The Republican nominee for Secretary of State, Damon Dunn, has apparently only voted once. Should this be considered a worthwhile campaign issue? It strikes as one of those things that seems really important when a candidate you oppose is discovered to be a non-voter but that you kind of shrug off when it’s someone that’s speaking to your views.

One of the big issues in Delosa is not the non-voting population, but rather the Democratic primary voter in the Republican primary. Delosa is mostly a Republican state, but not that long ago it was a conservative Democratic one. People who were not married to the other party currently vote in the GOP primary but used to vote in the Democratic one. So just about every election during the Republican primary, some candidate in some race is running ads saying that his opponent last voted in the Democratic Primary. It’s usually not too damning unless they say something like “I’m a lifelong Republican.” Sometimes, in fact, they do. One guy running for Insurance Commissioner actually sued his rival for running a clip of him saying in a commercial that he’s a lifelong Republican (followed by proof that he voted in the Democratic primary) by alleging copyright infringement. This, of course, resulted in the clip being shown every time the story came up on the local news. The lawsuit was dropped.

Anyhow, back to the main subject of politicians that vote… it seems to be one of those things that should matter but that is so far behind ideology that it’s hard to muster up a whole bunch of care. Maybe if I’m voting in a competitive primary with lots of candidates that are reasonably close (or far) from my ideology I might consider it relevant… but even then, unless it’s part of a larger pattern of Don’t Like I am likely to throw my vote behind whichever candidate is most likely to win in the general election. So it’s kind of hard to imagine a scenario in which it would actually affect my vote.

Some Democrats on Capitol Hill are seeking tax breaks — for their constituents:

New York Representative Jerrold Nadler, who wants to exempt his own six-figure constituents from the tax hike he supports. Mr. Nadler’s bill would “require the IRS to adjust tax brackets proportionally in regions where the average cost of living is higher than the national average.”

In other words, the various tax brackets would apply to residents in certain regions at higher income levels versus other parts of the country. A family with an income of $50,000 or even $1 million in Manhattan would pay less federal income tax than a family with the same earnings in Omaha. The bill is called the Tax Equity Act, but a more accurate title would be the Blue State Tax Preference Act.

“The basic costs of life in the New York region are much steeper than in most parts the country,” says Mr. Nadler. “The reality is that a dollar in New York isn’t worth nearly as much as a dollar in Spokane or Knoxville or Topeka. It’s time for our tax code to take reality into account when assessing someone’s tax liability.”

This, to me, would fall under the “Fairness is Subjective” tag, if I had tags. From the perspective of a Coaster, this makes perfect sense. If $200k does not mean as much in New York City as it does in Boise, Idaho, then why should they be taxed more? Why should the Boiseans get to take home more of their money than Bostonians? The Federal Government actually takes into account cost-of-living when it comes to wages – I made less as a Census Courier than someone on the Coast did. Of course, that shows some of the inexactness of these calculations. According to the Federal Government, my very affordable home city of Colosse is actually considered a high-wage area. They do it based on income and the statistics are skewed by the inordinate number of engineers that make it look like everyone with a bachelor’s earns a whopping big salary. Not that the Truman family complained! But seriously, when it comes to wages, I think that this is a fair question. And yet, when it comes to taxation, I am actually disinclined to be all that sympathetic.

I am more inclined to extra taxes that come with living on the coast as a sort of luxury tax. Living in places like NYC or the Bay Area is considered to be desirable. You can earn a good living in the very affordable Boise, if you want the take-home pay. But few choose to do so. In fact, they often disdain places like Boise. Which is their god-given right! But that they choose to spend their money living in a more desirable place rather than choosing to spend their money on big screen TVs and power-wheels for children in a less “desirable” place is not something that the government should particularly show favoritism to.

A lot of this comes down to a subjective opinion, though, as to whether or not people living on the coast in metropolii is more desirable or less desirable than living in smaller cities in the interior. It’s probably pretty obvious where I stand on the issue, though others look at cities like Phoenix and the like as environmental catastrophes while NYC and DC have public transportation and are less sprawling. And it’s hard to consider these issues without also considering how we ourselves would prefer to live. If we would ourselves prefer to live in cosmopolitan places with millions of others, we don’t think that people (by which “we” is meant) should be penalized. If we would prefer to live in places that are affordable, it seems unfair that should be penalized by cutting into one of the big advantages of living in places like these. Personally, I lived on the coast in an expensive city in the northwest and there was a lot to like about it. But there is also a lot to like about the city that I come from, large but affordable.

