“Social policy in the richest nation in the history of the world”

by John Sides on April 5, 2012 · 13 comments

in Health Care,Policy

On the second day of oral arguments over the Affordable Care Act, Solicitor General Donald B. Verrilli Jr., trying to explain what sets health care apart, told the Supreme Court, “This is a market in which you may be healthy one day and you may be a very unhealthy participant in that market the next day.” Justice Antonin Scalia subsequently expressed skepticism about forcing the young to buy insurance: “When they think they have a substantial risk of incurring high medical bills, they’ll buy insurance, like the rest of us.”
May the justices please meet my sister-in-law.

Political scientist Andrea Campbell, writing in the New York Times.  More here.

{ 13 comments }

RobC April 5, 2012 at 12:56 pm

Professor Campbell writes about an indisputably tragic situation, a 32-year old woman who suddenly finds herself paralyzed. Is it heartless to ask some difficult questions about her case? Perhaps, though since Professor Campbell has chosen to use the situation as an argument about public policy, it seems asymmetric not to consider some of the issues that may undermine that argument.

First, let’s consider Professor Campbell’s statement that her brother and his wife could not afford health insurance, and reflect on the implications of that fact in light of their choice to have a child. Even though they could not afford their own health care expenses, they opted to spend thousands of dollars a year on a child. Is it accurate to say, as Professor Campbell does, that health insurance was too expensive for them to buy on their own? Or did they opt to externalize their health care costs in favor of spending their limited resources on other priorities such as starting a family or maybe Professor Campbell’s brother’s hobby of working on and keeping old cars?

Under the ACA, of course, they’d be able to make these choices secure in the knowledge that they could always buy insurance once they needed it, without regard to pre-existing conditions. The individual mandate might have gotten them to participate in the insurance market, but that’s uncertain. It might well have been economically advantageous for them to pay the small penalty associated with not being insured and wait until the need arose to purchase insurance.

Professor Campbell is also troubled by the strictures of the Medi-Cal assets test. It’s no doubt a hardship that as long as Medi-Cal has not been reimbursed, her brother may not be able to pursue his hobby, they may not be able to benefit from an inheritance and their children may not be able to divide their own estate. On the other hand, wouldn’t it be even more unfair if the working people in California would be obliged to forgo their own hobbies and college funds for their children and estate-building in order to pay for the Medi-Cal Professor Campbell’s brother and sister-in-law used and didn’t reimburse while they pursued their hobbies and enjoyed their inheritances?

It was, after all, a conscious choice by the couple not to purchase health insurance. Living with the consequences of that decision is harsh but may not be as unfair as externalizing the consequences, and the existence of consequences may deter others from making the same poor choice.

Rob April 5, 2012 at 3:33 pm

+1

The other element you did not touch on here and one that pertains to PBR’s comments is the responsibility of government intervention in the insurance markets via tax policies contributing to the under availability of self-purchasable insurance. Far better public policy would be replacing the employer tax deduction with a general tax incentive to purchase insurance. Given that, as David Henderson points out, the Affordable Care Act is essentially coercive, I beg PBR to reconsider the tradeoff he’s calling for.

http://econlog.econlib.org/archives/2012/03/krugman_on_supr.html

anon April 5, 2012 at 3:01 pm

^ to summarize, having a child is a “poor choice” for those who are not independently wealthy, and who are employed at firms where the employer does not offer insurance?

It is good to see you confirm Professor Campbell’s final sentence.

PBR April 5, 2012 at 3:13 pm

Rob — Personally, from a normative viewpoint, I would prefer to live in a society where middle-aged, married, employed citizens are not forced to choose between starting a family or buying health insurance.

But your claim about deterrence is an empirical question. It may very well be that, as you suggest, having people “externalize the consequences” of starting a family instead of buying health insurance will deter others from making the same choice. But that is not obvious; there are strong social and biological pressures that encourage starting a family. People are not always rational. (I’m reminded of a study showing that the death penalty does not seem to be a significant deterrent of murder.)

RobC April 5, 2012 at 3:24 pm

anon and PBR – Let’s be clear, the poor choice was in choosing not to buy health insurance. I don’t know what they spent their money on. Maybe it was their hobby, maybe it was something else. We don’t have enough information to know. But they also chose to bring a child into the world, so they must have had some spare money, or at least one would hope so. And though it’s admittedly harsh to say if you can’t afford to have children, you shouldn’t, the alternative is to say you should have children whether or not you can afford them, and the rest of society will pay for their food and clothes and health care and everything else. And that’s a heap of externalizing.

anon April 5, 2012 at 3:41 pm

RobC,

Ultimately this is a normative disagreement. We will, I fear, have to agree to disagree. Personally, I am fine with subsidizing others’ ability to have kids and be healthy. And when we elect representatives who enable that to happen, I applaud it.

RobW April 6, 2012 at 12:14 pm

Your election of politicians who forceably take my money to fund programs you like is in no way just! If you like it, pay for it yourself or convince others to willingly support you.

Joel April 6, 2012 at 11:55 pm

which part is the unjust part? the representative bit or the democracy bit?

Social NC April 5, 2012 at 10:22 pm

Anon and PBR – You make false arguments regarding the tradeoffs involved. The author’s sister left the state to provide her only safety net. Sadly, we all see that was a poor choice, in hindsight.
In many states, the poor are able to afford many expenditures, as well as insurance.
If a possible inheritance is a concern, a trust might be set up by the child’s grandparents to benefit the child.

anon April 6, 2012 at 9:21 am

You point to an interesting empirical question, which is how much the monthly budget of a middle class family is taken up by discretionary spending. If we assume that food, housing, clothing, transport costs, etc. and so on are not discretionary, then what is left? I am sure there must be data out there on this that someone has pulled together. I know that for my own family health insurance is our second biggest cost, after mortgage payments and ahead of food. So I am not so confident that the discretionary nature of the decision you suggest exists is real.

Also, on the socializtion or risk, it’s worth remembering that US public spending on health is the same as the UK as a share of GDP. So for the same level of expenditure we have in the US today we could cover everyone under a different system. That sounds like a no brainer to me. (While understanding that the cost issue is one that no party has dealt with yet.)

Davis X. Machina April 8, 2012 at 7:22 am

Well, looking at the UK, something like that might work in practice, but will it work in theory?

Jayson Virissimo April 6, 2012 at 9:49 am

The title is somewhat misleading. I was expecting an article about social policy in that extremely wealthy constitutional monarchy, Liechtenstein.

anon April 7, 2012 at 3:02 pm

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