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How health-care repeal will burn the Republicans

The South Fulton Fire Department was right to let the Cranicks' house burn. You can't sell fire insurance but let people pay after the flames have begun. If you do, people will sign up after their houses catch on fire, rather than before. That's a bad business.

Which is why we don't generally run firefighting as an insurance business (this, actually, was a weird case where a city's fire service sold protection in a rural area outside the city's limits). We run it as a collective good. People have to pay, and firefighters never let someone's house burn. We're comfortable letting people make bad financial decisions when it comes to their television purchases, or the car they drive, or whom they date. We're not willing to do it when the consequence is that they and their children quite literally die in a fire. But that's what free-market firefighting would require.

Even the rock-ribbed conservatives at the National Review aren't comfortable letting the invisible hand refuse to lift a finger to save a family's home. "What moral theory allows these firefighters (admittedly acting under orders) to watch this house burn to the ground when 1) they have already responded to the scene; 2) they have the means to stop it ready at hand; 3) they have a reasonable expectation to be compensated for their trouble?" asked Daniel Foster. Some of his colleagues defended the firefighters, and Think Progress gleefully highlighted the callous arguments.

Have fun trying to repeal health-care reform, guys.

When liberals explain why health care needs an individual mandate, the traditional metaphor is firefighting: Everyone needs to buy insurance for the same reason that everyone needs to buy fire protection. But if you leave the market unregulated, some people won't buy -- or won't be able to afford -- fire protection. And we're not comfortable letting their houses burn down. Similarly, if you leave health coverage to the market, some people won't buy it, and others won't be able to afford it, and then, when they get sick and need it, insurers won't sell it to them. But we're not comfortable letting them die in the streets. Hence, the health-care law.

When Republicans talk about repealing the legislation, they keep the argument abstract. It's about freedom. About American values. About Nancy Pelosi not reading the bill. When they actually try to repeal the legislation, things are going to get concrete in a hurry. It's going to be about this child with that condition being rejected by insurers. And she's going to be adorable, and her parents are going to tearful, and voters will be able to relate.

Already, Republicans are running from that argument, trying to pretend that they'll somehow preserve the protections for preexisting conditions while repealing everything that makes those protections possible. But the bill's unpopular parts are inextricably intertwined with its popular parts. Remove the unpopular ones and you're asking firefighters to sell insurance for homes that are already engulfed in flames.

Here's my prediction for health-care repeal: The GOP will either never really try it, lose on it, or, most likely, cut a deal to add some more conservative pieces to the bill (think malpractice reform, more consumer-driven plans and other things they could've gotten by just negotiating in the first place). But Republicans who think this is going to be easy because public opinion is against the Democrats should remember that before Democrats got a specific bill, public opinion was overwhelmingly on their side. When Republicans are forced to get specific about repeal, they're going to find themselves just as -- if not more -- unpopular. If you're not comfortable explaining why you let someone's house burn down, you're really not going to like explaining why you let insurers turn their sick child away.

By Ezra Klein  | October 6, 2010; 2:42 PM ET
Categories:  Health Reform  
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Next: America's innovation gap, cont'd

Comments

Here's why you're wrong:

So what if the pre-existing conditions part is "inextricably intertwined" with the individual mandate? That's only if you want to make health reform work.

Republicans don't care about good policy or good governance. They will try to repeal the mandate. If they succeed, and that interferes with pre-existing conditions, then it will just be another mess the Democrats have to clean up later.

It's like saying "of course you can't cut taxes and fight 2 wars and care about the deficit."

Posted by: stevie314 | October 6, 2010 3:10 PM | Report abuse

Insurance companies won't let them repeal the individual mandate.

Posted by: fuse | October 6, 2010 3:22 PM | Report abuse

I can't buy car insurance AFTER the wreck, either.

Still waiting for THIS headline:
Guy Values Family's Safety at Less than 75 Bucks

Defending the Tennessee fire fighters is easy:
http://www.dailyscoff.com/?p=2685

But the actions of the Professional Fire Fighters of Wisconsin, who seem hellbent on torching the entire STATE:
http://gravelle.us/content/wi-fire-fighters-way-worse-tn-firemen

...are entirely inexcusable...


-jjg

Posted by: jgravelle | October 6, 2010 3:24 PM | Report abuse

I still don't understand why firefighting must be a public good. I imagine a system similar to termite control.

I pay a monthly fee for to protect my house from termites. If I do get termites, then the company I pay will fully pay to remove all termites. If I do not pay the monthly fee and get termites then I have to pay for the full bill of removing the termites.

I imagine something similar for fire departments. If you pay the $75 fee then if your house catches fire then the fire department will put it out for free. If you choose not to pay the fee, then they will still put out the fire, but you will be billed afterward for something much larger than $75. If you refuse to pay that fee, then the fire department will seize enough unburned assets in your home to pay the fine. I doubt the later situation would happen very often, as Mr. Cranick would probably have paid up to a grand in order to have the fire department put out the fire. I suspect the incidence of this failure-to-pay would be similar to the number of people that decide to live with termites, which is pretty low.

