Most people with employer-based coverage are terrified of losing it though, so I think for propaganda purposes the Obama team's making the right argument.

There's another problem with McCain's 'young people will magically flock to health care' argument-- some of them still won't, and thus will be the ones all of us have to pay for when they get into catastrophic accidents (which they do, more than the rest of us) or don't take care of their asthma and diabetes.

Ah Ezra--the false equivalence. Sure--nobody would set up an employer-based system de novo. Yet the system solves important agency and risk-pooling problems for tens of millions of people. While it is not an overall success, it is not something to be precipitously junked, either.

Come on. What is it so great about having system that has young, mostly single, and poor workers subsidizing the old rich ones? So, of course insurance rates should rise for some consumers in the individual market but it should drop for just as many more (especially for poor-middle class workers with cheaper plans).

And for the individual insurance market to work (i.e. for it transfer risks) pre-existing conditions must mean higher insurance rates or denied access. This is just how insurance works. For instance you can't buy hurricane insurance minutes before the hurricane hits your house. That wouldn't make sense and neither would it make sense to allow someone who gamed the system to buy cheap insurance only after they suffered a major heart attack.
Look in the present system if you buy insurance when your young and healthy, keep it or change it or whatever, when you get sick your covered. Even if after you get sick you can still change insurers and they will give you a credit for already having insurance. Of course if you like to live dangerously, fine, just don't expect to be able to get sick and then buy insurance at a comparable rate with the first example. Compare this system to one Ezra advocates where everyone must some arbitrary and often excessive level of coverage forever.

it should drop for just as many more (especially for poor-middle class workers with cheaper plans).

Why would it drop for them? Lots of poor-middle class workers have shitty health insurance as it is, and many insurers would look at opportunities to raise their rates. After all, since they're poor, they may well even have a history of poorer health.

Compare this system to one Ezra advocates where everyone must some arbitrary and often excessive level of coverage forever.

What you're arguing is that healthy people shouldn't have to pay for health insurance, while sick people should have to pay a lot of money for the treatment they need. That sounds like something that defeats the purpose of insurance.

There's a reason that some people require a lot of health care: because in life, they drew the short straw. Now, this is great for me, who won the personal health lottery: I'm free to start a business, work for a small company, and enjoy the benefits of the cheap, individual market without facing competition from those who are shut out of the market. But that's hardly a meritocracy, and I'd even venture to go so far that I'd have very little claim to say that I "earned" my success when, in fact, all I did was support a set of policies that enslaved a lot of my potential competition. You're describing a situation that is great for me, but only provides me with a few, marginal benefits that I didn't need in the first place, while creating a huge penalty for lots of other people.

Health care economics isn't conducive to sound bites and the devil, as always, is in the details. All we have now is campaign promises, and we have no idea what would actually make it through congress (and their lobbyists) or how it would get implemented.

That said, if implemented properly, McCain's program is better, as it gives people more choices. In Obama's program, you have two choices, your employer or the government. Two is better than one, but many is better than two. But that's based upon the assumption that McCain can develop a fair and economically viable health care market, which is ambitious. Obama's plan would be easier to put in place - but if poorly managed could create the worst of all worlds, lack of choice and accountability and a huge fiscal liability.

gordon gekko,
you are confusing health insurance with life insurance. If you buy individual health insurance when you are young and healthy, and then you develop a serious illness, the first thing your insurer will do is see if they can find some way to invalidate your policy. If they can't, they will deny payment for as much as they think they can get away with, while making it as burdensome as possible for you to get reimbursement. As soon as the law permits, they will raise your premiums to a virtually unaffordable level. And if you drop the policy and want to find another, your only possibility for individual insurance is going to be your state high-risk pool, which will be very expensive, offer poor coverage, and probably be unable to enroll you for a year because they don't have enough money to cover everyone who is shut out of the individual market. Until we have a national system, the minimum that any reform plan must do is to insist that health insurers cover everybody, that they pool individuals and small groups to spread risk, and that there is some cap on premium increases. As it stands now, all insurers will do all they can to pay out as little as possible; and why shouldn't they act this way? They are not in business for your health.

karen, that type of overly cynical and incorrect misinformation does a disservice to the entire debate

that type of overly cynical and incorrect misinformation does a disservice to the entire debate

Anyone who's actually dealt with an insurance company realizes that karen is correct.

That said, if implemented properly, McCain's program is better, as it gives people more choices.

No, actually, it doesn't give people more choices. At least, people who have a definite need for health insurance don't have more choices, since the individual market is not considered a viable "choice." The McCain plan rests upon the myth that there are all these people out there who have "more health insurance than they need."

"What Doug Holtz-Eakin just said is that even McCain's top advisers realize that this will mean much worse health care coverage for everyone involved."

What do you mean, realize? This is the whole point of the McCain plan. McCain wants people to pay for their own health care so that they will use less. In his mind the health care crisis is one of over-utilization, not of under-coverage. If more people would just go ahead and die instead of putting such a strain on the system the rest of us would be better off. That's the McCain health care plan.

Tryo,
What???
Insurance works by taking a group of people and forming an agreement to cover whomever gets sick. The person who rarely or never gets sick pays the same as the person who gets sick often. Each group determines at time zero how much they want to pay (i.e. how much they want covered).