Of course, we are all born someplace. If you’re born on the coast and stay there simply because it’s what you know or because it’s where your family is or what-have-you, it does seem unfair that you should be penalized for living there with higher tax rates with assumptions of a comfier standard of living than you have. But people are penalized for where they are born all the time. Most of the people that grow up where I live, if they want to work in any sector but agriculture or the service industry, are likely going to have to move. As long as a good bulk of the increased cost-of-living in the cities is a product of it being a more desirable place to live or because of the labor requirements or regulations that make it more expensive, I still say: luxury.

And on a pragmatic level, taxing the coasts is pretty useful because… that’s where the rich people are. That’s where the money is. There’s no indication that either party in Washington is remotely worried about the deficit, but even if they only want to provide cover for the next government program, there’s only so much money to be raised by taxing the super-rich in the interior US. That’s where the money isn’t.

Phi points to an article on mail-order brides and a scam therein:

To understand this incident you have to know about the Violence Against Women Act of 1996,” said Oldenkamp.“There is a little piece in it that states if an immigrant is abused by her husband or other family member, and can prove the abuse, then they become admitted for permanent residence.Elana was going to get her green card with or without me.

I find myself instinctually unsympathetic to those that marry a foreign girl they never met and get screwed in the process. Part of me thinks, “Well what they hell did they expect?!” Part of me finds the notion distasteful and I have to fight off the urge to say that they got what they deserved. I fight off that urge because while those that do or would beat their MOBs (a suitable acronym, considering…) do deserve what they get, nobody deserves trumped-up charges (as Oldenkamp alleges). Further, while some portion of these men may have ordered these brides because they wanted someone “docile, soft, and calm” (these are not characteristics I would generally associate with Russians) in a lot of cases it’s men without a lot in the way of other options. Men that have trouble relating to women on a square level. Hey, I can relate.

This is all further complicated by the fact that the participants from each side are going to be drawn from subsets of the population. The women are more likely to be desperate and/or ambitious, which makes them dangerous. The men are likely to be bitter and/or controlling, which makes them dangerous.

But even when I get past my biases, I am still uncomfortable with the business as a whole and can’t get too excited when I hear horror stories. I definitely do not support trumped up charges of spousal abuse. Nor do I support women using a sham marriage to get into the country and then cutting off the rope to the anchor at the first opportunity. These exploitations on the women’s part range from distasteful to abhorrent.

At the same time, though, I don’t entirely know what the alternatives are. If you don’t offer these women a degree of protection, you leave an extraordinary opening for exploitation the other way. A man can marry a woman and exploit the residency issues to turn her into a virtual slave. Or a punching bag. I mean, if she raises a fuss he can just divorce her and she’ll be sent home. That threat alone provides extreme leverage and marriage is not an institution at its best when one party has that kind of leverage over another. Giving a MOB (or a MOG, if such a thing were to exist and if domestic violence were a concern) recourse on the whole strikes me as better off than the alternative. We can quibble over what sort of standard of proof is required, but somewhere in a line beyond which his actions are demonstrably illegal and she should be able to report it without facing deportation.

On the other hand, I’m not sure how much it helps. The men with the most leverage are going to be those married to women that they manage to keep socially isolated. They’re less likely to speak English and it’s also less likely that she’s going to have the funds to hire a lawyer or the slightest clue where to go. The VAWA requires proof of hardship in the event of deportation, but those for whom the greatest hardship exists are those that would be deported before they knew what their rights were. Or maybe not, if she is appointed a lawyer by default or she at least knows to ask for one (if court-appointed lawyers exist for deportation?). In any event, it’s precisely those that would suffer the least hardship (comparatively speaking, anyway) that would have the strongest idea of what their rights were. Elana, the woman from the story above, notably had good command of English.

Incentivising accusations of spousal abuse is certainly troubling and if I were to isolate a concern, that would be it. If I were a man considering a MOB, it would matter far less if she got her own independent visa than if I have to defend myself against charges of spousal abuse. On the one hand, Elana’s accusations and the scratches that she had her son inflict would be pretty flimsy while applying for a green card. On the other hand, even if that is the case and Elana gets deported, Oldenkamp is still having to defend himself against felony assault charges. Back on the first hand, if Oldenkamp is a reliable narrator it’s pretty ridiculous that they pursued the charges. We can posit a situation wherein Oldenkamp would not have had the evidence that he did suggesting his innocence, but we can also posit a situation where a woman actually is being beaten mercilessly and has no recourse beyond deportation. Having to only be better than sent back to Russia provides a man a whole lot of leverage. Of course, being able to threaten trumped up abuse charges does the same for the woman. Regardless of the position that the government takes, somebody’s got lots of leverage.

