Health Insurance Premium Bask
(Bask = Blog Ask for newcomers, not to be confused with a Bleg.)
There is a new wave of projections for increases in health insurance premiums for 2015 (relative to 2014), and they are not heart attack inducing. But I’m concerned that something fishy may be going on with some of these relatively innocuous analyses.
It’s one thing to look at how much a given insurance plan, with specified benefits, deductibles, caps, etc., increased in price because of the introduction of the Affordable Care Act (aka “ObamaCare”).
However, that type of analysis doesn’t really correspond to what most people think when they say, “Holy #)($*! My premiums jumped up x percent!”
For example, in my case my policy is going up about 50%. But I’m being forced to get a “better” policy. So I’m wondering if my type of situation would go into these studies as a 50% increase, or instead as a (say) 20% increase because that’s the premium hike for the new policy that I’m being forced to buy, compared to that same policy pre-ACA.
And then of course, how do you do a percentage calculation for the people who used to pay $0 for health insurance, not because they had a pre-existing condition, but because they were young and healthy and didn’t think it was worth the money? That’s an infinite percentage increase, though I understand it’s a tricky situation.
In any event, does anyone know of a scholarly treatment of these subtleties? I have never seen an actual study that made the above distinctions.
Private Judicial Rulings and Law Enforcement
I looked this up because some people were arguing about these issues in the comments of a previous post. I’ve given this talk at Mises U several times, but I think I really nailed the private law enforcement part in this version. Specifically, from 4:00 – 22:00. I talk about the distinction between being morally justified in taking certain restitution, versus the wisdom or utility of doing so when the community at large doesn’t know whether you are justified. I also explain very precisely why the private enforcement agency would want to first get a ruling by a respected judge before taking action.
Clarification on Fama vs. Shiller
In the comments here at Free Advice, regarding my Mises CA post on Fama, J Mann was bringing up some good points. In response to one of his comments I wrote the following clarification, which may help some of you:
J Mann wrote:
If I’m being as charitable as I can to Fama, then if Shiller claims there’s a bubble in equities, and equities somewhat underperform other assets over the next 5 years,.
Here’s what I think happened:
(1) Shiller claimed a tech bubble.
(2) A few years later, tech stocks crashed hard.
(3) People said, “Shiller called it, he’s a prophet.”
(4) Fama pointed out, “Wait a second, tech stocks went way up after Shiller called bubble. So we need to see what the crash looked like, compared to when he first called bubble, not compared to the peak.”If the above (4) steps were all Fama/Sumner had done, then they would be great. I would congratulate them on their caution before rewarding people with kudos for calling “bubble.”
However, Fama went further:
(5) He looked at the market bottom, saw that it was higher than the price when Shiller first called bubble, and concluded that Shiller had in fact been an idiot.
So that’s what I was objecting to.
Further, the stuff with housing was just complete nonsense. With perfect certainty and a static equilibrium, you would expect house prices to be flat at a price that capitalized the annual rental equivalent at the market rate of interest. If your house price went down 6.7% or whatever over a 9-year stretch, you wouldn’t say, “Oh that’s OK, I got to live in my house for free.” Fama totally ignored the opportunity cost of the funds you invested in your house in 2003. He stated something matter-of-factly about the preferences of the home buyers that only makes sense if you ignore interest over 9 years. That’s kind of a big deal, especially in a Nobel acceptance speech pertaining to the subject matter for the award.
Health Insurance Coverage in the U.S., 1999-2012
I had known that coverage fell sharply when the recession struck, but I didn’t realize how much it had been falling the entire decade, even amidst the prime housing bubble years:
Depending on one’s worldview, the above chart could be spun either way. If you like ObamaCare, you could say, “See? The U.S. health care system was truly broken.” If you hate ObamaCare, you could say, “See? The massive government interventions in health care drove price hikes that made insurance more and more unaffordable. ObamaCare is just going to mess things up even more, except that the damage may show up in the form of shortages and delays, if prices are suppressed.”
Government Data Is Corrupt
I realize this is a silly thing to be posting, but does anyone know why all of the Census Excel tables on health insurance coverage are “corrupt” according to my Excel program? I’m using a MacBook and MS 2007 for Mac if that helps. It won’t even let me open the files.
Thoughts on Europe
I vaguely remember in grade school they taught us a short list of the causes of World War I. One was the assassination of the archduke. The other was a two-word phrase. I can’t remember it now. Neither does President Obama, apparently.
It’s Because I Care
Not that many of you care, but I just realized that lately I’ve been “attacking” EconLog posts pretty frequently. That’s not because I have some kind of vendetta, but on the contrary it’s because I’ve been really busy and so I only keep up with a few of my favorite economics blogs.
I’m So Mischievous
3 days after Bryan Caplan asks on EconLog why gov't water works so well, the Featured EconLib article explains how gov't caused CA drought.
— Robert P. Murphy (@BobMurphyEcon) September 3, 2014
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