More on the massive ObamaCare Loophole
Mar 26, 2010

Since my last post I've seen quite a few other people writing about exactly the same issue with ObamaCare that I saw: it actually encourages people to not carry health insurance. The most recent is someone's whose blog I've been reading for a while and whose opinions I generally respect: Philip Greenspun an EECS professor at MIT. He actually did the math to reveal that a family in Massachusetts making $100,000 can expect to pay around $20,000 per year on insurance. The fine for not carrying insurance, however, would only be $2,000. And, of course, the insurance carriers would be forbidden from denying them of insurance if they showed up already sick and actually in need of health care.

But there's more! Brian Caplan at the Library of Economics and Liberty (which I don't actually know much about, but I would guess is biased in the libertarian direction from a cursory examination of the site) suggests another unexpected side-effect of ObamaCare will be that employers will stop offering insurance as a benefit. Part of the reason it's currently so common for insurance to be an employment benefit is that the government has been encouraging this behavior since around WWII by not counting health insurance as taxable income. This, apparently, is going to change with ObamaCare.

This, however, I think is actually a good thing. I mentioned in my last post that I had some ideas on a different sort of reform that I've posted about elsewhere in the past; below is an outline of some ideas that I put together a couple years ago (around the time that Massachusetts was debating the inspiration for ObamaCare):

  • Decouple health insurance from employment
    • current system economically stupid
      • encourages un-educated consumers
      • reduces consumer choice
      • reduces competition in the market
    • current system unnecessarily restricts consumers
      • people with health problems can't change jobs for fear of losing insurance
      • true cost of insurance is hidden from consumers
  • Make medical costs tax deductible
    • all costs should be up to 100% tax deductible (maybe variable by income)
    • makes health care significantly more affordable
    • provides the same functional assistance as a single-payer system
    • doesn't encourage reliance on the system
    • doesn't require increased bureaucracy
    • encourages personal responsibility
  • Provide low/no interest loads to cover medical costs
    • interest rate based on need
    • removes problem of non-payment
    • allows even the uninsured to afford very expensive procedures
    • doesn't encourage reliance on the system
    • payments are tax deductible under point 2
  • Loosen regulations on insurance industry
    • regulations such as setting a maximum deductible hurt both sides
      • consumers aren't allowed to decide for themselves what they need
      • insurers aren't allowed to innovate and find new solutions
    • regulations reduce competition
      • not all of them!
      • regulations provide a disincentive for new insurance companies to enter the market
      • the more insurance companies there are, the better for consumers

Obviously this is still rather rough, and some of the points are clearly designed to address things that have now changed. However I think this is a decent outline of changes that could be made to healthcare that would meet the goals of both sides of the public/private argument. I'm sure there's tons of discussion that could be had on just about every one of my points, so perhaps I'll take the time to break each one out into a separate blog post where I can go into more detail in the future. Also, I'll try and write some more about the code I've been working on as there's some good stuff involving MongoDB, MongoEngine, and—of course—Django.

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