One thing I find notable, though, is that absent charges of abuse a foreigner appears to lose the “conditional” on their conditional visa in two short years. If I were a man looking for a MOB, I think that would be my primary concern. That she just waits it out. She puts up with me for two years, being just enough of a wife that I don’t divorce her and deportation is kept at bay, and then leaves at the earliest opportunity. In that case, I am out several thousand dollars and two years of my life. Of course, at least then I am not out several thousand dollars, a little over a year of my life, and facing felony charges like Oldenkamp.

So I guess if you’re a guy looking for a woman to dominate, you can probably find someone less likely to be able to leave. If you’re a guy looking for an actual partner and are looking for intelligence and competence (and the ability to speak your language), you’ve got just two years to win her over for real. Or you look for potential Elana’s like a hawk and insulate yourself against charges of spousal abuse, which is wonderfully fertile ground from which love should grow.

Seems that the best way to win the game is simply not to play. It’s extremely risky from both ends. Or, if you do play, know your rights and what their rights are. Then again, how smart is it to engage in a marriage where you’re in such a defensive posture. For women from the poor side of a poor town in a poor country, it may be worth it with or without VAWA. Men, however, should really think twice. They are, in a sense, trying to game the system by taking advantage of her poverty. That is not the formula for a successful marriage even in a world where VAWA does not exist.

I found this site a pretty good primer on the subject. On the whole, it actually made me more sympathetic to both parties of the marriages while making me even more sour on the concept. But what are you going to do? The VAWA has the advantage of discouraging men from doing it (which is where the bottleneck is), though sort of at gunpoint. At the end, there’s no law that can be written that either (a) can’t be worked around or (b) doesn’t provide a serious imposition to those that are seriously in love with and want to marry someone that they met abroad. The closest think I can think of is the requirement for more face-to-face meetings over a long period of time. But that’s (a) harder to prove/disprove and (b) simply makes it more expensive, not impossible.

An aside: One of the commenters at Phi’s place points out that the MOB business has been infiltrated by the Russian… well… mob. This was actually the topic of the episode of the late, great TV show Life, that introduced us to the main villain of the entire show. Sort of. Roman Nevikov’s operation would sell wives to desperate men. The husbands would then be extorted to keep their wives. They’d lose their wives anyway and she would then be remarried to another mark.

A while back, Megan McArdle explained why we can’t just keep raising taxes on the rich. While I disagree with her on particulars, one of the things that I have come to understand as we’ve jumped tax brackets is that regardless of what anybody thinks is “too much money” or “won’t be missed,” taxation takes a significant psychological toll. It’s one thing to say “I would be perfectly fine on $75k a year after taxes.” It’s another thing to see that you actually made $115k and the government has taken $40k of it. The progressive (and complicated) nature of the tax code means that you can’t easily factor it in when taking into account how much you’re going to make.

It’s not entirely logical. I mean, theoretically if you make $75k per year after taxes but pre-tax were only supposed to make $90k, it’s objectively no different than if you originally grossed $115. It sure feels different, though. And though the tax rates are marginal so that even if you’re in the “33% tax braket” it’s only part of your money that 33% comes out of, it’s the 33% that you remember. And even though you know and acknowledge that the government provides all kinds of services to you in return for that money, the benefits of government are dispersed and the tax bill laid out right there in front of you.

I am not an anti-tax sort of guy. I don’t think, in the abstract, that taxes are “too high” nor am I in favor of the flat tax which would be beneficial for us financially. If you disagree with me on those things, that’s fine and beside the point (and I don’t want to debate the matter). I’m merely stating where I am coming from. But despite these views, I find myself piqued at how much more is being taken out of our paycheck now than was a year ago. Even while I cannot point to a better way that things should be.

Now, a lot of people (including myself a half-decade ago) will say boo-freakin’-who and will tell me to look at how fortunate I am. And I am indeed fortunate and blessed. But the realization of how the fortunate and blessed can appraise their situation has provided me some insights.

If I get a job, the take-home from whatever my pay is will be little more than 60%. That makes me rather disinclined to work. Irrationally so since 60% is better than nothing and since I have always been willing to take jobs for less than I am worth. Part of me would rather give my time and energy for free to OpenOffice rather than get a low-level techie job making $9/hr of which I get to keep less than $6. Of course, in the current economy that’s not necessarily a bad thing. I don’t take the job and somebody else who actually needs the money takes the job instead. It’s a slightly bigger problem when it comes to my wife. She could probably get more money elsewhere working more hours. But is it worth that for less than 65 cents on the dollar?

