# Does Obamacare tax health? **URL:** \ **Category:** Great Debates\ **Created:** [October 14, 2017, 4:11am UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781 "2017-10-14T04:11:06Z")\ **Posts on this page:** 15\ **Page:** 2
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 15, 2017, 2:11am UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/21 "2017-10-15T02:11:10Z")
> [@igor\_frankensteen](#): > > 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. You are worrying about the details of implementation. The OP (which was honestly trying to echo right wing opinions, and therefore looked like a joke) was talking about the fundamentals of how any such system would work. The insurance model spreads the costs over a wider pool, and would be valid even if the overhead was somehow magically zero. You can compute the benefit of insurance as the possible payout times the probability of the payout occurring. This is relevant not just for health, fire and life, but also for calculating the benefit of adding features to a chip which might detect failures in the chip - failures which are not guaranteed to occur. The best indication that this works is term life insurance. Very few people are pissed off if they reached the end of the term and are still alive. If they were, term insurance would not be salable. Neither are beneficiaries - most of them, anyhow. Underwriters don’t require or expect each treatment to be predictable, just that for the pool the costs are predictable. The bigger the pool the more predictable the risk is, a great argument for universal single payer insurance. Companies can make more profit if they eliminate high risk people from the pool, thus rejecting those with pre-existing conditions. But then we have the social costs of these people (who are not responsible for their conditions) paying or the government paying. And customers would rather not pay if the expected value of their return is too low, the “healthy” problem. Make it universal, take away the profit motive, and it all becomes simpler and more efficient. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [October 15, 2017, 11:12am UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/22 "2017-10-15T11:12:36Z")
> [@up\_the\_junction](#): > > 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. I’m not sure what you think my “mindset” is; nor if our opinions differ. The whole point of the Rothschild-Stiglitz model is that insurance companies do NOT know in advance who will get injured or sick. However the knowable chance of future sickness does differ between individuals. Do you think people with “pre-existing conditions” should be able to get affordable insurance? ---
**Author:** ![up\_the\_junction](https://avatars.discourse-cdn.com/v4/letter/u/f1d935/32.png) [@up\_the\_junction](https://boards.straightdope.com/u/up_the_junction)\ **Post date:** [October 15, 2017, 11:58am UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/23 "2017-10-15T11:58:39Z")
I was disagreeing with the categorisation of two groups. It seems a bizarre way to think about healthcare, though probably perfectly logical for American economists. As I suggested, it’s a lifetime during which most people are mostly well and occasionally ill. ‘pre-existing condition’ is a US contractual phrase I’d imagine. Do you mean pre-birth? Otherwise,in UHC it’s just a condition. ---
**Author:** ![Broomstick](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/broomstick/32/246_2.png) [@Broomstick](https://boards.straightdope.com/u/Broomstick)\ **Post date:** [October 15, 2017, 1:45pm UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/24 "2017-10-15T13:45:56Z")
“pre-existing condition” is a condition you had before or at the time your current health insurance policy took effect. There was a point in time some insurance companies were writing policies that excluded coverage for birth defects, arguing they were “pre-existing conditions” but public outrage ended it. At least for infants. The subject can get both complicated and cruel. ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [October 15, 2017, 4:24pm UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/25 "2017-10-15T16:24:46Z")
> [@septimus](#): > > . . . Do you think people with “pre-existing conditions” should be able to get affordable insurance? It’s a crappy workaround, but the only alternative is to force such people into medical bankruptcy, and that’s worse. So, yes, the law should compel insurance companies to “insure” such people. ---
**Author:** ![Some\_Call\_Me.Tim](https://avatars.discourse-cdn.com/v4/letter/s/439d5e/32.png) [@Some\_Call\_Me.Tim](https://boards.straightdope.com/u/Some_Call_Me.Tim)\ **Post date:** [October 15, 2017, 5:39pm UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/26 "2017-10-15T17:39:34Z")
> [@Trinopus](#): > > It’s a crappy workaround, but the only alternative is to force such people into medical bankruptcy, and that’s worse. So, yes, the law should compel insurance companies to “insure” such people. I think that most of the developed countries in the world would disagree with the claim that the only ways to provide medical care to people who are known to have costly ailments are to force insurance companies to cover them or to force them into bankruptcy. In fact, much of the rest of the world regards medical insurance as an awkward, half-assed way to guarantee medical care to the populace. I’m not saying that I think the ACA is worse than the US status quo prior to the ACA- rather, we need to broaden our scope of consideration of possible health care systems beyond that false dichotomy. ---