The real problem I see is that the South Fulton fire department was not innovative enough to think of a pay structure similar to that - something a privately owned fire department would probably have implemented (yes, I realize this is speculation, but generally the private market is better at coming up with innovation like this than gov't entities). They didn't even think of the $75 fee for out-of-county-bounds homes until a home had burned down that they refused to save.

Posted by: chrisheatonspam | October 6, 2010 3:29 PM | Report abuse

Here's my prediction for health-care repeal: Luckily your wrong 95% of the time.

Posted by: obrier2 | October 6, 2010 3:32 PM | Report abuse

Word Wrangling?
"if you leave the market unregulated...if you leave health coverage to the market"

Which is it? Is it the market or not the market? Is it a government service (not market) or is it free market?

The argument is entirely confused. Too many apples and oranges and mangoes all mixed up with government, free market, insurance and libertarianism. It's no wonder they're called "talking heads".

At least I can understand the Mises folk: http://blog.mises.org/14158/did-the-free-market-burn-down-the-house/

Posted by: MakesNoSense | October 6, 2010 3:34 PM | Report abuse

The only problem with the individual mandate is that it may need to be strengthened. $695 a year is a pretty low penalty to pay when insurance can cost a few hundred a month, and you know you can still go and get insurance, no questions asked, if you ever get sick.

Posted by: vvf2 | October 6, 2010 3:34 PM | Report abuse

And remember that they'll presumably have to get a CBO score at some point in this process. If they're going to rip out all the revenue portions of the bill and leave in the hugs 'n kisses feel-good stuff that CBO score is going to be really scary. I think it's going to be a lot harder to say that the CBO is being too pessimistic than it was to argue that they were being too optimistic the first time around.

I wonder whether the Dems will obstruct as much as the Republicans have. On the one hand, the Republicans have shown how politically effective it can be to block the legislative roads as often as possible. On the other hand, I think the Dems are going to be even more gun shy than usual, and President Obama will probably want to have at least a few showdowns with the Republicans before 2012. Plus the Dems will be able to argue that they're taking the high road, even if I suspect it will be more from a lack of backbone/party cohesion. On the third hand (hey, lots of chemicals in the water), the Republicans are only likely to take the House, which will have fewer options for Dem obstruction.

Posted by: MosBen | October 6, 2010 3:38 PM | Report abuse

The analogy isn't that good a fit. Not everyone's house burns, in fact the vast majority don't. But everyone gets sick now and then, and everyone eventually dies. Typically we buy insurance for events that are unexpected but catastrophic if they occur. Insurance, at least for other than catastrophic health events, is not a very good way to go. This is the fundamental case for single-payer.

And insurance to rebuild or compensate for loss is very different from fire protection, which should be a community responsibility because fires can spread. Fire protection is more like public health--sanitation systems, innoculations, vector control, and emergency care, which we do treat as a public expense.

The irony here is that right-wingers know so little of American History that they do not realize that the fundamental feature of settlements that survived was that people looked out for each other and helped each other, and having to leave someone behind was always considered a tragedy not just desserts.

Posted by: Mimikatz | October 6, 2010 3:40 PM | Report abuse

interesting to see Ezra use this argument. So you do believe in the idea of pre-existing conditions in a world where an individual mandate does not exist. You'd better turn in your liberal card there Ezra.

Oh and some liberals, er uh progressives are against the mandate too so its not just some conservatives. Remember the kooks that don't want to "pay money to the EVIL insurance companies". They're over here:

http://fdlaction.firedoglake.com/2010/03/09/if-private-health-insurance-companies-are-evil-why-are-you-forcing-me-to-be-a-customer/

Posted by: visionbrkr | October 6, 2010 3:44 PM | Report abuse

vvf2,

from my understanding the penalty is up to $695 or 2.5% of AGI whichever is HIGHER. Anyone please feel free to correct me if i'm wrong but if it is that then that's fine.

oh and costs are going to be well more than a couple hundred a month. Many states individual rates are well over $400+ a month and if they aren't then its because benefits aren't up to par yet which the reforms like no annual caps, lifetime limits etc are going to take care of. Sure it'll be good coverage for whoever can afford it before the subsides kick in and we're all insulated FURTHER from the costs.

Compounding one mistake after another.

Posted by: visionbrkr | October 6, 2010 3:48 PM | Report abuse

"We're not willing to do it when the consequence is that they and their children quite literally die in a fire. But that's what free-market firefighting would require."

The real argument for firefighting as a public good is not to save the person from themselves, but to save their neighbor from the consequences of that person's bad decision. This is where your firefighting/health care analogy breaks down. Presumably you are also in favor of forcing that person to buy homeowner's insurance as well.

More fundamentally, there is a continuing breakdown of the national consensus on what it means to be an American and what the role of the Federal Government should be. No matter how the health care repeal attempts end up, 50% of the country will loathe and despise the other 50%.

Posted by: jnc4p | October 6, 2010 3:48 PM | Report abuse

Also, there's a social cost to personal irresponsibility. Letting someone opt out of the fire department coverage means that a fire on their property is going to be bigger by the time it jumps next door than if they fire department came as soon as the fire started. It worked out nominally ok in this instance, but it's totally possible that a similar situation could have turned into a fire that was much more dangerous and expensive to put out because it was given time to grow. And even once the fire it put out the property owner may not be able to afford to rebuild, which could depress values of surrounding homes.

