Common Theme/Common Solution

by Dave Schuler on April 27, 2012

Homing in on one tiny paragraph in the Washington Post’s editors’ critique of the Senate’s frantic attempt to preserve business as usual at the United States Post Office:

By a more important measure, what the Postal Service actually needs to be solvent, the Senate bill falls disastrously short. In February, USPS management spelled out a five-year plan to cut $20 billion in costs and restore long-term viability. The plan required ending mandatory Saturday delivery, downsizing a bloated network of mail-processing facilities and restructuring the employee health insurance program. The Senate bill enacts none of these reforms.

The emphasis is mine. Do mine eyes deceive me or do I see a common theme emerging? Let’s see. The Post Office has a problem with increasing healthcare costs. Healthcare costs, corporately, are the single largest component of the federal budget and rising due to increased costs. State and local governments are collapsing under the burden of increased healthcare costs. Businesses are dropping healthcare insurance for their employees because of increased costs. Non-group healthcare insurance is becoming an increasing burden to the families who seek it due to increased healthcare costs.

I know! Let’s extend coverage to more people!

{ 9 comments… read them below or add one }

Ben Wolf April 27, 2012 at 7:46 am

@Dave Schuler

Off-topic, but there’s a very well-written blog I’ve followed for a while, and I thought you might be interested. Forgive me if you’re already aware of it:

https://spikejapan.wordpress.com/about/

Drew April 27, 2012 at 8:08 am

“I know! Let’s extend coverage to more people!”

You nihilist, you.

Separately, there is a dinosaur post office near me that will not get shut down as we understand it. The scene: a modern post office in downtown Naperville. A very modern post office serving S Naperville on Ogden Ave near Rt 59. A post office in downtown Aurora. And then, a relic from the days when far west Naperville was just cornfields. This tiny little post office serves the “town” of Eola. a 50 home , postage stamp sized little community wedged in between Naperville and Aurora at, heh, Eola Road and N Aurora road. (If you are motivated you can google that and you will get the absurdity of the location.) Its 5 minutes away from us, but really serving no purpose but to drop off a letter if you so chose. The modern offices are no more than, variously, 10 to 20 minutes from me.

Crazy. Sorry for the nihilism, Michael.

Dave Schuler April 27, 2012 at 8:19 am

Just to make my position clear, I believe that reducing costs will enable more people to have healthcare insurance but the converse is not the case.

Also, while I think that universal healthcare is morally defensible, marginally increasing the number of insured is not. That’s just sophistry. Plus you could write the law on the back of an envelope over lunch (unlike the present law) and it could be written in such a way as to pass constitutional muster.

Drew April 27, 2012 at 9:15 am

“Just to make my position clear, I believe that reducing costs will enable more people to have healthcare insurance but the converse is not the case. etc”

I of course agree with this. I bet most people will, if they really think about it. Since I arrived at this blog and since this issue has been debated on this site it seems the issue has always been the same. There is a crowd who simply say “some are not insured, this is cruel, the government should insure them.” But their view stops there. They don’t ask themselves “why is insurance unaffordable?”

There of course is a small subset of the population where the answer is that they are too poor or disabled etc. This is no different than those who need assistance for food, clothing and shelter. Fine. But why is it that such a large segment of the population is uninsured? (and lets not argue for now about the right number, which is suspect) It seems to me there are two reasons. First, many young people take the bet that they wont get sick and just dont purchase. For most, its a good bet. But it creates a free rider problem that flummoxes me to this day.

Second, is what Dave points out. If the cost of the insured event is high and escalating quickly, the cost of insuring over it will escalate quickly as well. This is the general point of departure between me and any number of people. I think the consumer has been divorced from price, and reacts accordingly. The pricing power of the health care industry is unchecked. Others cite different reasons, self interested doctors for example.

I would point people to the homeowners insurance issue in Florida. The global warming crowd convinced everyone that hurricanes would become routine and more severe. What happened? The presumed frequency and cost of the insured event went up, and so did premiums, or even availability. I hope the gw crowd is proud of themselves, but it was so predictable.

