MSNBC's Klein Describes How ObamaCare Could Make Insurance Unaffordable for Elderly and Sick
Thursday's The Last Word with Lawrence O'Donnell on MSNBC displayed a classic example of how liberals fail to grasp the basic logic of people's economic decisions or, even when they are aware of economic principles, they still find reasons to be dismissive of a predictable outcome that goes against how they wish the world would function.
As host O'Donnell convened a group to discuss an article by Carl Gibson about why it makes more economic sense for a young, healthy person to pay a $300 fine than to spend thousands of dollars for insurance since they cannot be denied coverage for a preexisting condition later, Washington Post columnist and MSNBC analyst Ezra Klein explained how ObamaCare could result in there being "no system that is affordable to take care of" elderly and sick people.
But, even though this pessimistic scenario for how ObamaCare could destroy the private insurance system is a rational enough prediction, Klein seemed dismissive of the scenario even while describing it as he suggested that it would be "jerkish" for young people to behave this way. Klein began:
On any given day, for particularly for a young person, but also for an elder person, it is a good deal to not be paying any money to either a health insurer or to a government health insurer because you're probably going to be fine. You're probably going to get up and be healthy, and go to bed, and be healthy. And the question is on the days when you're not, and that's why people buy insurance.
Referring to Gibson's article, Klein continued:
Well, Carl is picking up on a point I don't think he quite makes in the article, but could, is that under the bill, under the Affordable Care Act, he can do something that you can't do now? Which is you can decide not to buy health insurance. And then when you get sick, just wait a couple months, and having paid the individual mandate, you can get insurance which currently right now an insurer would never give you because you would already have gotten sick. You can game the system in certain ways more effectively, post-ObamaCare than you could before.
The MSNBC analyst concluded:
The thing that I would caution is, one, you can always be a free rider. It's kind of a jerkish thing, I think, to do, but you can do it. And it's completely legal to do. But it is I think a mistake to think about yourself as having a singular relationship with the health care system, to say I'm young. And that's my relationship to health care is wrong, because one day you're going to be old. To say you're healthy, well, one day you're going to be sick. And if every young person and every healthy person decides to game the system, then when they are old and when they are sick, there will be no system that is affordable to take care of them.
A bit later, host O'Donnell pointed out the absurdity of believing that charging someone a $300 penalty would actually motivate people spend thousands of dollars when paying the penalty is less expensive. O'Donnell:
There's something very odd about the individual mandate as it applies to you. You have a choice to pay about $1,800 in health insurance premiums, and who knows what in other possible health costs. But at least $1,800. And if you don't do that, your penalty for not doing that, paying $1,800, your penalty is to pay $300.
Now, what I don't get about that is the reason parking meters work is that a parking meter costs 50 cents, and if you don't pay the 50 cents on the parking meter, you might get a parking ticket for 60 bucks. Here, we're saying to you, your penalty for not doing the thing we want you to spend money on is something way less than the amount we're asking you to spend money on.
All four panel members -- O'Donnell, Klein, Gibson, and former DNc chairman Howard Dean -- all admitted to supporting the more left-wing single-payer approach to universal health care.
Below is a complete transcript of the segment from the Thursday, December 26, The Last Word with Lawrence O'Donnell on MSNBC:
LAWRENCE O'DONNELL: A healthy 26-year-old journalist has written an article entitled, "Why I'm Choosing to Pay $300 to Stay Uninsured." Let's see if Howard Dean and Ezra Klein can talk him into complying with the individual mandate of the Affordable Care Act and buying health insurance.
(...)
O'DONNELL: Let's go straight to Carl Gibson's article. And, Carl, have to tell you when I saw this yesterday, I read this, I think we got to get Carl on the show to talk about this. "Reader Supported News," by the way, is a Web site that sends out a lot of e-mails with its stories, invaluable stuff which is very helpful to this show. I just wanted to get the plug in-
CARL GIBSON, RSN: Thank you.
O'DONNELL: -Carl, about your operation. So this is what you wrote that struck me. And it's actually something that I've been expecting to see at some point.
You wrote, "Through Healthcare.Gov, I found that as a single 26-year-old male living in Dane County, Wisconsin, who expects to make somewhere around $30,000 next year, the most affordable health insurance package for me comes with a deductible anywhere from $2,000 to $5,000. That's roughly 15 percent of my income. That comes out of pocket before my health insurance even kicks in. This 'affordable care' would cost me about $150 a month. Why the hell would any young person in this tenuous economy want to pay upwards of $1,800 in premiums on top of a $2,000 to $5,000 deductible for health care costs that may or may not even occur?" Howard Dean, I think Carl might need some fatherly advice on this one. Do you want to answer that question for him?