People without insurance/regular checkups end up in the emergency room and cost us all money.

Posted by: MosBen | October 6, 2010 3:51 PM | Report abuse

chrisheatonspam, theoretically your model could work (and is certainly better than just watching the house burn).

But what if your house fire was an arson? Do you still have to pay for fire service or do you create a loophole for that? And doesn't that create a huge he said/she said problem? Do you create "fire courts" to go through that category of cases?

What if it's just a small kitchen fire -- does that cost less than a four-alarm fire that requires dozens of workers on the scene? It surely doesn't seem fair for someone to have to pay thousands if one person with a fire extinguisher could put things out. But in that case, wouldn't it be in the incentive of the private fire company to NOT put out the fire promptly? Let it spread to the point at which you can charge more?

And what about the fact that people will now have an incentive to NOT CALL the fire department when the house is on fire because they don't want to be charged. "Marge, go get me a pail of water -- it's just the garage on fire. It'll be fine. I ain't payin' no $1200. And go over and make sure the neighbors don't call neither!" That'll end well.

What if the fire department fails to put out the fire and your house burns down anyways? Do you still get charged? Or is there a certain level of "success" where you still sort of have a a house left at which you are charged? Or is it a smooth gradation? And who makes that determination -- the fire company?

And do you think the idea of a for-profit company charging a family of six thousands of dollars RIGHT AFTER their house just burnt down will be very popular (whether they "deserve it" since Dad didn't send in the $75 or not)? Come on.

Maybe we should just accept that something as fundamental as living in a community with fire protection is a shared benefit and shared responsibility. Eeesh.

Posted by: vvf2 | October 6, 2010 4:01 PM | Report abuse

its funny that folks forget that 1: this guy pays his taxes; 2: he simply forgot and offered to pay "whatever it took," when the firefighters arrived; and 3: lets say the block didn't pay accept the house in the middle, so just put that fire out and let the block burn? we tried private firefighting a while ago, it didn't work, thus the socialized fire dept.
some things just shouldn't be left to private entities when the public good is in question.

Posted by: ttanner509 | October 6, 2010 4:02 PM | Report abuse

visionbrkr, thanks for the correction on the mandate fee. I was saying a "few hundred a month" thinking that would be the individual cost for some AFTER subsidies (some would pay far less of course).

The question of reducing costs in the system as a whole is something else entirely.

Posted by: vvf2 | October 6, 2010 4:07 PM | Report abuse

vvf2,

yes costs to the system is a much bigger issue and not as easily resolved although capitation would go a long way to resolving it.

MosBen,

just giving people insurance doesn't make them go to get the care they need. If we subsidized "good eating" do you think people wouldn't eat badly still? Some people are generally lazy and won't go get preventative care even when its handed to them. Heck Safeway had to PAY its employees to take care of themselves before it sunk in.

Posted by: visionbrkr | October 6, 2010 4:13 PM | Report abuse

Pretty sad state of affairs when a community(via it's elected officials) cannot implement a plan to provide a basic level of fire protection service. Here is an idea..Check out Acadiana Ambulance Service in Louisiana.... "For an annual fee of $75, an Acadian Ambulance membership covers applicant, spouse and resident children up to 21 years". If the ambulance arrives and you don't have a subscription, then you receive the service and get billed...it's your choice to subscribe.

Posted by: cjdaigle | October 6, 2010 4:14 PM | Report abuse

Ezra Klein has his head up obama's crack just like a good liberal puppet...Ezra Klein is that your real name...or just the name your using off that stolen social security card

Posted by: JWx2 | October 6, 2010 4:16 PM | Report abuse

Pretty sad state of affairs when a community(via it's elected officials) cannot implement a plan to provide a basic level of fire protection service. Here is an idea..Check out Acadiana Ambulance Service in Louisiana.... "For an annual fee of $75, an Acadian Ambulance membership covers applicant, spouse and resident children up to 21 years". If the ambulance arrives and you don't have a subscription, then you receive the service and get billed...it's your choice to subscribe.

Posted by: cjdaigle | October 6, 2010 4:17 PM | Report abuse

Pretty sad state of affairs when a community(via it's elected officials) cannot implement a plan to provide a basic level of fire protection service. Here is an idea..Check out Acadiana Ambulance Service in Louisiana.... "For an annual fee of $75, an Acadian Ambulance membership covers applicant, spouse and resident children up to 21 years". If the ambulance arrives and you don't have a subscription, then you receive the service and get billed...it's your choice to subscribe.

Posted by: cjdaigle | October 6, 2010 4:17 PM | Report abuse

"We're not willing to do it when the consequence is that they and their children quite literally die in a fire. But that's what free-market firefighting would require."

What a joke.

The fire department was a government run monopoly provider of services.

The fire department was prohibited by law from helping once it was discovered the homeowner didn't pay.

http://abcnews.go.com/US/tennessee-familys-home-burns-ground-firefighters-stand-watch/story?id=11806407

Some of the firefighters cried over being unable to help.

http://www.msnbc.msn.com/id/39535911/ns/us_news-life/

This is a prime example of a government screwing up by artificially trying to do what a market would do on its own.

Do you think a profit maximizing firm would say "burn baby burn" when a potential customer offered to pay whatever it took? No, only a government concerned with moral issues (no free riding!) would deny being paid for a service.

