Tag Archives: Moral Hazard

News

How health care mandates drive up health care costs

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From Investors Business Daily.

Excerpt:

The ObamaCare legislation gives the administration the authority to compile a list of female preventive services that all new health insurance plans will have to cover without employing deductibles or charging co-payments. A medical advisory panel is recommending that birth control services should be one of these services.

The committee from the National Academy of Sciences’ Institute of Medicine that issued the guidelines also suggests that free breast-pump rentals, counseling for domestic violence, annual wellness exams and HIV tests be part of all health insurance plans.

These mandates won’t come without significant costs. The additional benefits won’t be free, despite the left’s loose usage of that word in association with health care. The mandates will force insurance premiums higher and someone will pay.

The Congressional Budget Office said years ago that existing mandates at the state level — there are more than 2,000 of them, according to the Council for Affordable Health Insurance — raise premiums by 15%.

That’s just a starting point. CAHI, which has done heavy work on this issue, believes that state mandates push premiums up by 20%. In some states, the increase can be as high as 50%. The result is a cost curve that bends upward, not down.

Mandates at the state level run from the expected to the bizarre. They require insurers to provide such unorthodox coverage as wigs (hair prostheses), Oriental medicine, port-wine stain elimination, smoking cessation, acupuncture, midwives, counseling, and marriage, occupational and massage therapists.

As we’ve noted before on these pages, the state mandates are an insult to common sense. Why would a single man need an insurance package that covers in vitro fertilization, maternity leave, midwives, breast reduction or mammograms?

Does it make sense for a childless, unmarried woman to be forced into a plan that includes care for a newborn and screening for prostate cancer? And is there any reason a teetotaler’s policy should cover alcohol abuse?

These regulations are not only asinine, they wreck the health insurance marketplace. The longer the list of mandates, the less competition there is. When insurers have to carry these gold-plated packages, they can’t compete with lower-priced plans that have fewer benefits. This can price some customers entirely out of the private market.

Here’s a post from Ruth Blog that makes the financial aspects clearer, using “free” contraception as an example.

Excerpt:

First of all, preventive medicine implies the prevention of a pathological condition. Pregnancy is anything but pathological. Artificial contraception is an elective medical therapy for those desiring to block a totally normal and healthy physical condition. Not only is contraception elective, but the decision to have sex should be elective as well.

Secondly… If an unmarried woman makes the conscious decision to be sexually active, it seems she should also bear the consequences of such a decision. Her partner should be willing to share any burdens of the relationship, including the financial cost of sexual relations. If a woman is not in a stable relationship, it seems unreasonable to demand someone else has to pay for her sexual dalliances.

[…]Sexual activity is elective. Preventing the normal consequence of sexual activity, pregnancy, is elective. The use of artificial contraception to prevent pregnancy is a personal lifestyle choice, not a medically recommended therapy. Therefore, artificial contraception should not be considered mandated preventive medical care. In these tight fiscal times, we cannot afford to be too inclusive with what constitutes preventive medicine.

Note that the artificial conception would be free for women who want to have children without fathers. And we know how that works out.

The Heritage Foundation points out that mandates actually reduce the freedom and prosperity of women who don’t use these services.

Excerpt:

Many Americans find the use of birth control morally objectionable, and some women may simply have no need for a health plan that covers these services, based on any number of personal choices and other factors. Those that fall into this category would have no choice but to pay for unnecessary coverage if the recommendations are made law.

[…]If HHS takes an overly prescriptive approach regarding these particular measures, women who would prefer not to pay the higher premiums to carry health benefits they don’t need or to which they object won’t have that option.

In a truly market-based insurance exchange, women would be able to choose a health plan that met their needs and was consistent with their values, and those who wished to forgo certain benefits would have the freedom to do so. If any attempt at health reform is to succeed at reducing costs and tailoring coverage to the specific needs of each individual, it must ensure that consumers are able to choose the plan and benefits that work best for them, rather than submitting to the decisions of a bureaucratic board.

There is no opt out for moral women when these things are mandated as minimum coverages in every policy. There is no escape. My fear is that women would be forced to pay for these services and then feel obligated to use them since that is the only way to get any value for the money that is being forcibly extracted from them.