Doctors’ hours have fallen in the last decade or so. This is likely due more than anything to lower job satisfaction. But I think that McArdle is right that as marginal tax rates approach and exceed 50%, a lot of folks including doctors will adjust their priorities accordingly. It wouldn’t be rational, but people are not rational creatures. This hurts not only because of the shortage of doctors (which can be remedied by other means) but also because by working less and earning less she would be paying less in taxes and we would be cutting corners which then puts less money in others’ pockets to pay taxes.

So I’m really at a loss as to what the right course of action is. Conservatives will say “cut government!” and liberals will say “raise taxes anyway!” but the sad truth is that with the deficit we’re probably going to have to do both of those things anyway. Or we won’t and we’ll suffer the consequences. Depressing.

Arapaho is a Rights Restorative State, which means that felons get back their right to vote and participate in the system once their sentence is complete. In my view, this should be the case in all states. I might be more sympathetic to barring felons to vote if felonies were still limited to only the worst of the worst crimes. I was on the fence on this issue until I lived in Belle Rieve for a while and got to know people that would never again be allowed to vote or run for office (in Deseret, anyway) because of a mistake they made when they were 18 or 19.

I only know about Arapaho’s law because there is a local state assembly race that has garnered some statewide attention. One of the candidates, Steve O’Reilly is on something called the Violent Offender’s Registry. Arapaho’s sense of forgiveness apparently only goes so far. Far from being a fringe candidate, he has been endorsed by some powerful conservative groups in the state. The current assemblyman, who happens to be the brother of the first real estate agent we talked to in the area, has a reputation for being something of a squishy moderate.

O’Reilly attributes his crime (the equivalent of a bar fight, except that he found something within arm’s reach to use as a weapon) to an alcoholism he has since conquered. In addition to being an independent businessman, he has apparently been doing some good works in the area. He can appeal to be removed from the VOR, which he evidently plans to do.

I haven’t decided whether I am even going to vote in the next round of current elections. I haven’t really been in the area long enough to know the issues at play. But the Rights Restoration issue is another in a string of rather pleasant things I have discovered with regard to state law that make me feel better to be an Arapahoan than I expected.

I tend to try to avoid hot-button political issues on Hit Coffee because by and large I have discovered that people on both sides of most issues bring their opinions and sets of “facts” to the table and in blogland it devolves into a screaming match of accusations and name-calling. But every now and again I do feel compelled to discuss a sub-issue of limited scope if I feel that we can avoid being dragged into intractable larger debate where everybody’s mind is closed like a liquor store on Sunday.

The hot-button issue at hand is the health care reform law passed by congress and signed by the president. While everything is not completely settled on the matter, we have the broad strokes of what it is going to look like. The sub-issue I am interested in is the insurance mandate. There are all sorts of arguments for and against such a mandate and the Constitutional legitimacy thereof, but since they mostly come down to arguments about SOCIALIST(!!!!)S and FREE-MARKET WORSHIPPER(!!!!)S and STATIST(!!!!)S and HATER(!!!!)S OF CHILDREN, I am mostly interested in two particular arguments that I find off-base.

First, the comparison made between the federal government requiring that we get insurance and the requirements of each of the states that we get automobile insurance. Proponents of the legislation argue that of course the insurance mandate is okay because we already require auto insurance. There are three distinctions, though, of differing validity. I will approach them from least to most concretely valid.

1. There is a difference between individual states and the federal government enacting such laws. Truthfully, I find this argument uncompelling for reasons I will discuss below. However, there is at least a theoretical difference between a state government and the federal government enacting such a provision. Namely, if a state government enacts the requirement, people are free to leave the state without leaving the country. Or, if all states choose to enact a provision or requirement (as with auto insurance requirements) there is a substantive argument that the public has spoken as opposed to the blue states forcing something down the neck of the red states or vice-versa.
2. Drivers are not required to insure against damage to their own car the same way that a health insurance mandate would require is to insure against our own bodies. No state that I have lived in has required anything more than liability insurance. Right now, my Escort is not insured if I hit a light-post or another car. My car isn’t actually insured, but rather what my car hits is insured. For it to be comparable to a health insurance mandate, the state would be required me to insure my car against damage. I don’t know of any state where that is the case, though even if it is true in some state (a) we still revert back to #1 where the more local government made that decision for itself and (b) a whole lot of people that support liability insurance requirements would not support that move. So it’s not the “gotcha!” that a lot of proponents of the individual mandate suggest.

   The counterargument to this is that an individual mandate does protect other people because the uninsured are a drag on the system because they rack up health care bills that they cannot pay and the costs are passed along to everybody else. But this is far, far more indirect than the case that can be made for required auto insurance. Taken to its logical extension, it can be used to justify federal prohibition of any behavior that is unhealthy because the government (Medicare) is going to (partially) take care of us in our old age. That’s risky terrain even for those of us that are not of a particularly libertarian bent. In other words, this hands a substantial argument to those that would call this plan statist in nature.