The free market wouldn't *require* such nonsense as you claim - the only requirements involved here were set BY LAW.

"some people won't buy -- or won't be able to afford -- fire protection"

How the hell can you be able to afford a home and not fire protection? It would be like the owner of a BMW being "unable to afford" auto insurance. Must be one of those Fannie no money down mortgages...

"Similarly, if you leave health coverage to the market, some people won't buy it, and others won't be able to afford it, and then, when they get sick and need it, insurers won't sell it to them. But we're not comfortable letting them die in the streets. Hence, the health-care law."

If the government ever stops stealing $6.4 trillion annually from the private sector, I can assure you the tens of billions needed to provide for these type of situations will be available via charity.

Posted by: justin84 | October 6, 2010 4:19 PM | Report abuse

how come these liberal morons (bathtub boy olberman and she-man rachel maddow) don't ask the right questions....I bet he's a typical liberal thinking he could get something for free...ask this liberal if he has home-owners...if he does quit whining and file a claim...if he doesn't..which is more likely...then problem solved...he lies like liberal's daddy obama..and is a typical liberal freeloader...next time spend the 75.00 on fire protection instead of crackers for your obama liberal's cheese package....hahahahaha!

Posted by: JWx2 | October 6, 2010 4:25 PM | Report abuse

Fire 'departments' used to e private. And if your house caught on fire and another company's engine arrived before your own, they would hang around and make fun of you! Eventually fire departments became public utilities (entitlements!!!!) because they are a kind of protection everyone needs. And they are paid for out of taxes. Of course.

Posted by: AMviennaVA | October 6, 2010 4:28 PM | Report abuse

cjdaigle @ October 6, 2010 4:17 PM wrote "If the ambulance arrives and you don't have a subscription, then you receive the service and get billed...it's your choice to subscribe."

So what happens if you cannot afford to pay? Or if you just happen to be visiting?

Posted by: AMviennaVA | October 6, 2010 4:31 PM | Report abuse

Just because it's hard doesn't mean they can't or won't do it. Look at what Christie's doing in NJ.

You have to remember that poor and working people just aren't the GOP's constituency. So if those kinds of people start hurting -- you know, their heart goes out for them but don't expect much more than that.

Posted by: leoklein | October 6, 2010 4:32 PM | Report abuse

If there were a child trapped in that burning house, would the Republican politicians support the firefighters letting the child die because the parents didn't pay for fire protection?

It's hard to put anything by today's Republican politicians and the trust fund babies that control them.

Posted by: RichardHSerlin | October 6, 2010 4:35 PM | Report abuse

justin84: while the particular structure is not necessarily how a private company (or companies) would run fire protection, Ezra's main point remains.

"We're not willing to do it when the consequence is that they and their children quite literally die in a fire. But that's what free-market firefighting would require."

If you don't/can't pay, you don't get help when you're on fire. And most of us aren't willing to live in that America. And if private companies count on payment after the fact, they'll be in trouble -- I doubt they'll want to get in on the business of tracking down debtors.

And if, as you say, we're just going to count on charity to cover these costs, then what's the upside of the whole discussion? Why pay the fee if charity will cover my fire protection anyways?

Posted by: vvf2 | October 6, 2010 4:37 PM | Report abuse

RE: AMviennaVA asks "So what happens if you cannot afford to pay? Or if you just happen to be visiting?"

I haven't lived in Louisiana for quite some time. My best guest is that all non-subcribers are billed. Some pay out of pocket, some have insurance, others are cannot afford to pay. The bottomline is that "ALL" are provided ambulance service by "ONE" private ambulance company. No accident chasing, no confusion. If you live in a urban area or rural or swamp....you still receive service. BTW, for all the anti-tax proponents, Acadiana Ambulance is a private company (near monpoly, but compromises are sometimes warranted for the public good)

Posted by: cjdaigle | October 6, 2010 4:43 PM | Report abuse

I believe that the Republicans are proposing a repeal and a redo, not just a repeal.

It appears as though Mr. Cranick not only neglected to pay the $75, he also STARTED THE FIRE. He should count himself lucky that his neighbor did pay the $75, and the firefighters stopped the fire from spreading, otherwise Mr. Cranick might be liable for the destruction of his neighbor's house.

Posted by: bgmma50 | October 6, 2010 4:46 PM | Report abuse

"But what if your house fire was an arson? Do you still have to pay for fire service or do you create a loophole for that? And doesn't that create a huge he said/she said problem? Do you create "fire courts" to go through that category of cases?"

Remember, you are paying for fire service either way. You should pay for services rendered (especially since most people will just go with the subscription service anyway). If the arsonist is caught, he/she should be held fully liable for all damages including the fire bill.

"What if it's just a small kitchen fire -- does that cost less than a four-alarm fire that requires dozens of workers on the scene?"

Who knows? My guess would be that it would be based on the resources needed to fight the fire. Something like movers - they have a flat fee to come out, and then charge per hour based on the number of movers involved. Sure, they can always slouch off and try to get paid a bit more, but that's why you pay attention while they work.

Anyway, there is some uncertainty here - which is why most people will just pay for subscription service.

