For Young Adults, Health Insurance Is Available for About Same Monthly Cost as A Cell Phone
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Friday, September 24, 2010
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
Previous Posts
- Young Adults Are Key to Health Care Reform; But Th...
- If You Tax Something, You Get Less of It....
- Surprise, Surprise, Surprise: Beer Industry Oppose...
- Leading Index Improving, But Very Slowly
- Weekly Rail Traffic Continues to Improve, Containe...
- Indexing Capital Gains Tax for Inflation Protection
- Tourism Spending and Jobs Are Coming Back
- Minnesota's Exports Soar 19% in QII
- Random Roundup
- The Architecture Billing Index (A Leading Indicato...
39 Comments:
What would happen to the price of those cell phone plans if the federal government mandated that you must purchase one (and maintain an operating agreement or face fines)?
Or maybe more appropriately adjusting the model for 18-34 year old health claims, how much would a cell phone plan cost with 10 call minutes per month?
Health care coverage is expensive and unaffordable due to the fact that price of purchase is covered with net dollars...
Regardless of how cheap Blue Cross-Blue Shield may offer certain types of coverage it will do nothing to mitigate the other major flaws of ObamaCare...
The increased numbers of people that would by necessity flow into the medicaid/medicare program wouldn't be stopped...
Doctors refusing to deal with medicare/medicaid won't change or worsen...
Insurance companies will continue to drop child coverage or just go out of the health care coverage business altogether...
Small businesses will not hire due to the cost and red tape of ObamaCare...
Medical care will still be rationed...
MP, in the prior post you are griping that young adults are being forced to buy health insurance.
yet, in this post you are saying that the cost of said health insurance is almost trivial.
I don't happen to be a young adult.
As I ponder the next 10 years to Medicare, I see about $150k in health care insurance payments, and more out-of-pocket. That's a best-case scenario. I never get sicks, and premiums don't rise much.
My family costs even more, but luckily they are in Thailand, a nation with an affordable national plan.
I wish I was on Dr. Perry's state-provided health care plan.
Great plan - health insurance that doesn't actually cover trips to the doctor or urgent care or any preventative services. And don't get pregnant either - maternity services aren't covered (nor contraception!). And don't forget the $120/month deductible and the $300/month copay (which you're pretty much gonna hit if you have anything wrong with you at all).
Pretty much like a $50/month cell phone plan, but one with no minutes, no texts, an extra $100/month for data and $10/minute for calls.
Quote from Benjamin: "As I ponder the next 10 years to Medicare, I see about $150k in health care insurance payments, and more out-of-pocket."
Maybe you should consider using that $150k for investments and go with the $100 a month major medical plan instead.
Either way, I doubt you're making so little money that $150k, spread over 10 years, is an unsustainable burden. Those of us over 40 years old are generally the richest in the country, and typically the least in need of healthcare welfare. Just think how much better you could afford your insurance if you didn't have to pay 30% of your income to taxes.
Quote from davidj: "Great plan - health insurance that doesn't actually cover trips to the doctor or urgent care or any preventative services. And don't get pregnant either - maternity services aren't covered (nor contraception!)."
Car insurance doesn't pay for oil changes and minor fender benders. Are you responsible for yourself, or do you need somebody to take care of you?
Typically, pregnancy is a voluntary condition. Do you think somebody owes you a family?
bobble-
it won't be under the new plan once community rating and coverage minimums kick in.
try buying insurance like that in Massachusetts (the model we are emulating).
geoih:
What major medical plan for $100 a month?
Identify a few.
Thanks
Remember I am 55, non-smoker, but some health issues.
Benji's pining for some of that sweet sweet Obamacare.
Benji's not a farmer, so he hates farm subsidies.
When we take control of our health care decisions, we can help control costs. Check out Whatstherealcost.org for explanations.
Medical care will still be rationed...
================================
So, what is the problem then? You admit the previous plan was flawed, or is it that you think the previous rationing plan was superior?
"Just think how much better you could afford your insurance if you didn't have to pay 30% of your income to taxes."
=================================
This is just innumeracy.
Sure, If i didn't pay 30% in taxes I could afford more stuff, except I would probably have to buy a lot of services and other stuff now provided by the government.
In the end not paying 30% in taxes may make me no better off, except that I get to choose what services I want to pay for, and which ones I will do without.
You conveniently forget the do without part when figuring you will be "better off".
What would happen to the price of those cell phone plans if the federal government mandated that you must purchase one (and maintain an operating agreement or face fines)?
================================
You mean like seatbelts, catalytic converters, and airbags?
I can remember when seat belts were offered as an expensive option.
morganovich:"it won't be under the new plan once community rating and coverage minimums kick in."
good point. apples and oranges.
"yet, in this post you are saying that the cost of said health insurance is almost trivial."
==================================
But the profits are not, so they can be used to spread the risk and make more coverage availble to more people.