3. Nobody is required to purchase auto insurance. You’re only required to purchase auto insurance if you drive. True, it’s difficult to get by in this country without driving, but people do it every day. Further, when people agree to drive they are already committing themselves to a series of expenses and we can just add auto insurance onto the cost of the car, licensing, and so on. I suppose one could make the case that living costs money, too, but I would think that as a society we would be more willing to accept people being unable to drive because they cannot afford it far more willingly than we would accept people being unable to live because they cannot afford it.

None of the above is to say that a health insurance mandate is a bad idea. In fact, despite the above I personally support it in the abstract (even if I have reservations with regard to how it was implemented in this law). On balance, though, in any system in between a state-run or completely state-subsidized health care system and a completely Darwinian system that allows people to die on the emergency room steps unable to enter because they cannot afford to be stitched up is going to be better served by inducing or coercing people into getting health insurance. Disagree with that? Fair enough. You have my views and I have mine.

The second argument I find off-base is that an individual health insurance mandate is simply not something the federal government can do. It may be true that either (a) how this particular health care plan does it runs afoul the Constitution or (b) a “proper” reading of the Constitution (ie how you would read it) does not allow for such a thing, but the courts have already given the government enough latitude to be able to practically enforce an insurance mandate by giving the federal government control over taxation the way that they have. And if the mechanism used by the current law does prove to be unconstitutional, there is a relatively easy workaround at Congress’s disposal.

Because the federal government has the ability to set the tax code, all that is needed is “fine” people by raising taxes and then to make health insurance tax-deductible (up to a particular amount or in total). Whether it was envisioned by the Founding Fathers or by those that enacted an income tax in the first place is procedurally beside the point. Right or wrong, the courts have buckled by allowing the government to use taxation as a stick and carrot to promote desired behavior and discourage undesired behavior. If they can encourage home ownership through the tax code, they can “encourage” the purchasing of health insurance.

There are some legitimate questions as to whether or not the way the precise way that they are using taxes to punish those without health insurance is constitutional, but the notion that the federal government is incapable of punishing those that do not get health insurance is not, as far as I can see, true. They punish housing renters every day.

-{I realize that by even mentioning the health care law I have potentially opened a can of worms. Let’s try to avoid broader discussions as to whether this bill is on balance a good thing or a bad thing and any comment that accuses those with differing opinions of being dishonest, unintelligent, uninformed, or of moral integrity will be clipped or deleted.}-

Jamelle Bouie writes that Emperor Palpatine (of Star Wars fame) was not as wrong as we think:

I’m not so certain that the operating philosophy behind the Galactic Empire — that despotism is necessary to maintaining the peaceful cohesion of a galaxy-spanning empire –is entirely wrong. Especially since we have enough examples of republican forms of galactic government to know that the alternative isn’t that much better. The previous galaxy-spanning political unit — the Galactic Republic — collapsed largely because it was too large to be effective. The Republic didn’t even possess the strength or legitimacy to handle a trade dispute on a minor core world, much less an existential threat like the Clone Wars.

Several years ago, Jon Last wrote a seminal piece entitled The Case For the Empire:

Scores of thousands of planets are represented in the Galactic Senate, and as we first encounter it, it is sclerotic and ineffectual. The Republic has grown over many millennia to the point where there are so many factions and disparate interests, that it is simply too big to be governable. Even the Republic’s staunchest supporters recognize this failing: In “The Phantom Menace,” Queen Amidala admits, “It is clear to me now that the Republic no longer functions.” In “Attack of the Clones,” young Anakin Skywalker observes that it simply “doesn’t work.”

The Senate moves so slowly that it is powerless to stop aggression between member states. In “The Phantom Menace” a supra-planetary alliance, the Trade Federation (think of it as OPEC to the Galactic Republic’s United Nations), invades a planet and all the Senate can agree to do is call for an investigation.

Bouie is a liberal and Last is a conservative, which makes this a rare non-partisan issue (except for the fact that Last wrote his piece when Republicans were in power and Bouie his now that the Democrats are… the justification of power rises and wanes depending on who, precisely, is in power).

This sort of puts its finger on something that I find myself thinking about on this issue or that. Some of the greatest evils that have been committed were an illegitimate response to legitimate issues. Whether the villains were greedy oligarchs or the extraordinarily unfavorable terms of a post-war treaty, Hitler and Castro came to power because the previous models of governance were not working for large segments of the population.