"But in that case, wouldn't it be in the incentive of the private fire company to NOT put out the fire promptly? Let it spread to the point at which you can charge more?"

What's the incentive for BP stations not to charge $7 per gallon for gasoline?

"And do you think the idea of a for-profit company charging a family of six thousands of dollars RIGHT AFTER their house just burnt down will be very popular (whether they "deserve it" since Dad didn't send in the $75 or not)? Come on."

If they feel they were screwed by poor service, they can always opt not to pay the bill.

By the way, note that under the current system this family would pay thousands over the years for fire protection, and there is no guarantee that their house won't burn down.

Posted by: justin84 | October 6, 2010 4:49 PM | Report abuse

vvf2,

You bring up some good concerns. Let me address them individually:

What about arson?
This seems like a non-concern to me. If the house is on fire, then the fire department puts it out according to the policy (free if insured for; charged if not). It doesn't matter how it started. No one would start a fire so that they can get fire department services for free because the fire would do more damage than you'd get compensated for by the insurance. The normal moral hazard of arsony to get the insurance company to pay for more for the house than it is worth doesn't apply.

What about small fires vs. large fires? Would they have different prices?
It doesn't seem fair to me that THE PUBLIC would have to pay thousands of dollars if one person with a fire extinguisher could put a fire out. The question is which system incentivizes people more to put the fire out themselves rather than call the fire department. . . I think the private system would.

What about the incentive structure for the fire department to let the fire get bigger?
Yes they would, but this happens all the time and it's hard for companies to take advantage of these incentives. GM has an incentive to produce cars that don't last as long so that you buy them more often, but the average lifecycle of cars continues to increase year over year. It's only when you have gov't that is not incentivized to the needs of consumers that this gets upset - like cash for clunkers that took a chunk of the average lifetime of a car away. Not that this argument is without merit - fire departments currently run in a competitionless space and wouldn't feel the pressures that GM would. I guess I have to ask (and indirectly am asking) is - should they?

What about the incentive not to call the fire department when it would be cheaper to? I think this one has merit. Do we allow people to make bad decisions? Sometimes yes; sometimes no.

What if the fire department fails to put out the fire? Would they still have to pay?
Good question - probably not . . . if a termite company fails to kill the termites I don't think they are allowed to charge again or at least you can insure against this. Both pricing schemes would have the result of failed attempts to put out the fire. The question is which system would result in more failures to extinguish the fire? One in which the fire fighters are only compensated by a successful attempt or one is which they are compensated either way?

Isn't is a bad time to charge a family money after they learned their house just burned down?
Yeah, but that's why we have insurance to level out potential for total catastrophy. We accept this risk in other parts of our life. Besides I doubt it would be $6,000 for a fire. Back of the envelope, if 10 firemen at an average of 50k/year and say 1M of fixed costs depreciated over 10 years with 500 incidents a year, that department would average $1,200 per incident.

Posted by: chrisheatonspam | October 6, 2010 5:07 PM | Report abuse

The other thing to realize about the Cranick's house is that not only did their house get burned, but the fire spread to their NEIGHBOR's house, and their neighbors HAD paid for fire protection. We require people to buy health insurance not just for their own sake, but to prevent them from having to seek expensive emergency room treatment and driving up costs for everyone.

Same thing with global climate disruption - when the consequences of individual action spread from that person to another (e.g. fire or pollution), it ceases to be a matter of individual rights, and becomes society's business.

See this post:

http://akwag.blogspot.com/2010/10/free-market-firemen-watch-as-home-burns.html

Posted by: AndrewKent | October 6, 2010 5:18 PM | Report abuse

"justin84: while the particular structure is not necessarily how a private company (or companies) would run fire protection, Ezra's main point remains.

*We're not willing to do it when the consequence is that they and their children quite literally die in a fire. But that's what free-market firefighting would require*"

Ezra's point remains silly. The free market does not require that people who didn't subscribe to fire service before hand die in a fire any more than government rescue assistance requires letting people die from hurricanes.

A free market company will arrive at the scene and then bill you. Or for all we know, in many locations the free market alternative will be volunteer fire squads. We can't say precisely how the free market will respond, because it will be composed of a bunch of entrepreneurs with their own ideas.

I can tell you that a fire company with a reputation for letting people die in fires or one that charges a bunch of money after a home burns down isn't going to get a whole lot of business.

My guess is that rural/exurbs will have volunteer fire departments, and suburbs/urban areas will have many competiting for profit providers.

"If you don't/can't pay, you don't get help when you're on fire."

Anyone who owns a home can pay for fire. Lifetime homeownership expenses are far higher than what it costs to put out a fire or two. Especially with no property taxes. "Can't" doesn't really apply heere.

"And if private companies count on payment after the fact, they'll be in trouble -- I doubt they'll want to get in on the business of tracking down debtors."

If the service was done well at a reasonable rate (e.g. not $20,000), most people will pay out of a sense of gratitude/duty. Those who don't pay, well, that's what collection agencies are for. If the service was poor, I agree some may not pay out of spite, and it will be particularly hard to collect from them.

"And if, as you say, we're just going to count on charity to cover these costs, then what's the upside of the whole discussion? Why pay the fee if charity will cover my fire protection anyways?"