"You mean like seatbelts, catalytic converters, and airbags?"...
Both items that are totally useless and haven't done much to mitigate deaths on the road or cleaned up the air...
Typical federal interference, long on costs, short on useful results...
Great plan - health insurance that doesn't actually cover trips to the doctor or urgent care or any preventative services.
It is a great plan -- it's what insurance was meant to be. In fact, it's a lot like car or home insurance. You pay out of pocket for foreseeable expenses (routine maintenance); and you collect for unforeseen and catastrophic events.
And emergency room care is covered if it's for an actual emergency. I suppose showing up for the sniffles isn't. As far as not covering childbirth? It's actually (contrary to modern opinion) completely foreseeable, preventable and, in my opinion, should be paid for by the proud parents anyway.
You do represent the conventional wisdom, though, that after paying a premium, health care should be free.
So you have a cell phone and no insurance.
If you suddenly need health care, who are you going to call?
Many of the respondents here don't know what INSURANCE is. You are so accustomed to government-mandated "Cadillac" healthcare plans called "insurance" that you take this as your example of insurance.
Both items that are totally useless and haven't done much to mitigate deaths on the road or cleaned up the air...
=================================
Bullshit.
We have this year the lowest highway death rate in decades despite more miles driven and more cars on the roads.
There are many factors for those lower rates, safer cars and safer roads and more drunk driving enforcements - all partlythe result of government interference which was demanded by citizen action.
I can remember when my town was routinely covered in smog, and that is no longer the case, largely do to catalytic converters and unleaded gas.
I'll buy you a junker if you will drive it into a wall at 50 MPH without protection.
Craig: Thanks for trying to teach people about insurance. One reason that healthcare "insurance" has grown so expensive is that it isn't insurance!
So we agree that insurance is not unlimited. We all want some kind of "rationing" in order to make insurance viable, profitable, and still useful.
Now we are talking about the trade off between those two, and where it should be.
Can we stop throwing around rationing as if it was a dirty word or as if it only applies to the plan poroposed by the other side?
Typical federal interference, long on costs, short on useful results...
================================
I think the price of seatbelts when down after they were mandated.
Of course the costs were still higher than NO setbelts, but the benefits were higher than no seatbelts too.\
So take the costs of all the sealtbelts ever made and subtract the costs of the ones not worn. Divide that by the number of lives probably saved figure the cost per life saved. Do the same for fire alarms, swimming pool fences and anything else you can think of.
Some regualtions are more valuable than others some are a whole lot less valuable, but that does not mean the are all bad.
This comment has been removed by the author.
Libertarian economists and some of their followers want to own the definition of the word "insurance", and then use their definition to "prove" that the medical insurance industry is not selling insurance,
The most common definitions of the word "insurance" do not specify that losses be uncommon or unroutine:
from Merriam-Webster's online: "coverage by contract whereby one party seeks to indemnify or guarantee another against loss by a specified contingency or peril"
The argument that health insurance is not "insurance" because it covers regular maintenance - checkups or regular drug benefits - is a red herring. Routine medical care makes up a very small part of overall health insurance benefits paid, IN fact, routine medical exams are a means for reducing the risk to the insuror. Routine exams help consumers discover potentially serious medical conditions before those conditions become life-threatening and costly.
If libertarian economists want to be relevant in the debate about health care, they should stop trying to use their own definition of a huge industry in an attempt to nullify its economic contribution.
Why do employers and consumers prefer health insurance plans which bundle both so-called catastrophic and routine medical care?
1. to take advantage of the superior negotiating power of large insurance companies for all of theire health care consumption;
2. to reduce their costs of and take advantage of superior expertise in shopping for medical care (I think shoe leather was the term my professors used);
3. because so-called "regular" treatments can become very expensive when required for many years and even decades;
4. because employe4rs have an interest in keeping workers on the job, and routine examinations and health care are believed to be a key factor in reducing absenteeism;
5. because enlightened employers wish to reducwe the stress on their employers, and helping employees manage all their health care requirements eliminates what for some can be a major stress generator.
Health insurance - as defined by the industry which provides it - provides major economic benefits. Dismissing those benefits by making comparisons to automobile insurance seems a little naive to me.
"Of course the costs were still higher than NO setbelts, but the benefits were higher than no seatbelts too"...
Highway Deaths Fall to Lowest Level Since 1950
Sounds good, doesn't it?
Sounds good until you compare it to this number...
zelI don't see your point. there are hundreds of reasons the highway deaths have gone down, and many of them have to do with some kind of government activity. Of which, some are more cost effective than others.
Even the decline in auto usage can be partly attributed to government interference, in the form of zoning restrictions, rural conservation, and subsidizing mass transit.
But to baldly make the blanket statement that catalyitic convertors and seat belts are a useless waste of money and an example of government coercion is still total BS.