Having gotten Godwin out of the way, you can see this in contemporary issues as well. To pick an example of something that has worked in multiple directions, sexual harassment law. Sexual harassment law, whatever its faults, was a response to a real problem. When women did not have sexual harassment workplace protections, there were no systems in place where she could file a complaint if men would demote or punish women that were not receptive to their sexual advances. The original incarnation of sexual harassment law, however, also went too far and the backlash was to be expected. Men had little or no defense against any allegation and could, at least theoretically, be fired for an innocent gesture taken the wrong way. There were absolutely no assurances that men wouldn’t be fired simply because a female coworker wanted them to be fired. There was no way that this was not going to cause a backlash. Even if it were the case that the men most likely to speak up were those that really just had a disregard for women and wanted the right to treat them however they wanted, they gained an audience in part because there were some legitimate fears about what this sweeping legislation would ultimately mean.

Ben Franklin’s famous quote about security and freedom notwithstanding, a society that disregards security for too long will almost certainly lose its freedom in the long run. When policies don’t allow the law enforcement and security personnel to do their jobs, the temporary result will be a population more free from police interference. The longer-term result is increased anger at rising crime that results in a new round of legislation that’s not unlikely to go five steps too far.

There needs to be a term for the opposite of the slippery slope argument. The slippery slope argument says that if you give in 10% on Issue X that you’re setting to stage to give in 20%, 30%, and up to 100%. The opposite of this would be that if you don’t give in the 10%, you’ll create a situation that will have people clamoring for a 50% solution.

Ultimately, institutions have to be able to respond to the problems set before it. Further, to the extent that those in power completely disregard the perspective and concerns of the opposition, they lay the groundwork for a disproportionate backlash that could easily outlast the effects of the legislation that they managed to get through in the first place.

-{Note, I touch on a lot of areas here with varying degrees of volatility. It may be too much to ask you to keep focused entirely on the abstract, but any and all comments that are disrespectful towards people that you disagree with will be cropped or deleted. Ditto for comments expressing great skepticism that the people you disagree with are good-intentioned or honest about their motives.}-

A couple weeks ago I discussed the gray area involving pre-existing conditions (PEC) and health insurance companies. In the comments, I made an allusion to a health care company that I signed up for that sheds some light on the issue.

Assurant Health specializes in offering short-term health insurance options to people that want individual or family policies apart from employer-financed health care. The terms they attach to their policies actually put their coverage between “insufficient” and “utterly useless.”

Assurant specializes in offering “insurance” on the cheap. Their plans are generally high-deductible and even after you meet your deductible you’re still on the hook for 20%. They may offer a permanent plan, but the policies I’m looking at are their “short-term” policies. Those are the policies that are half-useless. But they do fill a market void.

The way it works is this: You sign up for a plan and it can last for up to six months. The last time I used them, they cost $75 a month despite my smoking. The deductible was $2500 and, as mentioned, you were still on the hook for 20% once you passed your deductible. I’m not sure how much they charge now, though their web site says plans start at $60.

The catch is, though, is that after six months you cannot renew. You have to apply again. Therefore, any illness you got in the previous six months becomes a PEC. And if in the interim you get cancer, there is a good chance that they will refuse to cover you altogether. Which may be just as well because they won’t cover PECs in the first year** on their permanent plans (which cost twice as much) and you can’t get a policy for more than six months.

So why would anyone sign up for this plan? Well, if you get a sudden-but-temporary illness, they’ve got you covered until the policy expires. If you have an accident, you’re covered there, too.

But the reason that I signed on was solely to avoid the gaps in coverage I talked about in my previous post. In essence, I was paying them just so that I would be able to tell future insurance companies that I was insured. Which is kind of screwy, when you think about it.

I’m honestly a little surprised that the insurance companies let us get away with this. You would think that they’d lobby congress to only certify plans that meet specific criteria to count. It’s very likely that, if there were a PEC requirement, we will start to see more such lobbying. Not all of Assurant’s plans are allowed in all states and Assurant does not serve a handful of states. With the exception of some western states, the states with limited services are Blue States. So I suspect it’s a question of how tightly states are regulated rather than state legislatures being overly deferential to Big Insurance (not that these things are mutually exclusive).

Nonetheless, it’s a handy thing to have around for people that can’t afford better coverage. Clancy and I may have to re-evaluate our insurance options soon (her COBRA plan is wicked-expensive and not reimbursed by ARRA). We’re in a good enough financial position that we don’t have to accept this sort of half-coverage, fortunately.

** – You have to have a gap in coverage for PECs not to be covered under group (ie employer) plans. The same is not true for individual policies.

One of the ongoing factors in the Health Care battle in congress is the issue of pre-existing conditions (PECs). It’s one of those issues where it is hard to strike a compromise that is fair to both consumers that have PECs and the insurance companies (and, by extension, their customers).