The charity comment was largely healthcare related - children with cancer would have options in a free society, even if their parents were morons.

Charity probably isn't going to pay your firefighter fee (though perhaps you might find a sympathetic friend or family member). Charity in this situation will probably be people letting you stay in their house until you can buy a new house (hopefully you had homeowners, otherwise, a place to rent).

Posted by: justin84 | October 6, 2010 5:30 PM | Report abuse

Just because it's hard doesn't mean they can't or won't do it. Look at what Christie's doing in NJ.

Posted by: leoklein | October 6, 2010 4:32 PM | Report abuse

Really Leo? What's wrong with what Christie is doing in NJ? Is the fact that he's not literally in bed with the unions like the last governor upsetting to you? ITS ABOUT TIME. in about 10 years compare Christie's NJ to Brown's California and see who's in better shape. It won't even be a contest. 80% of government intakes going to pay salary and benefits of government employees. That's a crime!

Posted by: visionbrkr | October 6, 2010 8:08 PM | Report abuse

"Do you think a profit maximizing firm would say "burn baby burn" when a potential customer offered to pay whatever it took?"

A profit-maximizing firm wouldn't even respond to half the calls.

Posted by: dpurp | October 6, 2010 8:45 PM | Report abuse

"http://akwag.blogspot.com/2010/10/free-market-firemen-watch-as-home-burns.html"

Andrew, there was nothing "free market" about this story.

The provider was a government run fire department.

Firemen who wanted to help - who cried about it afterward - were prohibited by law from doing so.

There was no market for providers. One lousy provider which had nothing to do with you if you didn't pay the subscriber fee. If there were three fire companies in the area, you can guess who wouldn't be getting calls after this story broke.

"A profit-maximizing firm wouldn't even respond to half the calls."

Then that firm wouldn't make much profit, would it? It would soon be put out of business by firms which do respond to calls. Or citizens would get fed up with poor service and set up a volunteer fire department. That's the beauty of a free country. People can figure out how to set up institutions that work best for them, and it doesn't have to be done at the point of a gun.

Posted by: justin84 | October 6, 2010 10:13 PM | Report abuse

It's interesting how they act as though the externalities are contained by just being willing to put out the fire at the house next door if it spreads there, and if next door paid the fee.

Like there's no externalities to the next door neighbor from being bombarded by toxic smoke, and having a burnt out toxic waste sight next door -- no effect on property values there! Plus, you have an economies of scale/natural monopoly issue. Now you have firefighting units going out to burning homes and just sitting there in case the fire spreads, when at that point it's just little extra expense to just put put the fire at the non-paying home.

Moreover, please, please, economists, consider positional/context/prestige externalities. If you don't have fire fighting costs taken out of taxes, people will have more money to bid on houses and to spend on cars, so the bar to achieve the level of prestige and perceived quality relative to your reference group will rise, so more people will feel so much financial stress before the fire bill is paid that they will risk not paying it. Total intrinsic utility, that is total utility, will certainly go down due to this increase in positional/context/prestige externalities -- more spending on conspicuous consumption, less on inconspicuous consumption like fire fighting.

Posted by: RichardHSerlin | October 7, 2010 12:20 AM | Report abuse

Epic logic fail here.

Why pre-existing conditions is the starting point of the discussion, I have no idea. But even if it is.....


Pre-existing conditions might not be able to exist without the mandate.

Neither of them, though, needs the free cash subsidies.

Posted by: krazen1211 | October 7, 2010 12:29 AM | Report abuse

"I wonder whether the Dems will obstruct as much as the Republicans have. On the one hand, "

Obstruct Master Obama? I doubt it.

Recent elections show that the 'obstruction' whining doesn't work. The US President takes the hit regardless of why his economy stinks or how much excuses he makes. See 1976, 1980, 1992.

Posted by: krazen1211 | October 7, 2010 12:36 AM | Report abuse

Actually, children will die BECAUSE of the "affordable" "care" act. If your child has a terrible disease you will not necessarily be able to take him to the best facility for care, like the cancer center in Houston, or in Memphis. Now, if you have the money or can round it up somehow, you can seek out the best possible care. In the future you will be told that because everyone cannot have it, you cannot. So what will happen to those top places, Anderson in Houston, the cancer center in Seattle? Who will get to use those facilities if money (and of course meeting their own health criteria) won't get you in? Answer: those connected with the powers in the administration. The family of Nancy Pelosi, and so on.

Posted by: truck1 | October 7, 2010 1:06 AM | Report abuse

I say fine, get rid of the health care mandate. But then let's make the hard choices.

If my state votes for mandate and yours didn't, you cannot go to my state to get the health care. If your state gets rid of mandates, then to bring your taxes down, ban emergency care too. If your job doesn't offer health insurance then you just pay your super high bills in full, that's all. Since the rich will always be able to pay, let's call this policy the Legal Murder of The Working Poor Act. Or as the Republicans will say as they drink their Dom Perignon and laugh at the people who can barely afford to pay for groceries at Walmart, Culling the Herd.

Posted by: raduodogi | October 7, 2010 3:04 AM | Report abuse

chrisheatonspam,

Termite coverage has almost no relevance.

e.g. timing is one factor.

