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Medical Homes: Good Idea, or Politicized Boondoggle?

David Hogberg at Investor’s Business Daily has written a nice critique of the so-called “medical homes” pushed by ObamaCare (HR 3590).  A “medical home” sounds comforting, but if politicians are forcing you, or nudging you, into one with legislation, then you should be wary. A few excerpts from the article,Medical-Homes Model Pushed By Health Bill Is Still Unproven:

A medical home emphasizes teamwork among physicians. Primary care doctors coordinate patient care among specialists, but they don’t act as gatekeepers. Patients have relatively unrestricted access to care.

Electronic medical records provide easy access to information, helping doctors spot redundant services and monitor patients with chronic problems to make sure they follow proper treatments. Physicians and patients alike can track the results of care. The goal is to cut costs while boosting quality of care.

Sounds good, right? But,

“It becomes more bureaucracy than health care,” said Greg Scandlen, an independent health care consultant. “Congress got together and said, wouldn’t it be great if we could create something that could lower costs and improve quality, and they called it a medical home. Politicians come up with swell terminology for something that won’t work and that we’ll spend a lot of money on.”

Hogberg reviews research on the effectiveness of medical homes in improving quality and decreasing costs – the results are mixed.

Don’t forget the big picture: regardless of their merit, politicians should not tell doctors how to run their practices and how to relate to their patients.  As Michael Cannon at Cato has noted, government already does this:

Rather than allow a level playing field for all payment systems, so that competition forces them all to improve, government tips the scales toward fee-for-service. Medicare is the largest purchaser of medical services in the U.S., and it operates largely on a fee-for-service basis. According to former Medicare chief Thomas Scully, “in many markets Medicare and Medicaid comprise over 65 percent of the payments to hospitals, and more than 80 percent in some physician specialties.” No wonder a recent New England Journal of Medicine study found that only 1.5 percent of non-federal hospitals use a comprehensive EMR system. Name any quality innovation that might save money by avoiding unnecessary services — EMRs, bar-code scanners for prescription drugs, surgery checklists. Medicare blocks them all. The Left bemoans the resulting quality problems, yet is desperately trying to subject even more of the market to the very stagnation Medicare introduces. Massachusetts, with its commission to develop a single payment system for its entire health-care sector, is diving head first into the cement. It makes no difference if government chooses a different payment system than Medicare’s. The problem isn’t the particular payment system, but the lack of competition from other systems.

Jail Time for not having (Legal) Health Insurance?

When the mandatory insurance provisions of the health control legislation (HR 3590) kick in, will not having medical insurance (as defined by politicians) land you in prison?

Short answer: The process is the same as if you don’t pay your taxes. You could end up in prison, but that usually does not happen. The government has other ways to get what they want from you.

The Colorado Center on Law and Policy (CCLP) issued a “Fact Sheet” about the recent health control legislation, HR 3590.  One section says:

Tax penalties for people who do not have insurance will be phased in beginning in 2014. In 2016, the penalty will be $695 per person, with a maximum penalty of $2,085 for a family, or 2.5 percent of income, whichever is greater. No one will go to jail for not having health insurance.

To be more precise, having medical insurance is not enough to avoid the tax penalty. Your insurance policy must meet the requirement of what politicians define as insurance. I’ve written several blog posts on how mandatory insurance can and has made insurance policies illegal.

What about going to jail?  Citing the above fact sheet, Erika Stutzman of the (Boulder) Daily Camera has repeated this claim:

No one will go to jail for not having insurance; no one will be charged with any crimes. You are not forced by force to have insurance. Just choose to pay your tax penalty …

Stutzman and the CCLP argue that you won’t go to jail for not having legal insurance. You just have to pay a penalty. But this begs the question: what happens if you do not pay the penalty?   The Daily Caller reports:

IRS Commissioner Doug Shulman] noted that the health-care bill expressly forbids the agency from freezing bank accounts, seizing assets or pursuing criminal charges, but when pressed said the IRS would most likely use tax refund offsets to penalize those that don’t comply with the mandate. The IRS uses refund offsets to collect from individuals that owe the federal government a delinquent debt.

So if you are due a tax refund, then you can not avoid paying the penalty.  So I guess you won’t end up in prison.  Government just confiscates your money for not buying a product politicians think you should buy. But it’s not prison!

But what if you do not have any pending tax refunds? What if you do not like overpaying your taxes, which is in effect an interest-free loan to the government? Then what?

You’d think the penalty would be akin to not paying your taxes, and then not paying the penalties that result from it.  But the IRS Commissioner, says the Daily Caller, says the health control bill “expressly forbids the agency from freezing bank accounts, seizing assets or pursuing criminal charges.” Hmm

PolitiFact has addressed this question in detail.