On the other hand, if all pre-existing conditions are covered no matter what, there is little incentive to get health insurance until you need it and an incentive to get something high-deductable until you need an insurer that’s going to cover whatever it is that ails you. Some, such as Megan McArdle, argue that this is not really such an issue, but I would expect it to become a much larger one as people get accustomed to the idea that they cannot be denied insurance due to a PEC. As it stands, I know someone that was uninsured, needed surgery, and cheated a single-issue insurance company by not disclosing it.

On the one hand, if PECs are never covered, people who happen to get sick while ininsured are forever locked out of the system even if they’re uninsured for brief periods of time. Or even if you were insured at the time, but for one reason or another have to switch insurance carriers. Further, PECs are frequently used by insurance companies for the sake of rescission.

Rescission, for those of you that don’t know, is when a policy is retroactive vacated. Insurance companies claim to do this when a customer was not up-front about a PEC. The problem is that some of the PECs used to vacate policies are things that a customer doesn’t even know about or that does not strike someone as significant (particularly if it’s something that hasn’t come around in a while). For instance, someone with a family history of heart illness or that had an irregular heartbeat in 2003 could find his policy vacated in 2009 when the insurance company finds out and argues that it needed to be informed.

The current balance that has been struck is that as long as one has maintained consistent coverage without a lapse over 30/60/90 days, they cannot be denied coverage on the basis of a PEC. State laws vary as to what length of lapse is acceptable and how long PEC coverage can be denied. In Cascadia, you have to have a lapse for greater than 60 days or so and if you have one they can deny you for up to 12-18 months. Further, rescission is generally only available to single-issue policy holders. In other words, you generally are not cut lose when covered through your employer.

This strikes me as a not-unreasonable balance, though I’m not sure it’s sufficient or proportional.

To take an example from the Truman-Himmelreich household, there was a snafu in the paper work for Clancy’s COBRA coverage* that lead us to find out, more than 60 days after coverage lapsed, that she had not been covered. So by default, we’ve already got a lapse that prevents anything pre-existing from being covered for a year. And I believe Cascadia is the most generous state I’ve lived in as far as this goes. I don’t believe Delosians are similarly protected, though I could be wrong about that.

As mentioned above, you generally have to have some sort of penalty for people that let coverage lapse during health, but the difference between enrolling in 70 days and enrolling in 59 days should not be that dire. A more fair approach would be to say something like “PEC do not have to be covered for whatever time period one was uninsured.” So we would not have any PEC coverage for 70 days. That seems fair to me. We would not have an incentive to wait as long as we wanted until we needed it since the longer we waited the longer it would be before we were completely covered. As it stands, we would have to wait nearly as long (within six months, anyway) as someone that went five years without coverage.

Rescission is a tricker issue. On one hand, insurance companies ought to be able to deny people that cheat the system. People should not be able to do what my friend did. The law didn’t stop him, but that’s only because the insurance company did not know. Meanwhile, however, insurance companies have picked up the practice of taking someone’s money until they suddenly have need of the services offered and only after that investigating someone’s application form and finding some (alleged) discrepency.

If an insurance company is collecting someone’s money, they ought to be relatively assured that they have coverage. Only those cases where insurance companies have reason to believe that fraud is involved should they be able to rescind. Insurance companies say that’s what they’re doing now, but frankly I do not believe them. They have too much financial incentive to do otherwise.

My proposed solution to that would be similar to the previous. Once an insurance company has been collecting premiums for a specified period of time (I’m inclined to say six month or a year), they should not be able to rescind a policy. Someone that hasn’t made any substantial claims in a year but continues to pay their premiums has demonstrated a degree of good faith. Someone that needs knee surgery is not going to pay $300-800 a month for a year just to collect benefits. Someone that is at risk of a heart condition didn’t start buying insurance with the plan of having a heart attack in a year’s time.

Now, both of these cases would have an exclusion for outright fraud. The difference between that and now is that the insurance company would have to prove that any reasonable person would know that a PEC was relevant. In other words, a heart attack a year before the policy could be considered fraud, but a heart murmur four years prior would not. A pack-a-day smoker that does not disclose his habit would be game, but family history that may have escaped their mind would not. Beyond that, the insurance company has the option of paying for (or splitting the cost of) a complete physical rather than not worried about it until it suddenly becomes very convenient to do so.

The other issue at play is that as medical records become more electronic, it’ll become harder and harder for people to knowingly (or unknowingly) hide PECs. There are questions as to what the insurance companies should and should not have access to versus the right of doctor-patient privilege, though it could well be that a compromise could become that if a person submits all of their medical records that there can be absolutely no rescission. Right now it’s not easy to collect that information, but it’s one of those things that (for better or worse) is going to become a lot easier in the coming decades.