If you discover the existence of termites after failing to buy coverage, you enter into a written contract and likely in a day or two business days a company will come out to your property and perform an evaluation and treatment.

In the case of fire service, you don't have the luxury of time. Your house is on fire. In theory you could sign a contract on the spot as your house is burning down, but odds are you could also get the contract revoked (if you have a good attorney), because the contract was likely signed under duress. It's likely not going to be a valid contract. An oral contract is also likely to be unenforceable.

The costs of putting out a fire are also exponentially higher than treating a termite infestation. The front end investment in equipment requires a dedicated revenue stream.

In the case of a fire you're talking about equipment that runs in the hundreds of thousands of dollars -- if not a million or so -- an individual call is likely to generate thousands of dollars in costs.

In the case of a termite treatment you're looking at one or two people with perhaps a few hundred dollars worth of equipment.

The financial risk of a failure to pay in the case of a fire is on a completely different order of magnitude than that of the termite treatment. (Additionally, in the case of a termite treatment you may need to pay money up-front).

The risk of a termite infestation in terms of public safety is also nothing compared to the spread of an out of control fire -- especially in heavily populated areas. The time that it might take for termites to spread from one property to an adjacent one could take weeks if not a year, so there's plenty of time to act. The time that it might take for the termites to do structural damage is likely to be measured in years, not hours, or minutes. The risk to safety and lives is minimal. The potential damage in terms of financial to property is exponentially higher in the case of fire as well.

There are relevant distinctions at play, so the analogy doesn't really hold.

Posted by: JPRS | October 7, 2010 8:32 AM | Report abuse

The ACA will repeal itself

The real causes of high cost in our health care non-system are that we do too much inherently expensive and invasive intervention, and then we pay too much per unit of such intervention. The ACA does absolutely nothing about either of these two factors.

It does make some noises about controlling the third, and least, of the reasons we pay much more for lower quality care in this country than anywhere else in the deveolped world -- that our insurer middle-men skim off 15-30% right off the top. But even if the insurance industry went quietly -- cooperated meekly with the good and blessed intention of the ACA to limit its margins to 15% -- that's still just 15% savings, when the differential between us and world, the differential you have to make up to make health care affordable, is more like 200-300%.

And, of course, the industry won't go quietly. The ACA leaves them and their cartels with the health care provider industry intact and in charge of market conditions. All of the well-intended reforms of ACA cost money, make insurance less profitable. The insurers will do, have already started doing, two things that effectively repeal the well-intentioned provisions of the ACA. They will get waivers from the adminsitration to continue the abusive practices that make their products somewhat less unaffordable, or they will demand higher subsidies to keep their product somewhat less unaffordable.

Of course, there is no money to pay for the higher subsidies needed to keep the premiums down, so the govt, even under a Dem administration, will waiver away every provision of the ACA in order to not burden the people still paying premiums to the industry. The ACA won't save a penny of costs, will allow quality to keep spiralling down, and will generally serve only to help discredit the very idea of reform in this area.

Posted by: gtomkins1 | October 7, 2010 9:08 AM | Report abuse

"If my state votes for mandate and yours didn't, you cannot go to my state to get the health care. If your state gets rid of mandates, then to bring your taxes down, ban emergency care too."

I'd bet quite a bit of money that such a *ban* on emergency care would be used as an example of market failure.

Posted by: justin84 | October 7, 2010 9:48 AM | Report abuse

Epic logic fail here.

Why pre-existing conditions is the starting point of the discussion, I have no idea. But even if it is.....

Pre-existing conditions might not be able to exist without the mandate.

Neither of them, though, needs the free cash subsidies.

Posted by: krazen1211

//////////////////////////////


No subsidies means some can't afford insurance; meaning that a lot of people don't have coverage.

If a lot of people don't have coverage, and the only ones who carry it are those who are sick, then you basically have the status quo.

There's also a question of efficiency at stake here.

If only a few people in a neighborhood decided to buy "fire service" you would have a much more expensive service than you would if everyone chipped in. Part of the challenge is that there's administrative waste simply figuring out who has coverage and who doesn't. There's administrative waste involved with determining when another person's lack of coverage threatens the safety and well-being of someone who does have coverage.

All of those are costs and inefficiencies that don't factor into a universally provided service.

It's not hard to envision how you could have a system of fire protection where only 80 percent of the people were covered that ultimately ended up being more expensive than a system where 100 percent of the people are covered (e.g. patchwork administration, costs associated with out of control fires that might have been contained more easily and at a lower cost with an earlier intervention, etc). In the case of health care an early intervention doesn't deal just with preventative care for an individual -- this also relates to things like outbreaks and viruses, which should be easier to contain in the early stages -- or at least managed more easily -- if people aren't falling completely outside of the network of care.

Posted by: JPRS | October 7, 2010 11:30 AM | Report abuse

In respect to Employer mandates, it appears from www.BenefitsManager.net and www.AHealthInsuranceQuote.com analysis that employers nationwide will be assessed a $2,000 penalty for every employee not offered group health insurance or commonly referred to employer sponsored health insurance. Does this include part time employees that traditionally didn’t qualify or buy health insurance in the first place because of the cost vrs. Hours worked? How in the world is an employer going to absorb this cost? So if an employee doesn’t want to participate in paying their share, the employer is penalized $2,000?