[Sen. John Ensign, R-Nev] questioned [Joint Committee on Taxation chief of staff Thomas] Barthold — the top professional staffer on the joint House-Senate panel that advises both chambers on tax legislation — about what penalties would be assessed.Barthold told him that they would be “penalties under the Internal Revenue Code.” Ensign asked for “the maximum penalty” for a “willful” — that is, intentional — violation. Is it “possible that somebody could go to jail over this?” Ensign asked.

Barthold answered, “Could be criminal, yes, if it were considered an attempt to defraud.”

Later, several news outlets reported that Barthold delivered ahand-written note to Ensign after the hearing confirming that violators could be charged with a misdemeanor and could face up to a year in prison or a $25,000 penalty. When PolitiFact contacted the Joint Committee on Taxation to confirm the contents of the letter, a spokeswoman said that such communications were confidential, but she pointed us to Section 7203 of the Internal Revenue Code, titled, “Willful failure to file return, supply information or pay tax.”

The text of that section appears to jibe with the reported contents of Barthold’s note. It says, “Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than 1 year, or both, together with the costs of prosecution.” (A House Ways and Means Committee spokesman said that the same rules would apply to the House bill.)

… And it’s worth noting that, as with other violations in which people have refused to pay taxes, sending someone to prison is an extreme measure used as a last resort.First off, as Barthold testified to the committee, the Internal Revenue Service would likely undertake normal collection procedures such as wage garnishments before resorting to a criminal case. Tax lawyers we spoke to said it’s possible for an unsuccessful debt collection to be referred to federal criminal prosecutors, though criminal prosecutions more commonly arise from audits.

If a nonpayment case with “willful” aspects did make it to the criminal docket, then it still has a long way to go until prison time kicks in.

I’m not sure how the wage garnishment would be allowed if the health control legislation forbids “seizing assets,” as the IRS chief said.

Mandatory insurance then is looking more and more like a tax. If you don’t pay your taxes, you can ultimately end up in jail. But government is likely to find ways to get your money before imprisoning you.  From the government’s point of view, this makes more sense: you cost the government money as a prisoner, whereas they can take your wealth if you’re still earning money.

But still, the threat is there. If you just want to live your life, pay your taxes, and pay for your medical care in a way that does not include buying a government-approved insurance policy, watch out.  Government will seize your assets or put you in prison for doing so.

(link to note via Michael Cannon at Cato, here)

Does Obama Know What Health Insurance Is?

Apparently Barack Obama does not know what health insurance is.  Neither do most people, and this is a core problem with health care in the U.S. Back in February at the health care summit, President Obama said:

Look, if I’m a self-employed person who right now can’t get coverage or can only buy the equivalent of Acme insurance that I had for my car — so I have some sort of high-deductible plan. It’s basically not health insurance; it’s house insurance. I’m going to — I’m buying that to protect me from some catastrophic situation; otherwise, I’m just paying out of pocket. I don’t go to the doctor. I don’t get preventive care. There are a whole bunch of things I just do without. But if I get hit by a truck, maybe I don’t go bankrupt. All right, so that’s what I’m purchasing right now.

Sorry Mr. President, a product that is equivalent to insurance you buy for your home or car, but pays for unexpected medical expenses is health insurance. As for not getting necessary care or preventive care, The American Academy of Actuaries wrote the following about HSA-qualified (catastrophic) health plans:

Generally, all of the studies indicated that cost savings did not result from avoidance of inappropriate care and that necessary care was received in equal or greater degree relative to traditional plans.  All of the studies reported a significant increase in preventative services for CDH participants.

As for bankruptcies connected with medical expenses, the connection is questionable.  As I wrote in the post linked in the previous sentence,

Not that I am defending the status quo health care policy in the United States.  It needs some real reform to bring down costs to consumers.

The president is not alone in confusing what most people call health insurance with real insurance. What most people have should really be called (and sometimes is called) a “health plan.”  As economist Arnold Kling writes in Insulation vs. Insurance:

The health coverage most Americans have is what I call “insulation,” not insurance. Rather than insuring them against risk, most families’ health plans insulate them from paying for most health care bills, large and small.

In short, the consumer is not the customer, which is a huge problem.

(Thanks to the Cato Institute for bringing the Obama quote to my attention.)

Instead of mandatory maternity coverage, supplemental insurance

Colorado Governor Bill Ritter signed Colorado HB 1021 into law last week.  The Denver Business Journal reports that it requires “all small-group and individual health insurance policies to include contraception and pregnancy coverage” “Proponents of [HB 1021] said it provides women with services that they sometimes had difficulty obtaining from their insurer.”