**Author:** ![AI\_Proofreader](https://avatars.discourse-cdn.com/v4/letter/a/8dc957/32.png) [@AI\_Proofreader](https://boards.straightdope.com/u/AI_Proofreader)\ **Post date:** [October 15, 2017, 6:38pm UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/27 "2017-10-15T18:38:30Z")
> [@Try2B\_Comprehensive](#): > > 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? The alternative is no health insurance at all. As pointed out repeatedly by others in the thread, that’s how insurance \*works; those not expected to utilize the benefits of the insurance pay into the system, and their money covers the costs of those who do need those benefits, plus a profit margin for the insurance company. If \*only sick people paid into the system, either the prices would be so astronomical that very few could afford it, or the system would collapse because the amount paid in claims would be far more than the insurance companies are receiving in premiums. Bear in mind 50% of Americans have $30,000 a year or less in income, so the amount that can be considered affordable is much lower than the cost of the health treatment people are receiving. So removing the “tax” on healthy people means a reversion to complete free-market healthcare, the ideal that they’ve been pushing for this year. But there are virtually no cost-controls on healthcare, so this effectively means only the wealthy can afford it. Everyone else just gets sick and dies. It’s also worth noting that healthcare is basically a ready-made monopoly; are you going to drive to the next town to use their E.R. to stitch your severed thumb back on, because it’s cheaper? Are you able to specify \*which ambulance company comes to pick you up when you have a heart attack? The “free-market, increased choice” arguments are complete fallacy whether referring to insurance, or the healthcare itself. So we’re left with either providing treatment to most people via health insurance (which isn’t saying much; 45,000 people still die every year in the U.S. due to basic lack of healthcare), or abolishing it altogether. No health insurance at all would be a disaster and make that number skyrocket. The other alternative would be a single-payer system like Medicare, but paid for in taxes to the government instead of premiums to a health insurance company. ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [October 15, 2017, 6:56pm UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/28 "2017-10-15T18:56:12Z")
> [@AI\_Proofreader](#): > > Everyone else just gets sick and dies. ‘They had better do it, and decrease the surplus population.’ – Ebenezer Scrooge ---
**Author:** ![igor\_frankensteen](https://avatars.discourse-cdn.com/v4/letter/i/839c29/32.png) [@igor\_frankensteen](https://boards.straightdope.com/u/igor_frankensteen)\ **Post date:** [October 15, 2017, 7:36pm UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/29 "2017-10-15T19:36:22Z")
> [@Voyager](#): > > You are worrying about the details of implementation. The OP (which was honestly trying to echo right wing opinions, and therefore looked like a joke) was talking about the fundamentals of how any such system would work. > The insurance model spreads the costs over a wider pool, and would be valid even if the overhead was somehow magically zero. You can compute the benefit of insurance as the possible payout times the probability of the payout occurring. This is relevant not just for health, fire and life, but also for calculating the benefit of adding features to a chip which might detect failures in the chip - failures which are not guaranteed to occur. > > The best indication that this works is term life insurance. Very few people are pissed off if they reached the end of the term and are still alive. If they were, term insurance would not be salable. Neither are beneficiaries - most of them, anyhow. > > Underwriters don’t require or expect each treatment to be predictable, just that for the pool the costs are predictable. The bigger the pool the more predictable the risk is, a great argument for universal single payer insurance. > Companies can make more profit if they eliminate high risk people from the pool, thus rejecting those with pre-existing conditions. But then we have the social costs of these people (who are not responsible for their conditions) paying or the government paying. And customers would rather not pay if the expected value of their return is too low, the “healthy” problem. Make it universal, take away the profit motive, and it all becomes simpler and more efficient. Okay, I read this several times, and parts of it are confusing to me, so bear with me a bit. I think you have some things incorrect or incomplete in your appreciation of insurance effects within the health industry. Mainly, the insurance companies don’t call for specifics in treatments because they want to be able to predict treatment costs. They do that because of the OTHER leg of the insurance influence over health, which is the business insurance that providers have to have. To avoid high malpractice insurance costs, the AMA sets standards up for medical people to follow, so as to minimize accusations of incomplete or overdone or ill-advised experimental treatments. This SEEMS to make sense, in that you want medical experts to decide what is and isn’t good medicine, but it has the side effect, in conjunction with the insurance model, in that your treatment content and cost is predetermined before you go to see a doctor. It also causes in turn, a fair amount of the weird pricing of other services in medicine, because once the AMA sets a price point, the insurance company will accordingly refuse to pay more than that; if the providers actual costs are higher than they are allowed to bill, or to be paid (when customers can’t afford the overage), the providers tend to move the needed profit elsewhere that doesn’t have such limits. This is why you get hundred dollar aspirin tablets and the like. The goal of insurance concepts is NOT to “spread the costs out.” At least, it is not the goal of insurance concepts to spread the cost TO THE INSURED out amongst everyone. The goal is to spread THEIR OWN COSTS out, and have them covered by their customers. It may be a subtle difference, but it’s a very important one. The goal of a TAX based system is to spread the costs out amongst everyone. I think a few of your