HOWARD DEAN, FORMER DNC CHAIRMAN: Well, first of all, let me just say that, unlike most of the stuff that gets written about health care, criticizing the bill, this is a really good article, and everybody ought to read it. I don't agree with Carl because I think, in the long run, it's quite possible that nothing of the sort will happen. But if you're wrong, and God forbid you are one of the few young people that gets something really expensive, you're in bankruptcy.
And that's going to affect your credit rating, it's going to have all kinds of problems with it. So it was a well-reasoned article. It was a really well-written article. It raises a really good point. But I have to say I think it's a point I disagree with.
O'DONNELL: Okay, Carl, I want you to listen to advice from both Howard Dean, that you just heard, and from Ezra Klein before you respond. Ezra, what's your reaction to that question that Carl poses, which is basically the affordability of this? The Affordable Care Act has provided health insurance that Carl does not believe he can afford.
EZRA KLEIN, MSNBC POLICY ANALYST: Look, this is something real in the bill. I wrote a column a while back called "The Individual Mandate is the Best Deal in the Bill."
And the point is, on any given day, for particularly for a young person, but also for an elder person, it is a good deal to not be paying any money to either a health insurer or to a government health insurer because you're probably going to be fine. You're probably going to get up and be healthy, and go to bed, and be healthy. And the question is on the days when you're not, and that's why people buy insurance.
Well, Carl is picking up on a point I don think he quite makes in the article, but could, is that under the bill, under the Affordable Care Act, he can do something that you can't do now? Which is you can decide not to buy health insurance. And then when you get sick, just wait a couple months, and having paid the individual mandate, you can get insurance which currently right now an insurer would never give you because you would already have gotten sick. You can game the system in certain ways more effectively, post-ObamaCare than you could before.
The thing that I would caution is, one, you can always be a free rider. It's kind of a jerkish thing, I think, to do, but you can do it. And it's completely legal to do. But it is I think a mistake to think about yourself as having a singular relationship with the health care system, to say I'm young. And that's my relationship to health care is wrong, because one day you're going to be old. To say you're healthy, well, one day you're going to be sick. And if every young person and every healthy person decides to game the system, then when they are old and when they are sick, there will be no system that is affordable to take care of them.
O'DONNELL: Carl, what's your response to all this advice?
GIBSON: Sure, well, you know, I'm glad to be on the show. And thanks to Governor Dean and Ezra Klein for coming on as well.
You know, I think, Governor Dean's home state of Vermont makes a great example of what a great health care system could look like. Governor Dean, you would know that in 2011, your state legislature, passed a single payer health care bill, but because of the Affordable Care Act and the individual mandate and the exchanges, people now have to buy private health insurance which for people in the lower middle class income bracket, people like me really have a hard time affording. You know, I can barely pay my bills and, you know, save $100 each month, let alone pay $180 a month in premiums.
Now, something similar could be done at the federal level, like that was done in Vermont. Congressman Alan Grayson introduced HR-500 back in February. Congresswoman Carol Shea Porter in New Hampshire co-sponsored it in May. And for a small fee, roughly equitable to the premium costs that I would pay under this private health insurance you could buy into Medicare and Medicare could be expanded for everybody because everybody is paying into the system. It's self sustaining.
DEAN: Well, actually, in fairness, we did something very much like that in Vermont. We actually did something much better than a single payer in Vermont, in a sense. Everybody under 18 in our state has health insurance through Medicare and Medicaid. So essentially what we did what you're suggesting and more. And I agree, I think there should have been a public option. We should have had a single payer. We don't. And I think we've got to live what we have until it can get better. But you're right. Single payer is coming in Vermont. And we've got single payer for kids, and we've had one since, actually since 1992 when I was governor.
O'DONNELL: Ezra Klein, the thing-
KLEIN: Let me offer a bit of a contrary point-
O'DONNELL: Go ahead, go ahead.
KLEIN: -here, if you don't mind, which is I agree that, compared to what we got, because legislation is always compromised and always less than we hope it would be, a single payer system designed sort of in a lab would be a much better system.
But one thing I actually noticed in your original op-ed, Carl, is that, and it actually struck me a lot, was that one of the things you basically criticize the system for doing is that young people are paying too much, basically in order to subsidize, as you sort of imply here, older sicker people.