Then why not mandate that insurers offer a rider for contraception and prenatal coverage (optional supplement), instead of forcing everyone to pay the extra premium costs? That way, only people who want this coverage would buy it, and it would be available.

Could it be that the real reason is to use the strong arm of the law to further distort insurance into mandatory charity? That is, turn insurance into a tax?

The same argument can be made for all mandated benefits. A ballpark figure is that each mandate increases premiums by 4%.

As for supplemental maternity coverage, HealthQuote360.com says:

Yes, most individual health plans will allow for an optional maternity benefit rider to be added to the plan for an additional cost. Almost all plans will have a waiting period of 6-12 months before any (or full) benefits will be paid out for maternity expenses.

Jane Molnar at MaternityInsurance.org writes:

… The best thing to do in this situation is get supplemental maternity insurance.  Most health insurance companies offer this for families that are going through a pregnancy.  This would be an addition to your current health coverage.  This supplement would cover any health visits that are related to the pregnancy.

I’d be more confident of how available these products are if I could find some quotes on-line, or documentation that they exist.  Comments on this are welcome.

Questioning your “compassionate” politics

My first article/post for the Huffington Post appeared earlier this week. It begins:

“You oppose Medicaid and government-run schools? You’re heartless and lack compassion.”  If you have ever made this accusation, even tacitly, I invite you to reconsider the government policies you support.

Why does being compassionate mean supporting government-run schools and health plans? This makes little sense if you view these programs as government-run charities. Would you agree to perpetually donate a portion of your monthly income to the same charity -  regardless of its effectiveness?  If the charity is doing a lousy job, wouldn’t you want the freedom to find a better one?

Read the whole article: Questioning Your “Compassionate” Politics.

Thanks to Ari Armstrong, Paul Hsieh, Dave Kopel, and my wife for their comments. Thanks to Jessica Corry for putting me in touch with HuffPo.  I acknowledge many others in links within the article.  One person I did not link was Michael Cloud, whose book Secrets of Libertarian Persuasion was quite helpful, especially for this sentence, which is basically his:

If you support mandatory charity, what do you authorize government to do to those who peacefully refuse to cooperate?

I also recommend Cloud’s CDs on this topic. Great material, and not much overlap with the book.

Peter Saint Andre also inspired some of my ideas for this article. Many years ago I read his essay, On the Road to Voluntary Government Financing.

Is Mandatory Insurance Like a Tax Exemption for Mortgage Interest?

David Catron at Health Care BS quotes Florida Representative Debbie Wasserman Schultz on whether ObamaCare authorizes government to require citizens to buy health insurance:

We actually have not required in this law that you carry health insurance … What we’re doing is that you will be in a different tax status if you carry insurance versus not carrying health insurance …

She compares this to the tax deduction for owning a home – as if it’s that OK. Watch the video for the whole quote.  It appears that Wasserman turned the tables on the questioner. But not so fast.

Catron makes the point that the IRS will confiscate or reduce your tax refund for not complying.  That sounds like mandatory insurance to me.

As for the home interest tax deduction analogy, why not take that on?  There’s a difference between (1) a tax exemption on money used to purchase a product and (2) a tax penalty for not making a purchase at all.

And don’t forget the larger picture: Why can government not tax you on interest you pay when borrowing money for a home, but not other items?  This is social engineering: using tax policy to control your behavior.  As Yaron Brook has written:

Government’s job is not to dictate your values but to protect them. In a free country, you choose values and then use your own money as a tool to achieve them. But a value-rigged tax policy reverses this cause and effect–it uses your money against you, bribing you with tax breaks that let you keep some of your earnings in exchange for abandoning your preferred values.

Read the whole article, it’s great.

Wasserman was answering a question of where the U.S. Constitution authorizes you to buy insurance.  Perhaps a better way to ask is where the politicians get the authority to require citizens to buy insurance that politicians approve of, or dictate how we may and may not pay for medical care.  When insurance is mandatory, politicians get to decide what legal insurance is, and your current insurance can become illegal.

Or more fundamentally, ask what gives anyone the authority to force you to pay for other people’s medical care or insurance.  This is what mandatory insurance and so-called health care “reform” is all about anyway. Don’t get hung up on details. Don’t forget, mandatory insurance is a tax.

ObamaCare: buy insurance only when you have medical expenses

The Boston Globe reports:

Thousands of consumers are gaming Massachusetts’ 2006 health insurance law by buying insurance when they need to cover pricey medical care, such as fertility treatments and knee surgery, and then swiftly dropping coverage, a practice that insurance executives say is driving up costs for other people and small businesses. …

The typical monthly premium for these short-term members was $400, but their average claims exceeded $2,200 per month. The previous year, the company’s data show it had even more high-spending, short-term members.