similes are faulty as well. Fire insurance doesn’t pay the cost of putting the fires OUT. It pays the cost of recovering financially AFTER the fire is out. Actually dealing with fires, is usually handled by the government as a general tax cost for the entire society. The equivalent in the medical world, might be that the society (through their government) pays to provide your medical needs, but you pay for insurance to restore your missed wages and lost business opportunities because you were injured or sick. As for term life insurance, that product was invented to try to make additional money for the insurance companies, from the people who couldn’t afford regular whole life insurance. It essentially is the equivalent of providing super cut rate coverage, with specific exclusion of death by natural causes, including old age. Nothing wrong with that, it just isn’t a valid part of this discussion. “Make it universal, take away the profit motive, and it all becomes simpler and more efficient.” That part I agree with completely. I just think that the insurance model approach is in direct opposition to that, because insurance is ALWAYS about profit and not about health. ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [October 15, 2017, 7:55pm UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/30 "2017-10-15T19:55:57Z")
> [@Some\_Call\_Me.Tim](#): > > I think that most of the developed countries in the world would disagree with the claim that the only ways to provide medical care to people who are known to have costly ailments are to force insurance companies to cover them or to force them into bankruptcy. . . . I never said that, exactly. Most certainly the Canadian, Australia, British, German, Japanese (etc!) models are alternatives – and a damn sight better than heavily regulated insurance. I was only saying that regulations to require coverage for PEC is better than pure risk-based insurance, where PECs would be excluded. Like getting your ulna broken is better than getting your humerus broken… Better not to break anything at all, but the U.S. doesn’t seem ready to consider the kinds of plans everyone else uses! ---
**Author:** ![gatorslap](https://avatars.discourse-cdn.com/v4/letter/g/bb73d2/32.png) [@gatorslap](https://boards.straightdope.com/u/gatorslap)\ **Post date:** [October 15, 2017, 8:22pm UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/31 "2017-10-15T20:22:44Z")
The cost of health care services is itself functionally a tax that discourages people from getting healthier. Expanding Medicaid, getting more people insured, the mandates on what must be covered, and the regulated limits on out-of-pocket costs all serve to reduce that “tax”. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 16, 2017, 3:10am UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/32 "2017-10-16T03:10:43Z")
> [@igor\_frankensteen](#): > > Okay, I read this several times, and parts of it are confusing to me, so bear with me a bit. > > I think you have some things incorrect or incomplete in your appreciation of insurance effects within the health industry. Mainly, the insurance companies don’t call for specifics in treatments because they want to be able to predict treatment costs. They do that because of the OTHER leg of the insurance influence over health, which is the business insurance that providers have to have. To avoid high malpractice insurance costs, the AMA sets standards up for medical people to follow, so as to minimize accusations of incomplete or overdone or ill-advised experimental treatments. This SEEMS to make sense, in that you want medical experts to decide what is and isn’t good medicine, but it has the side effect, in conjunction with the insurance model, in that your treatment content and cost is predetermined before you go to see a doctor. I think the AMA had standards before malpractice was a big issue, just from the medical ethics point of view. Many professional societies have standards for their members even when their members don’t tend to get sued. Obviously I left out stuff, like the bozo in chief said, health care policy is complicated. Insurance companies may pay for things that will reduce their costs in the long run, like birth control and vaccines. But that doesn’t affect my point. > [@](#): > > It also causes in turn, a fair amount of the weird pricing of other services in medicine, because once the AMA sets a price point, the insurance company will accordingly refuse to pay more than that; if the providers actual costs are higher than they are allowed to bill, or to be paid (when customers can’t afford the overage), the providers tend to move the needed profit elsewhere that doesn’t have such limits. This is why you get hundred dollar aspirin tablets and the like. I was unaware that the AMA set any price points for anything. Individual providers and hospitals do. And remember the studies showing how much prices varied. Insurance companies of course negotiate prices with providers. Hundred dollar aspirins come partially from the fact that a trained nurse providing it and recording it is going to be more expensive than you getting one from the medicine cabinet, and partially because the patients are captive customers. > [@](#): > > The goal of insurance concepts is NOT to “spread the costs out.” At least, it is not the goal of insurance concepts to spread the cost TO THE INSURED out amongst everyone. The goal is to spread THEIR OWN COSTS out, and have them covered by their customers. It may be a subtle difference, but it’s a very important one. The goal of a TAX based system is to spread the costs out amongst everyone. I more or less said this. The pool consists of their customers. Insurance is naturally spreading costs out among the pool. And of course overhead (which is what I assume you mean by their costs) gets spread out also. And profit. > [@](#): > > I think a few of your similes are faulty as well. Fire insurance doesn’t pay the cost of putting the fires OUT. It pays the