Posted by: mikeoliphant | October 7, 2010 12:49 PM | Report abuse

["Epic logic fail here."]

Yes, yours.


["Why pre-existing conditions is the starting point of the discussion, I have no idea."]

And that is why you shouldn't have written anything. Understand the topic *before* you share your opinion about it.


["But even if it is.....

Pre-existing conditions might not be able to exist without the mandate."]

Might not, nothing. You *must* have a mandate if you ban discrimination against pre-existing conditions, or else some people will game the system. They'll go without insurance until they need it when they get sick or hurt, and then the insurance company will have no choice but to insure them. This would drive up costs for both the insurance company and the medical company, which obviously undermines the whole effort of cost-cutting.


["Neither of them, though, needs the free cash subsidies."]

Of course they do. If you're going to mandate buying health insurance, then there will be people who can't afford it no matter how inexpensive you manage to make it. You *must* have subsidies for people who otherwise can't buy into the system.

So, once again, if you're banning pre-existing conditions, you must have a mandate to prevent people from gaming the system. If you have a mandate, you must have subsidies so that everyone can buy in. And so on and so on and so on.

As Ezra pointed out, and as you ignorantly claimed was wrong, the whole system is inter-connected. You can't take out one piece without undermining all the rest.

So once again, understand the topic at hand *before* you share your opinion about it.

Posted by: jiji1 | October 7, 2010 4:26 PM | Report abuse

"No subsidies means some can't afford insurance; meaning that a lot of people don't have coverage.

If a lot of people don't have coverage, and the only ones who carry it are those who are sick, then you basically have the status quo."

Yeah, so? Then you make them pay the penalty.

Garnish their EIC.

Posted by: krazen1211 | October 7, 2010 5:40 PM | Report abuse

"No subsidies means some can't afford insurance; meaning that a lot of people don't have coverage.

If a lot of people don't have coverage, and the only ones who carry it are those who are sick, then you basically have the status quo."

Yeah, so? Then you make them pay the penalty.

Garnish their EIC.

Posted by: krazen1211 | October 7, 2010 5:41 PM | Report abuse

"Of course they do. If you're going to mandate buying health insurance, then there will be people who can't afford it no matter how inexpensive you manage to make it. You *must* have subsidies for people who otherwise can't buy into the system.

So, once again, if you're banning pre-existing conditions, you must have a mandate to prevent people from gaming the system. If you have a mandate, you must have subsidies so that everyone can buy in. "


Nope, you're just regurgitating someone else's rhetoric.

The people who can afford health insurance either get it or pay a penalty.

The people who cannot afford health insurance simply never get it.

There's no worry about people in class 2 gaming the system since they can't make the premium payments.

Posted by: krazen1211 | October 7, 2010 5:43 PM | Report abuse

"And that is why you shouldn't have written anything. Understand the topic *before* you share your opinion about it."

Thankfully, I don't take the words of some moron spread the wealth liberal as gospel.

Posted by: krazen1211 | October 7, 2010 5:46 PM | Report abuse

"... before Democrats got a specific bill, public opinion was overwhelmingly on their side."

No it wasn't, Mr. JournoLista -- the Democrats simply raised a middle finger to the will of the people and voted for it anyway, even though about 60% of Americans opposed (and still oppose) it.

Sorry, Ezra, you progressives always reveal what you're most afraid of by pretending to offer "helpful" advice to your enemies. Often it comes in the form of some column written in a mocking tone -- essentially, "ha ha, only a political idiot would attempt to do what you guys are considering."

That's the surest sign that Republicans are on the right track, because only a fool would believe you'd offer advice that would help them politically.

The simple reason the Republicans will succeed in killing, or at least defunding, ObamaCare is that the vast majority of Americans already have health insurance that they like. So the only thing Obama and the Dems have given them is higher premiums.

This is the worst bill since Prohibition, and payback is coming next month.

Posted by: UponFurtherReview | October 7, 2010 6:37 PM | Report abuse

Klein sensibly points out, "You can't sell fire insurance but let people pay after the flames have begun. If you do, people will sign up after their houses catch on fire, rather than before."

Similarly, you can't sell health insurance but let people pay after they have an accident or become ill. Except you can! That's the new health care bill, which requires coverage for pre-existing conditions.

So called mandatory insurance isn't a solution, because someone can choose not to obtain the insurance, often suffering no more than a $750 penalty--if the Government ever gets around to collecting it--rather than paying multiples of that for insurance premiums. Skipping the insurance until after the house starts burning or the health problem arises seems like the smart move.

Posted by: Rob_ | October 7, 2010 7:42 PM | Report abuse

["The people who can afford health insurance either get it or pay a penalty."]

Half right.


["The people who cannot afford health insurance simply never get it."]

So you leave them to die in the streets, revealing yourself to be a barbarian. It's shocking that people like you claim to be the ones to love America, when you're willing to subject your own fellow country-men to this kind of carnage.


["Thankfully, I don't take the words of some moron spread the wealth liberal as gospel."]

Instead, you take the words of a truly moronic and selfish "hoard the wealth and screw you, pal" America-hater as gospel. Which makes you an even bigger moron and America-hater.

Posted by: jiji1 | October 7, 2010 10:00 PM | Report abuse

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