And one of the interesting things that I think some folks miss in the single payer conversation is that happens much more in a single payer system than it does in this kind of one. So the higher deductible plans we're talking about here, and the age rating where a young person can pay a third of what an older person pays, that allows you to subsidize older folks a whole lot less, whereas in a true single payer system, particularly the ones we typically talk about, where everybody is paying the same into the system, you are having a whole lot more subsidy coming from young people to old people, which is, by the way, true in most employer-based systems, too.
You see this on the right all the time, too, where they're furious that you would have any young people subsidizing old persons. They all get employer-based health care, where all the young people are subsidizing old folks and much more.
There are a lot of problems I think single payer would solve in this country, but the fact that young people and healthy people end up paying more for something they don't need as often as older people and sicker people, that's not one of them. That is core to any kind of insurance, national insurance system or even non-national insurance system we can possibly conceive of.
O'DONNELL: Carl, it becomes very clear in your piece that you'd prefer, you would prefer a single-payer system, certainly, as I would. Many others would.
But your problem with the health insurance now, in this market is that you're finding at a $30,000 income, you cannot afford this $1,800 a year maybe in premiums, and then that's just if you never get sick and never use the health care system at all. If you use the health care system at all, your costs are going to go way above a couple thousand a year.
And so it's that affordability issue that I think is so clearly focused in here, and there's something very odd about the individual mandate as it applies to you. You have a choice to pay about $1,800 in health insurance premiums, and who knows what in other possible health costs. But at least $1,800.
And if you don't do that, your penalty for not doing that, paying $1,800, your penalty is to pay $300. Now, what I don't get about that is the reason parking meters work is that a parking meter costs 50 cents, and if you don't pay the 50 cents on the parking meter, you might get a parking ticket for 60 bucks.
Here, we're saying to you, your penalty for not doing the thing we want you to spend money on is something way less than the amount we're asking you to spend money on.
GIBSON: Yeah, I think that's the main issue here. And that's why a lot of people who are in my age range don't really feel like they're being related to on this issue and they feel left out of the conversation. There's a lot of people who are, you know, struggling from a student loan debt bubble that's, you know, swollen by over a trillion dollars. And education and health care, they've become commodities in this country that are, you know, made to be profitable by a certain few group of people at the expense of everyone else.
And if we saw health care instead as a human right, that everybody has a right to, and that health care shouldn't just be for people who have fat wallets,and, you know, you make something that's affordable and accessible to young people. And something like a Medicare buy in, or, yoiu know, even expanding Medicaid to cover people who fall into, you know, my situation. I unfortunately live in Scott Walker's Wisconsin, so that didn't happen.
But here in Kentucky, you know, Governor Steve Beshear expanded Medicaid. He's got a great system set up with KYNECT. There's been mixed response from that, but, overall, in Kentucky, when it's not called Obamacare, and it's called KYNECT, it's really well received by a lot of people.
So we're moving in the right direction. And I think eventually, if we get to a system where we pay, you know, a small monthly fee to pay into Medicare, I would totally participate in a system like that. And I would feel like I was part of that conversation, rather than, you know, being relegated to this one block of people who are getting the short end of the stick here.
O'DONNELL: Howard Dean, the case that Carl makes in his article is what they used to call, in economics class, "rational economic man." The question of what would a rational economic man do presented with the following menu of dollar choices. And the choice that Carl ends up making is one that it seems to me, many, many, many people in his age category and income category and his health category are going to make.
DEAN: Well, the problem here is, you know, Ezra pointed out that he can be a free rider for now. But the fact is what's going to happen is what happens in most insurance policies around this country and the private sector, which is you're only going to be able to sign up for one month out of the year. And if you don't sign up, then you can't get insurance later on, unless you've signed up in that particular month.
That's where the risk is. Ezra is right, there's not that much risk to doing this right now.
The other thing is, I think, first of all, I think that, that, young people who are trying to get insurance ought to have some sort of a tax subsidy. You know, trying to pay $1,800, plus a $2,000 deductible really ought to, that's too much for somebody who's making $30,000 a year.
And so the price range has got screwed up. There's a long, I mean, we all know the flaws, this bill was written in the Senate Finance Committee principally for the insurance companies, and Lieberman held them up and then got rid of the public option at the last minute, and all this kind of stuff.
But again, I just say we are where we are. We got to make this thing work, do our best to make it work. And hopefully it will change as we go along later on.
You know, 20 years ago, when I did this stuff in our state when I was governor, you know, we waited 20 years and now, we're talking about a single payer.
O'DONNELL: Howard Dean and Ezra Klein and Carl Gibson, thank you all very much for joining me tonight.