For the umpteenth time, this issue of escalating health care costs will not get resolved until health care insurance returns to being insurance, and not maintenance, and the consumer is reintroduced to the same purchase price decision faced in just about every other facet of life. (Or alternatively, the government takes over the system and restricts access and quality) Until then, Dave will be able to write these essays about post office workers, teachers, pensioners etc etc forever.

Jimbino April 27, 2012 at 11:02 am

Drew, you say:

“First, many young people take the bet that they wont get sick and just dont purchase. For most, its a good bet. But it creates a free rider problem that flummoxes me to this day.”

I don’t agree with your statement. Health insurance, like ALL insurance, is a bad bet, worse in fact than spinning a roulette wheel (payout ~95%, cf. http://wizardofodds.com/games/roulette/). The insurance payout is under 80% for health insurance and can go as low as 2% for title insurance.

Starting out as a bad bet on average, it becomes much worse if you’re singled out to pay more, as are men in general and young men in particular. A young man is a fool to participate in any kind of health insurance plan, and I myself have studiously avoided taking jobs that offer health “benefits,” opting for the 50% wage differential instead. Furthermore, insurance for the kinds of things a young man wants to do, like climb Everest, is not available. So you’ve got a lot of young men faced with making a lousy bet, covering breast exams and pre-natal care for the young breeders, while he is climbing Everest uninsured.

And it’s worse if you are a Black man, forced to pay Medicare FICA for 45 years and expected to die at age 71, far younger than the White woman who has worked less and will live much longer.

And I would like to see some evidence in support of your “free-rider” claim. The true free-rider, in my mind, is the hypochrondiac young breeding woman in a group-insurance plan. Every kid she chucks out will cost the guy climbing Everest a large part of the $10,000 spent on a non-medical procedure (a common birth). And he will, of course, also participate in the additional true medical costs that result from birth complications.

I would like someone to provide stats in support of the idea that the free-rider is the illegal immigrant. The illegal immigrants I know here in Texas work hard, pay taxes (income, property and sales) like everyone else. They often pay FICA taxes with no claim to SS or Medicare benefits. They are uninsured, but since the Feds pick up some 50% of the nation’s healthcare costs, they have already paid their share of the 50% of an emergency-room visit when they walk in the door. Not being insured, however, means they generally do not make as much use of medical care as does the hypochondriac and indolent breeding woman citizen covered by her husband’s group insurance.

So, I figure that it is the illegal alien who is subsidizing the health care of the citizen and not the other way around. I don’t know how the figures come out, but I do know that you have not given any evidence to support the assertions implicit in your statement.

Drew April 27, 2012 at 12:56 pm

Jimbino

Your comment is 99% drivel. People and businesses insure for very concrete and real reasons. We pool risk and the financially manageable insurance premiums not because we expect to break even, but because if we are the unlucky ones in the risk pool we are not driven to financial ruin. Jimbino, you WANT to collect less than your premiums. Otherwise, you can “self insure,”

The problem, as I pointed out, is that health care “insurance” is no longer insurance from a financially catastrophic event, but a maintenance program for all kinds of routine and expected events. Such as your breeding women, hypochondriac etc examples. And once the consumer is able to offload such expenditures to others, you will get excess demand and price escalation.

This ain’t rocket science.

Icepick April 27, 2012 at 3:39 pm

Drew, I suggest that Jimbino would make one terrible actuary.

Icepick April 27, 2012 at 3:41 pm

And once the consumer is able to offload such expenditures to others, you will get excess demand and price escalation.

Given that birth rates are low in this country, one wonders what they might be if they weren’t subsidized.

Of course, what’s really being subsidized are lawyers and administrators, much moreso than the breeders.

Sara May 2, 2012 at 9:29 am

I, of course, cannot wait until the same people who handle the post office are also in charge of my healthcare.

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