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Tab dump

1) Europe is on track to meet the Kyoto goals.

2) The Senate's practice of placing "holds" on nominees is less important than the filibuster, but probably more absurd.

3) Ross Douthat has a new blog at the Times.

4) The special inspector general report on the AIG bailout makes a convincing case that we should never let ourselves be placed in the bailout position again.

5) Jeff Toobin on the Stupak amendment.

Recipe of the Day: 10 dishes, actually, all Brazilian dishes that aren't as widely known as they should be.

By Ezra Klein  |  November 17, 2009; 7:03 PM ET
 
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Comments

My economics professor today brought up an interesting point today when talking about the aspect of the health care bill than bans insurance companies from discriminating against a preexisting condition. I'm not an expert and am curious if you agree with his argument or if there is something missing.

HIs basic argument was that people purchase health insurance in case something happens to them they will have it. Currently, if you do not have insurance and you get sick it becomes difficult to suddenly purchase a plan. If insurance can simply be bought at any time, what is the incentive to purchase insurance if you are healthy? If this assumption is correct, won't that make plans become more expensive since more and more of the people purchasing plan will be the sick?

I guess a penalty can fix this a little bit but if a plan costs $10,000 and the penalty is only $2,000 is still does not make too much economic sense.

I certainly agree with the virtue of not discriminating against the sick, after all these people need it the most. I'm just wondering what the economic implications of the policy generally tend to be.

Posted by: DropItLikeItsHot | November 17, 2009 7:47 PM | Report abuse

For the life of me I don't know why you link to Douthat blogging without comment. You should highlight that he's the same idiot that he always has been as seen in stuff like this:

http://douthat.blogs.nytimes.com/2009/11/16/pro-lifers-and-the-patriarchy

John

Posted by: toshiaki | November 17, 2009 7:52 PM | Report abuse

I'm still hoping that if we don't talk about Douthat he will go away. His post on health care reform is a link to Tyler Cowen. If you want the contrarian view go straight to the source:

http://www.marginalrevolution.com/marginalrevolution/2009/11/what-should-we-do-instead-of-the-health-reform-bill.html#comments

Posted by: bmull | November 17, 2009 8:06 PM | Report abuse

The special inspector general report on the AIG bailout makes a convincing case that we should never let ourselves be placed in the bailout position again.


--while i agree that it makes that case it also makes the case that Geithner is a HORRIBLE negotiator. How many billions did they just hand away. Another example of our government in action.

Posted by: visionbrkr | November 17, 2009 8:52 PM | Report abuse

DropItLikeItsHot, that's the justification for the individual mandate. If we just got rid of denials based on pre-existing conditions nobody would buy insurance until they were already sick. An individual mandate means nobody can be turned away due to medical illness because everyone is required to have insurance even when they're healthy. It's the young and healthy subsidizing the old and sick, but that's really the way insurance is supposed to work anyway.

Now, it's much more complex than just the individual mandate and the pre-existing condition issue, but I won't get into that. Suffice to say that the individual mandate is the missing piece to the puzzle your professor was talking about.

Posted by: MosBen | November 18, 2009 8:51 AM | Report abuse

MosBen thank you for your reply. I understand that the logic behind the individual mandate. An individual mandate would help obviously but that does not guarantee that everyone will buy insurance unless the fee was large enough for people to pay it.

If a plan costs $10,000, and the penalty (by refusing the individual mandate) is only $2,000 people might be willing to just pay the penalty. Do we know how large the penalty is? I think if it is somewhere near $8,000+ some might just go ahead and purchase the plan, but unless the penalty is near the price of a plan will it be effective?

Posted by: DropItLikeItsHot | November 18, 2009 10:15 AM | Report abuse

DropItLikeItsHot,

Here for example is what the penalty is currently in Mass in 2009:

http://www.mass.gov/?pageID=dorterminal&L=4&L0=Home&L1=Individuals+and+Families&L2=Personal+Income+Tax&L3=2009+Health+Care+Reform+Information&sid=Ador&b=terminalcontent&f=dor_rul_reg_tir_tir_09_1&csid=Ador

and in 2008:

http://www.mass.gov/?pageID=dorterminal&L=4&L0=Home&L1=Individuals+and+Families&L2=Health+Care+Reform+Information&L3=Health+Care+Reform+Regulations+and+TIRs&sid=Ador&b=terminalcontent&f=dor_rul_reg_tir_tir_07_18&csid=Ador

By the way this figure gets them to about 96% coverage which is probably as close that you'll get in this type of system that doesn't default people in.

House bill's penalty:

SFC penalty: $250 at the onset increasing eventually to $750 for individuals. Families increasing up to $1900.

Considering the current and increasing cost of healthcare (and basically no cost containment features invovled) I'll be stunned if we get anyone healthy to purchase coverage under those perameters.

It must be at least the Mass. model and should be more than that. If the poor are getting adequate subsidies then cost should not be a factor for them.


Posted by: visionbrkr | November 18, 2009 1:00 PM | Report abuse

and personally i'm more in favor of the house mandate penalty (believe it or not). 2.5% of AGI is much more responsible.

Posted by: visionbrkr | November 18, 2009 2:59 PM | Report abuse

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