Karl Marx, actuary

The President has been compelled to acknowledge the price hikes in the individual health market.  One of the points he now explains is that he old market was unfair in extending preferred rates to healthy people, not making men pay for maternity risk, etc.

This is literally true, of course.  With community rating, some people pay for risk incidence they don’t actually have.  And ACA enacts community rating, so in this case lucky ducks who were healthy and male or healthy and post-menopausal are going to pay maternity risk now.  Etc.  There’s other examples.

Now I can under some circumstances be convinced that community rating is fine as a method, but ‘fair’ is by definition the wrong discussion.  It’s insurance.  There isn’t anything ‘fair’ or ‘unfair’ about it.

The President however sees it in terms of fairness, and has been conflating concepts of insurance and concepts of progressive taxation (for the purposes of funding social welfare).

I find this objectionable and new.  Thing is, a ‘to each by his needs, from each by his abilities’ case for risk burden sharing based on health of the premium payer …this hasn’t been articulated, I dunno, maybe ever.    But the President married them with ACA.  With ACA your health insurance rate is a progressive tax based on your health and income.

Fact is, this is accepted, for the time being… inasmuch as people are busy arguing about other features of the ACA right now.

But the President didn’t win this point and it will be revisited.  People will be prompted by a couple visceral reactions.

First is, a lot of people who don’t feel like lucky ducks will be exposed to enormous cost increases.

Second thing is… on a civic level, taxes are accepted (at least to a point). People know they have to pay taxes.  But it’s one thing to have a tax increase of several hundred dollars a month and pay that to the government.  It’s quite another to have to pay it to UHC, Cigna, Humana, etc.   There is something deeply unsettling and protestable about this arrangement that’s been made via Obamacare.  I have my doubts its survives  the elaborate discussion that comes with next year’s cost increases.


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