What health care mandates really achieve is 1) to buy votes from the providers of the mandated services, and 2) to transfer wealth from people who don’t want or need these elective services (e.g. – single chaste Christian men) to people who need it because of their own elective lifestyle choices. And the more I have to pay to subsidize other people’s breast implants, contraceptives, STI  treatments, abortions and in vitro fertilizations, the less I can afford to do the things that I want to do, which isn’t fair. My money is my money, and their money is their money. I should be allowed to keep what I earn and buy only the health care that I need. I have other uses for that money. Let the government do-gooders find some other way to boost their self-esteem instead of playing Robin Hood with health care.

News

155,000 illegal immigrants receiving welfare benefits in the socialist UK

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From the UK Daily Mail. (H/T Verum Serum)

Excerpt:

Tens of thousands of workers with no right to be in Britain have been claiming benefits thanks to an extraordinary loophole in the law.

Ministers have discovered that Labour allowed 155,000 illegal immigrants to qualify for sickness benefits and maternity pay. Government sources put the cost to the public purse at ‘tens of millions of pounds’.

They say the shambles is a damning indictment of how Labour lost control of both the benefits and immigration systems with taxpayers left to foot the bill. Work and Pensions Secretary Iain Duncan Smith will outlaw the practice in welfare reform legislation expected to be unveiled this week.

Ministers believe most of those abusing the system came to work in Britain for a limited period and overstayed their visa. Others managed to get a job without a work permit.

At present, someone could be illegally in the UK and able to claim Employment and Support Allowance (ESA), paid to those too sick to work, as well as statutory payments such as maternity or paternity pay and sick pay.

Astonishingly, the Work and Pensions Department has not in the past asked to see work permits when assessing claims for ESA.

Employers, meanwhile, have not been asked to show proof that workers are in Britain legally when processing claims for maternity or paternity pay or sick pay.

[…]Hundreds of thousands of National Insurance numbers were handed out under Labour to illegal workers as, alarmingly, there was no requirement on JobCentre staff to check whether a person was in the country legally.

[…]However, the European Commission has warned ministers that the rules may infringe the human rights of EU citizens and are ‘not compatible’ with EU law. It has started legal proceedings against Britain to have restrictions on welfare claims by incomers scrapped.

[…]The scale of the welfare challenge facing Britain is laid bare today in figures which show at least 330,000 children – around one in 30 – are growing up with a parent claiming Jobseeker’s Allowance.

The Labour Party is the UK-based equivalent of the Democrat party here, and Democrats also advocate for similar welfare programs for illegal aliens. Here, illegal immigrants get free health care (from emergency rooms, that cannot turn anyone away), free schooling in public schools, and free birthright citizenship. And they get to work without paying any income taxes. It’s a mess. This is being paid for by everyone else who plays by the rules. And all this doesn’t even include the crime problems.

Now consider this article from the UK Daily Mail. (H/T Verum Serum)

Excerpt:

Ministers today faced calls for an inquiry into claims that their open-door immigration policy was designed to make Britain more multicultural and allow Labour to portray the Tories as racists.

A former Labour adviser alleged that the Government opened up Britain’s borders in part to try to humiliate Right-wing opponents of immigration…

The Daily Mail reported on Saturday the controversial claims by Andrew Neather, who worked for Tony Blair and Jack Straw.

He said Labour’s relaxation of immigration controls in 2000 was a deliberate attempt to engineer a ‘truly multicultural’ country and plug gaps in the jobs market.

He said the ‘major shift’ in immigration policy was inspired by a 2001 policy paper from the Performance and Innovation Unit, a Downing Street think-tank based in the Cabinet Office…

Ministers were reluctant to discuss the move publicly for fear that it would alienate Labour’s core working-class vote, Mr Neather said. But they hoped it would allow them to paint the Conservatives as xenophobic and out of touch.

‘I remember coming away from some discussions with the clear sense that the policy was intended – even if this wasn’t its main purpose – to rub the Right’s nose in diversity and render their arguments out of date,’ Mr Neather added.

That’s right. This mess was intentionally created.

