cost are always still more than what I’m paying for insurance”.

I don’t understand why this is such a difficult concept for some people to grasp.

By coincidence(?) another recent thread asks about the Rothschild-Stiglitz model and the associated “Wellness Tax”.

TL;DR: Having the healthy help the sick is not only logical and humanitarian, but necessary for an efficient insurance system.

They grasp it all right. They don’t like it.

Of course, one of the problems here is the “pre-existing conditions” debate. Traditional insurance works because no one knows who will need it. Any one of us might get a completely unexpected cancer.

But once a guy has cancer, it stops making sense to “insure” him (in the traditional sense.) We don’t sell fire insurance to a guy whose house is afire.

The trouble is that this makes insurance companies into monsters, denying paid access to treatment to the people who need is the most desperately. The traditional model fails, and has to be altered or replaced. Mandating that insurance companies cover people with PEC is a “tax on the healthy” that benefits the unhealthy, but most people favor it for moral reasons.

Higher premiums for the elderly also falls into this moral trap. Economically, it makes perfect sense, because older people need more care. But as a moral/ethical case, it’s disturbing. This is why medicare is favored by so many: it helps close that moral gap.

Not only that, that the ACA makes insurance mandatory, and if you refuse to buy it, you must pay a fine, which SCOTUS tells us is a tax. Now, if you’re healthy and don’t want insurance, you pay a tax if you don’t buy any. Certainly in that sense, the ACA taxes healthy people, if not “health”. Because a major part of what is supposed to make it work is forcing healthy people to buy something they might ordinarily buy.

I hope this post is a joke. Because aside from the other problems mentioned, if you tax to drive behavior, it must be behavior that people can control, like smoking. Kind of hard to control getting cancer.

Healthy in the sense of healthy at the moment they make the decision, not necessarily healthy over the year of coverage. And maybe not even then, since a sick person may decide to forgo coverage to use the money for other things, and thus burdening the system.

Typo, but a highly appropriate one.

Because sick people are takers. Just like poor people.

I don’t understand this mindset; is the world divided into ‘sick people’ and ‘well people’, because I occupy a world where I have been sick occasionally but I am mostly well, and hope to be mostly well until sometime into retirement, when I expect to need medical care more often.

That, as far as I understand, is the human condition. There is no us and them, just us.

Oh my. I see why some people think this is a joke post, so much of it is either in error, or self-contradictory.

The ACA doesn’t "regulate health insurance markets such that the healthy subsidize the sick. "

It is not a “casual rule of economics” that we should tax what we want less of, and leave alone what we want more of.

“This rule seems upended in the health care debate. Basically, A != A, healthy people become sick people at the drop of a hat. We have to tax healthy people for their own benefit, and ride sick people onto them for the sake of Justice.” This is nonsense and falsehoods blended together into an inept propaganda statement.

All in all, this appears to me to be a somewhat clumsy attempt to present again, some recent erroneous talking points of opponents to the ACA, who were trying to play clever games, rather that coming up with any genuinely useful criticism.

I hate “clever” arguments. They almost invariably interfere with any real problem solving or conflict resolution.

Let me see if I can restate this very poorly executed “clever” argument, for clarity:

  1. Make a false statement about the ACA (including mislabeling it),to the effect that it was designed primarily to regulate health care insurance markets, and that the primary method of that manipulation is to force healthy people to pay for unhealthy people. Note that the ACA includes a tax penalty for non-compliance.

  2. Misstate the observation that people tend to try to avoid doing something, if doing that thing increases their taxes, and twist it to pretend it means that taxes inevitably cause less of what it taxed, and contrarily, that NOT taxing something directly causes more of what is not taxed.

  3. Claim that therefore, taxing healthy people will cause them to want to be less healthy, and paying to care for sick people will cause everyone who is now healthy, to want to become ill.

That is a clear and direct translation of this opening post. Once made clear, it is obviously nonsensical, because as most “clever” arguments do, it selects a tiny few factual elements, and pointedly ignores far more influential elements in order to seem “clever,” at the expense of actually being of any real value.

Let’s not get too excited here, folks. My motive with this thread is that, considering the recent actions taken by the POTUS to sabotage Obamacare, it looks like we are going to have to go through the health care debate all over again. I want to look at the kinds of objections the GOP makes to the whole project and make sure there isn’t some way they make sense that I may have missed. I have little hope of being able to persuade right wingers to change their views, but if I am to have any chance at success at all I think I understand better how they see things.

This kind of objection seems likely to come up. What is actually the alternative to taxing healthy people? Can this conversation have any endpoint other than just screwing up an honest attempt to talk about solving America’s health care troubles?

Alternatives I would support, primarily involve ending this nonsense about basing everything on an “insurance model.”

The reason why so many purposeful overcharges occur, is because we insist on the insurance model. It is insurance companies who demand that each treatment be predictable, and therefor NOT be designed to fit the particular patient. It is insurance companies who demand that the ACA establish limits to treatments, and set prices for treatments, so that they can make appropriate predictions and set mathematically profitable rates.

If nothing else, the only way to have insurance function, is to ADD the cost of the insurance on top of the actual cost of treatments.