What I like about this system is it allows each individual to optimize his utility based on his preferences. If someone is risk adverse and wants superior coverage, fine join group X. And conversely if someone prefers consumption (perhaps because they are poor) they have the ability to pay less.

For this insurance model to work though it requires a few key assumptions. The most important is that everyone starts off at an equal level of health without the ability to predict future health outcomes. While this assumption is largely true not everyone is of equal health at age 18 or has equal health outcomes. The government could potentially intervene at this point to ensure a level playing field and then let individuals make their own decisions going forward.

I personally don't see how this system is more unfair than a progressive system. If you gave equal amounts of redistribution under both systems a fair insurance model could make everyone better off. Of course if you're a paternalists and believe we are not rational actors then I am lost.

Ezra, you are failing to differentiate between the catastrophic layer of insurance -- with a floor that will at least prevent anyone from complete financial disaster -- and the layer underneath that for a few is a mere convenience, because they can afford to pay. (For most, depending, of course, on where it is set, the underneath layer is important, but not utterly critical --i.e., it could with pain be paid over time.)

The first order of business for universal social insurance is preventing catastrophes. That's what government does very well, and even rational libertarians can recognize that as a collective good with limited government intrusion. Government can enforce a no-preexisting -conditions rule for anyone who wants to play in the market, can offer optional, low cost alternatives for the underneath layer for anyone who wants one, and can subsidize low-income people to get insurance for the first layer. There is no problem with employers voluntarily or through collective bargaining offering a good deal on the underneath layer, so long as their exposure is capped. Many no doubt will continue to do so.

Anyone who's actually dealt with an insurance company realizes that karen is correct.

Really? She is correct to say "As soon as the law permits, they will raise your premiums to a virtually unaffordable level" even though individual insurers cannot raise rates on an individual due to claims experience?

And she is correct to suggest there is not a cap on premium increases, when nearly every state controls the amount that premiums can be increased, and all of the insureds get the same rate increase?

And she is correct to suggest that capping rate increases even further is a good idea when insurers are not making any more money from those increases but merely keeping up with cost trend?

Learn a little something about how to finance health care costs and get back to me. These companies make tiny margins and take on a significant amount of risk. We need to find a way to reduce our overall health care costs, trying to blame the problems on the "evil" insurance companies is counter-productive, and in this case simply incorrect.

This is not meant as a defense of the McCain plan, which I don't like, but we need to get beyond this simplistic blame game where the insurers are the reason health care is so expensive. Arguments like the one karen made are not helping anything, they only serve to further spread incorrect information. How can we discuss how to fix serious problems when some people cannot even get the facts straight?

If you can stomach it, read this Wall Street Journal article supporting the McCain health care plan: http://online.wsj.com/article/SB122506862956370705.html

The fatal flaw is the assumption that people should pay out of their pocket for preventive health care--this would discourage people from "overusing" the system and lower costs. Yeah, right. Ever heard of the salutory effect of preventive health care?

Barf.

AB,
Actually, I'm not blaming the evil insurance companies; as I said, they aren't in business for our health, and we shouldn't make the mistake of thinking they are. They are in business to make money, not to take care of us, so their behavior is perfectly rational; it just doesn't do patients much good. We fall into the same trap when we tell doctors they need to operate like businesses, and then tell them they have to put patients' needs first. Neither doctors nor insurance companies can do both, so let's make up our minds which we want, and accept the consequences.

even rational libertarians

You lost me.

For this insurance model to work though it requires a few key assumptions. The most important is that everyone starts off at an equal level of health without the ability to predict future health outcomes.

And yet, you stick with these assumptions and keep talking after all of this rather than ending with, "of course, such assumptions are completely ridiculous, which makes the entire thing a waste of time."

AB, most everyone's experience with health insurance has been that they make it difficult to get reimbursed for procedures and attempt to stick patients with as large a bill as possible. Many go so far as to refuse to cover prophylactic/preventative procedures based on the assumption that by the time a problem manifests itself, you will be covered under another insurer, anyway. Dismissing karen's skepticism of insurance companies reflects a profound disconnect with the experiences of others when it comes to dealing with their own coverage.

gordon gekko: "What is it so great about having system that has young, mostly single, and poor workers subsidizing the old rich ones?"
Reply: "Honour thy father and mother, that thy days may be long.."

hey make it difficult to get reimbursed for procedures and attempt to stick patients

Exactly. Of course they need to contain costs and make profits, but they need to do it honestly. Not by gaming "diagnostic" vs. "preventive" care, or by taking kickbacks from drug companies to have their product included in a formulary, etc. etc.

Tyro, those statements are just not true, and once again reflect a fundamental lack of knowledge of how the the industry works. It is far too easy to just assume ill intentions when something doesn't work the way you want it to. Answer me this: if the insurers do so much to get out of paying, why is it that their loss ratios do not reflect those savings?

Dismissing karen's skepticism of insurance companies reflects a profound disconnect with the experiences of others when it comes to dealing with their own coverage.

And blindly believing in it reflects a profound disconnect with the actual workings of the industry.