What is not BS is that there are things which we are coerced to buy by government regulation and almost invariably, once the issue is forced on industry, they step up to the plate and figure out how to meet the regulation inexpensively, and the cost goes down, not up.
"The argument that health insurance is not "insurance" because it covers regular maintenance - checkups or regular drug benefits - is a red herring. "
===============================
I agree with Beagle. My farm insuror makes regular checkups to make sure I have not created some hazard he will be liable for.
Still, we cannot expect insurance to be all encompassing, and still be able to pay for it.
Choosing Michigan as your observation is deceptive. The average individual coverage across the US for health insurance is $440 per month. As a young adult on a private plan subsidized by my college campus affiliation, I pay just under $200 a month. That alone calls into question the merits of your conclusions.
"But to baldly make the blanket statement that catalyitic convertors and seat belts are a useless waste of money and an example of government coercion is still total BS"...
O.K. hydra, prove it...
All those two items have done (along with all the other useless crap in the CAFE standards) is to drive up the costs of a vehicle, put people out of work, and put otherwise useless people into bureaucratic positions which drives up the taxes since those parasites have to be paid too...
We are seeing a new incarnation of the seat belt/catalytic converter today with the CFL lighting mandate...
"I can remember when seat belts were offered as an expensive option."
But government never mandated the purchase of automobiles, only that the automobiles sold must have the belts.
Government mandated auto liability insurance sure hasn't lowered the rates (despite all that traffic safety you are quoting)- plus I still have to buy uninsured motorist insurance to cover the lawbreakers.
A lot like indigent care on the health insurance side. And that ain't gonna change. Maybe you'd like a line item called "illegal alien insurance charge" on your W-2 form.
"we cannot expect insurance to be all encompassing, and still be able to pay for it."
Not sure exactly what you mean by all-encompassing.
If insurance companies were free to tailor products to the desires of their customers - if government mandates did not exist - the free market would create a variety of insurance products which would meet the needs of most consumers at a price they could afford.
If i didn't pay 30% in taxes I could afford more stuff, except I would probably have to buy a lot of services and other stuff now provided by the government.
Yes, I want to pay for babysitting for other people's children. And for Amtrak, even though I live in the Midwest. I want to pay subsidies to artists and writers through the Nat'l Endowment for the Arts. I want to pay Congress' pensions and health insurance. I want to pay for health insurance for part-time county supervisors. So many things I am forced to pay for now that I would be thrilled to pay for voluntarily because they are so important to me.
"If libertarian economists want to be relevant in the debate about health care, they should stop trying to use their own definition of a huge industry in an attempt to nullify its economic contribution."
- - - -
Liberal economists, in turn, should stop pretending that insurers can insure people in a scheme in which the insurer is guaranteed to have to pay out more in health care bills each year than all of its insureds pay in as premiums.
If you are going to insist that routine, expected care costs be covered by your insurance, you may as well simply take the bills for those items and add them directly to your yearly insurance premium. Buying insurance is most like placing a bet; my insurer bets me the price of my premiums that I will not incur medical costs that exceed my premium. If I know I'll be spending $2000 ahead of time, they'll not be covering that amount in our bet.
"If libertarian economists want to be relevant in the debate about health care, they should stop trying to use their own definition of a huge industry in an attempt to nullify its economic contribution."
- - - -
Liberal economists, in turn, should stop pretending that insurers can insure people in a scheme in which the insurer is guaranteed to have to pay out more in health care bills each year than all of its insureds pay in as premiums.
If you are going to insist that routine, expected care costs be covered by your insurance, you may as well simply take the bills for those items and add them directly to your yearly insurance premium. Buying insurance is most like placing a bet; my insurer bets me the price of my premiums that I will not incur medical costs that exceed my premium. If I know I'll be spending $2000 ahead of time, they'll not be covering that amount in our bet.
bobby: "If you are going to insist that routine, expected care costs be covered by your insurance"
Not sure if that is addressed at me. I am neither a liberal nor an economist.
Routine, expected care costs are a very small portion of health care costs in America. Having those prepaid expenses included along with the real health insurance for which consumers pay does not invalidate the economic value of the health insurance product or of the profit-seeking corporations who offer it.
Many employers who provide health insurance believe that encouraging routine health maintenance decreases employee absenteeism.
bobby: "Buying insurance is most like placing a bet"
That sounds like a smart sentence, but it is not correct. Buying insurance is a transfer of risk. It is also a means of increasing the odds of one's survival. The gambler faces no risk of loss - either loss of funds or loss of life - when he does not place the bet.
Hydra: "I can remember when seat belts were offered as an expensive option."
I remember when power windows were an expensive option. And power steering. And power locks, And cd players...
Those things are inexpensive and standard now, all without gov't mandates. All it takes is for people to want something enough to pay for it.
Post a Comment
<< Home