* – For those of you that don’t know about COBRA, it’s a pseudo-mandate by the government that requires insurance companies not to drop coverage if you lose your job. What happens is that you get COBRA paperwork after you lose your job (for any reason excluding malfeasance) and if you respond within 60 days and pay the bill, you’re retroactively covered.

The downside is that you have to foot the bill that your employer previously footed. In a case like mine, that’s diddly. But when employers are actually generous with their benefits, you can see your premiums jump three-fold or more, as was the case with Clancy. The other downside is that since COBRA was something that was thrust upon them by the government and the policy-holder’s employer, it’s not something that they’re excited about and it’s frequently the case that they don’t want your business.

On the other hand, President Obama’s stimulus package included a provision wherein the government will pick up 65% of the tab. For people like me, that means that COBRA is cheaper than penny-pinching employer-provided health care. For people that have more generous benefits like Clancy, though, it’s still going to cost more.

If you’re looking for a defender of Cash for Clunkers, you’re not going to find it with me. I’m not against it in theory if I thought that it could do what its supporters said it would do. I don’t like the idea of taking functional cars off the road and I think that the money would have been better spent elsewhere. However, there is one argument against C4C encapsulated in this article that I consider to be pretty problematic: The notion that it has made el cheap-o entry-level cars too expensive for people without much money:

The Manheim Used Vehicle Value Index reported that prices reached record highs in September. The consulting firm that publishes the index blamed low inventories.

That’s bad news in Berks, where many shoppers seek inexpensive, used vehicles, especially during difficult economic times, said George Tabakelis, general manager of Perry Auto Service & Sales on Route 61 in Perry Township.

“Customers used to be able to find a good car for their son or daughter to take to college for $2,000 or $3,000, but now that same car may cost $5,000,” Tabakelis said. “It’s sad.”

He, too, blames cash for clunkers, which has led to fewer vehicles being available at used-car auctions, and the recession.

The cars that C4C is taking off the road are those that are old and get less than 18mpg. So for people looking for cheap, entry-level, high-mileage old cars with poor mileage, their hunt got a little bit tougher and more expensive. So for bigger cars, trucks, SUVs, and low-mileage muscle cars, C4C has become tougher. However, those aren’t college student outfitters (except perhaps bigger cars). This article (as well as numerous conservative, libertarian, and anti-Obama commentators) implies that this applies to the most basic of entry-level cars. Like the old Dodge Colt or Chrysler LeBaron that I used to drive. Those aren’t being scrapped.

The LeBaron got around 25 miles to the gallon and the Colt got 30 until the day it died. The only vehicles in our family history that would be eligible would be the vans and the convertible, neither of which are “college cars” (and I have my doubts that the convertible would have been eligible because even though it got very poor mileage, I think the model itself got good mileage and I think that eligibility is determined by model and year).

The only really good argument that C4C made college cars more expensive is that by taking old SUVs and station wagons off the road, it forced people that would buy those to instead buy smaller cars, increasing demand on those cars and driving the price up. I’m not really sure how much of a factor that is, though. People that get low-mileage vehicles typically do so for a reason. When it’s necessitated by extra cargo space or passenger capacity, smaller vehicles don’t do them any good and so they’ll likely bite the bullet and get something a little more expensive. It’s a bit murkier with people that wanted a 1990 Ford Mustang or Taurus but instead must make due with an Escort. Those people may drive the price of Escorts up a little bit, but you can still get a 90’s Ford Escort for $2,500. Clint got an early-90’s Toyota Corolla for less than $1,000 and it runs great. Even if Crayola, my late-90’s Ford Escort, were running well, I wouldn’t expect more than a couple thousand for it.

For those noticing an uptick in the cost of entry-level used vehicles, it’s possible that C4C is playing a marginal role in it through a cascading effect, but to that extent so is the economy as a whole on models completely unaffected by the program. The article above actually points out that fewer new car sales are making barely-used car sales more expensive. As I’ve been car shopping for the last several months, I’ve noticed the price differential between low-usage used cars and new cars has shrunk to become pretty marginal (and I say this as someone that never intended to buy new).

Back to the original point, as much as I’d like to blame a government program that I never really liked for an undesirable turn of events, I’m afraid I just don’t buy into the notion that Cash for Clunkers, despite its various flaws, has priced people out of the entry-level cars that they need. It may have priced them out of the entry-level cars that they want, if they wanted a Ford Taurus or a truck of some sort, but for the poor cash-strapped college student depicted in the article, they have other options.