Commentary

Thomas Sowell explains the concept of “moral hazard”

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Young Thomas Sowell

From Real Clear Politics. (H/T Jojo)

Excerpt:

One of the things that makes it tough to figure out how much has to be charged for insurance is that people behave differently when they are insured from the way they behave when they are not insured.

In other words, if one person out of 10,000 has his car set on fire, and it costs an average of $10,000 to restore the car to its previous condition, then it might seem as if charging one dollar to all 10,000 people would be enough to cover the cost of paying $10,000 to the one person whose car that will need to be repaired. But the joker in this deal is that people whose cars are insured may not be as cautious as other people are about what kinds of neighborhoods they park their car in.

[…]Although “moral hazard” is an insurance term, it applies to other government policies besides insurance. International studies show that people in countries with more generous and long-lasting unemployment compensation spend less time looking for jobs. In the United States, where unemployment compensation is less generous than in Western Europe, unemployed Americans spend more hours looking for work than do unemployed Europeans in countries with more generous unemployment compensation.

People change their behavior in other ways when the government pays with the taxpayers’ money. After welfare became more readily available in the 1960s, unwed motherhood skyrocketed. The country is still paying the price for that– of which the money is the least of it. Children raised by single mothers on welfare have far higher rates of crime, welfare and other social pathology.

San Francisco has been one of the most generous cities in the country when it comes to subsidizing the homeless. Should we be surprised that homelessness is a big problem in San Francisco?

[…]We also hear a lot of talk about “the uninsured,” for whose benefit we are to drastically change the whole medical-care system. But income data show that many of those uninsured people have incomes from which they could easily afford insurance. But they can live it up instead, because the government has mandated that hospital emergency rooms treat everyone.

And here’s another Tom Sowell column making a related point.

Excerpt:

Much has been made of the fact that families making less than $250,000 a year will not see their taxes raised. Of course they won’t see it, because what they see could affect how they vote.

But when huge tax increases are put on electric utility companies, the public will see their electricity bills go up. When huge taxes are put on other businesses as well, they will see the prices of the things those businesses sell go up.

If you are not in that “rich” category, you will not see your own taxes go up. But you will be paying someone else’s higher taxes, unless of course you can do without electricity and other products of heavily taxed businesses. If you don’t see this, so much the better for the Obama administration politically.

This country has been changed in a more profound way by corrupting its fundamental values. The Obama administration has begun bribing people with the promise of getting their medical care and other benefits paid for by other people, so long as those other people can be called “the rich.” Incidentally, most of those who are called “the rich” are nowhere close to being rich.

[…]There was a time when most Americans would have resented the suggestion that they wanted someone else to pay their bills. But now, envy and resentment have been cultivated to the point where even people who contribute nothing to society feel that they have a right to a “fair share” of what others have produced.

The most dangerous corruption is a corruption of a nation’s soul. That is what this administration is doing.

Republicans prefer private voluntary charity as the best way to provide a safety net. Just because people on the left give less to charity than people on the right, it doesn’t mean that no one one gives to charity. Europe has the highest taxes, and they give the least in charity. Why not LOWER taxes for people who want to give MORE in charity? When government hands out money, it encourages people to be more dependent. But when a person in trouble has to go to a neighbor or a charity in their own community, it sends the right message – “this should be temporary – don’t let this become a habit”. It’s not GOOD for someone to depend on the government. People need to work in order to be happy.

Having the government take over the role of provider in the home is an insult to men. It’s not government’s job to replace men. They ought to stay right out of it. Leave money in the pockets of the working man so he can save for a rainy day himself. If you subsidize a behavior, you get more of it. If you tax a behavior, you get less of it. It makes no sense to subsidize irresponsible lifestyle choices and tax productive and moral lifestyle choices. You don’t want to make the rescue from bad decisions an anonymous and automatic affair. You want people to worry, so that they won’t want to make risky and irresponsible choices. Everybody goes through though times, but we shouldn’t make it normal. People ought to know that it’s not normal.

You may want to read about how government dependence makes people less happy than having a job. Don’t make people depend on government by taxing businesses and investment. We need more companies hiring – not less. And that means letting the profit motive provide an incentive for entrepreneurs to engage in more risk-taking and enterprise.