cost of recovering financially AFTER the fire is out. Actually dealing with fires, is usually handled by the government as a general tax cost for the entire society. The equivalent in the medical world, might be that the society (through their government) pays to provide your medical needs, but you pay for insurance to restore your missed wages and lost business opportunities because you were injured or sick. You might remember that in the old days there were private fire companies, which didn’t work out for obvious reasons. If you could get your burning house to a central location, they’d come back. If someone invented a firetruck teleporter, which let a station cover a bigger area than a government station, it might comeback too. And, btw, epidemiology, which is more like firefighting than individual treatment, is kind of government run. > [@](#): > > As for term life insurance, that product was invented to try to make additional money for the insurance companies, from the people who couldn’t afford regular whole life insurance. It essentially is the equivalent of providing super cut rate coverage, with specific exclusion of death by natural causes, including old age. Nothing wrong with that, it just isn’t a valid part of this discussion. My term insurance didn’t exclude death from natural causes - was that a typo. Nor death from old age, though the premiums might be a bit high. Term life is also a good product for companies, which don’t care about insuring employees forever, and for those who realize whole life is a lousy investment. And also it is good to let people be covered when they need insurance. I don’t have either because I no longer have income, and live on savings quite nicely. But it was useful 30 years ago. > [@](#): > > “Make it universal, take away the profit motive, and it all becomes simpler and more efficient.” That part I agree with completely. I just think that the insurance model approach is in direct opposition to that, because insurance is ALWAYS about profit and not about health. As I said, insurance as a concept has nothing to do with profit. Medicare is insurance, right? No profit there. Ditto NHS. The details of how health insurance is implemented in the US is another matter. ---
**Author:** ![Try2B\_Comprehensive](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/try2b_comprehensive/32/65_2.png) [@Try2B\_Comprehensive](https://boards.straightdope.com/u/Try2B_Comprehensive)\ **Post date:** [October 16, 2017, 1:50pm UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/33 "2017-10-16T13:50:00Z")
> [@Broomstick](#): > > Taxing poor health won’t make sickness go away. That’s now how health works. Common theme these days, the objection to a policy proposal being “That’s not how \_\_\_\_ works.” Snatch coal back from automation and competition? Not how it works. Ignore climate change and it goes away? Ditto. Cut taxes to increase revenue? Not how it works. But these kinds of arguments never go away. The powerful seem to love false premises. > [@Trinopus](#): > > 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. > [@Trinopus](#): > > It’s a crappy workaround, but the only alternative is to force such people into medical bankruptcy, and that’s worse. So, yes, the law should compel insurance companies to “insure” such people. Right, it helps close the moral gap, but it appears that the authorities don’t much care about moral gaps. Let’s say you’re a rich bastard who would rather sick people went into bankruptcy and died prematurely than being forced to pay for the doctor visits of anonymous brown people. How do you make the moral argument to them? At some point it almost crashes into the 1st Amendment freedom of religion- is this moral point grounded in some religion or another? Sure, we can all see that some things are immoral, and justice isn’t considered a strictly religious thing, but in most cases the rich and powerful just dismiss such points out of hand and turn the conversation to personal responsibility Libertarianspeak, or some maxim about taxing less of what we want more of, and so on. The powerful don’t care. How do we get this sense of what is morally or justice-ways correct to be expressed in policy for the benefit of the population at large? As soon as Hannity or Limbaugh start talking about what a crime your morality is against some Iron Law of economics, or what a trojan horse it is for Liberalism (socialism!), millions will nod their heads and become tough to persuade. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [October 16, 2017, 2:03pm UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/34 "2017-10-16T14:03:51Z")
> [@Trinopus](#): > > 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. This is why the insurance model only works when insurance is mandatory for the entire population as part of their social contract. Almost every other civilized country in the world has realized, therefore, that the private insurance model does not work for basic healthcare. The simplest and cheapest way to administer an adequate healthcare “insurance pool” is to fund healthcare out of general taxation. ---
**Author:** ![The\_Other\_Waldo\_Pepper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/the_other_waldo_pepper/32/12370_2.png) [@The\_Other\_Waldo\_Pepper](https://boards.straightdope.com/u/The_Other_Waldo_Pepper)\ **Post date:** [October 16, 2017, 3:27pm UTC](https://boards.straightdope.com/t/does-obamacare-tax-health/798781/35 "2017-10-16T15:27:28Z")
> [@Try2B\_Comprehensive](#): > > 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 \_\_\_\_\_\_. You know, for the SDMB I’m pretty right-wing: conservative on plenty of issues, and downright reactionary on some. But if taxing stuff worked the way you seem to be saying, then even I’d maybe have to stroke my chin and say, _“wow, three cheers for what may be the greatest idea in history; hooray for the ‘death tax’.”_ [Previous page](https://boards.straightdope.com/t/does-obamacare-tax-health/798781.md?page=1)