This is yet another example of how controls beget controls. Shall we expect this nationally with ObamaCare? The Globe article continues:

the phenomenon is likely to be repeated on a grander scale when the new national health care law begins requiring most people to have insurance in 2014, unless federal regulators craft regulations to avoid the pitfall.

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Get ready for health insurance slumlords

My latest article at Pajamas Media begins:

If you dislike your health insurer now, just wait until politicians impose price controls that make your insurer act like a slumlord. Expect worse customer service, skimpier plans, and more claim denials.

Price controls on rental properties encourage landlords to become slumlords. Forbidden from making a profit by renting at market rates, to make a living landlords must skimp on quality and service rather than please customers. The same will result from insurance price controls: lousy policies for people with preexisting conditions or for anyone who might get sick.

That is, everyone.

Read the whole article: Get Ready for Health Insurance Slumlords.

Health care “reform” bill is immoral & won’t work

Here’s a summary of arguments against so-called health care “reform,” specifically, the Senate Bill, HR 3590. It might be useful when contacting a member of Congress (e.g., those on the fence). The bracketed numbers refer to the reference list at the end. (To keep your e-mail short, you can omit the reference list and link to this post.)

1. The bill coddles insurance companies with the individual mandate, the employer mandate,subsidies, regulations and limits on competition. [1]

2. So-called “reform” is a national version of Massachusetts’ “Romney Care”, which has failed. [11]

3. The Democrats’ Health-Care Proposals Promise To Entrench The Status Quo. [13]

4. Health care is not a right, or is it a privilege. We have the right *to seek* health care.[3]

5. Health care reform will increase your insurance premiums. [2]

6. Middle-class taxes will increase. [2]

7. Many people will not be able to keep their current insurance. [2]

8. It will not reduce the budget deficit. [2]

9. It’s wrong to force people to pay for other people’s health care or insurance. That’s what charity is for.

10. Insurance price controls hurt the sick [4]

11. It’s wrong to force people to buy a product.

12. It’s wrong to make people’s current insurance policy (or any insurance policy) illegal. [12]

14. Mandating employer health care is more poison, not an antidote. [5]

15. Mandatory insurance punishes low-wage workers with high marginal tax rates, which keeps them poor. [6]

16. Medicaid is a fraud-ridden poverty trap that provides lousy care and increases everyone’s insurance premiums. [7] Don’t expand it. Why not let taxpayers *choose* which charities their tax dollars fund? [8]

17. Coverage is NOT care: Having insurance does not mean you get needed medical care. [9]

18. Doctors will quit, or substitute the judgment of government bureaucrats for their own medical expertise [10]

Instead, try some free-market reforms. For example, read “Yes, Mr. President: A Free Market Can Fix Health Care” at healthcare.Cato.org or “Real reform: free-markets” at PatientPowerNow.org.

=== References ===
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Removing Insurance Anti-trust Exemption is Misguided

The Denver Business Journal reports:

A recent salvo against the insurance industry came in a missive from U.S. Rep. Betsy Markey, D-Colorado. From an email her office sent out Monday:

“For too many years the health insurance industry has been allowed to fix prices, collude with each other and wield monopoly control over us without fear of investigation.

“This week I’m introducing a piece of legislation removing the anti-trust exemption from the insurance industry. I’m proud to stand up for the patients against the kind of profiteering the insurance industry has so long enjoyed.”

The Denver Post reported this last week, and I submitted the following letter to the editor:

Instead of scapegoating a narrow antitrust exemption for paltry insurance competition, Representative Betsy Markey should confess to how she and her political allies have prevented competitive insurance markets in the first place.

The Post reports that Markey’s bill would “remove the antitrust exemption now enjoyed by health-insurance companies” (Feb. 5). This is misleading. The exemption, codified by the McCarran-Ferguson Act, applies only to practices constituting “the business of insurance,” that are “regulated by State law” and lack “an agreement to boycott, coerce, or intimidate.” The federal government can already restrict allegedly anti-competitive insurance company practices such as mergers and group boycotts.

Blame politicians for protecting insurers from competition. Because the tax code chains you to our employer’s plans, changing your insurance provider entails changing jobs or paying a stiff tax penalty. Further, politicians forbid consumers from buying more affordable policies available in other states. Repealing these controls would greatly benefit consumers.

For more, see:

Government Accountability Office, Legal Principles Defining the Scope of the Federal Antitrust Exemption for Insurance, March 4, 2005.

Eliminating Antitrust Exemption Will Kill Health Care Competition, Gregory Conko & Kevin Hilferty, Investors Business Daily, Novemer 4 2009,
and a well-referenced report by the same authors: Congressional Misdiagnosis: Why Repealing McCarran-Ferguson Will Harm Competition in Health Insurance Markets.