Markets vs. Morality

      David Brooks argues in his latest column that the main difference between the Republican and Democrat models for health care reform is top-down vs. bottom-up planning.  Really, argues Brooks,

"Politicians wave studies, but they’re really just reflecting their overall worldviews. Democrats have much greater faith in centralized expertise. Republicans (at least the most honest among them) believe that the world is too complicated, knowledge is too imperfect."

      Jonathan Cohn finds this merely new spin on an old Republican framing:

Brooks writes as if the key distinction between Democratic and Republican plans for Medicare is the way they would manage the program, with Democrats entrusting experts to make key decisions about where to spend money and Republicans entrusting consumers. But that’s not the most salient difference between the two approaches. The most salient difference is that Democrats would preserve Medicare's fundamental guarantee of health benefits at affordable prices. Republicans would not.

     I completely agree.  This is less about markets and more about morality.  One of the most irritating conservative mistakes is to compare private vs. government service without acknowledging the fundamental point of government services: to guarantee some standard of access to all. Private enterprise is pointed to as routinely superior in service – which it no doubt usually is. But be they roads, parks, libraries, schools or health care – they are not required to open their doors to everyone. Of course this is often less efficient, and normal market mechanisms won’t come to bear – but we make this sacrifice if we feel the service is of sufficient importance to provide to the public.

     Has “public service” lost its meaning?

Insurance Pools and Information

Reihan Salaam is a rarity it seems these days: a reasonable conservative who is both knowledgeable about the context of his opinions and willing to engage issues in an intellectually honest capacity.  I've long wanted to find more right-wing thinkers like him to defray my somewhat tendentious reliance on liberal thinkers for political and cultural analysis.  I say somewhat tendentious because, to be fair, conservatism has taken the express train to crazyville lately.

So I was delighted to see that he's blogging at National Review, with comments (although there don't appear to be many!), and that from the looks of things he's providing some quite interesting and reasonable writing.  In a great little posting on what the increasing availability of medical predictors in patients might mean for the entire enterprise of health insurance.  He quotes fellow conservative Mankiw:

If insurance companies do not use these markers, perhaps because of regulation, will the availability of these tests cause the markets for life insurance and annuities to unravel because of increased adverse selection?

Then, economist Stephen Cecchetti:

To understand the problem, think about a simple case in which there are only two kinds of people, those with high and low expected future medical-care-costs lives. Imagine that the insurance company can’t distinguish the two types, so it charges all comers the average cost across the entire population.  For the healthy people, the cost of the insurance will look very high, so they won’t buy it.  That means that the only people who will buy the insurance are the unhealthy.  Realising this, the insurance company will have to raise their price further to compensate for the fact that only the high cost people are willing to buy insurance.  This is the classic “lemons” problem that causes markets to fail and was first described by George Akerlof. 

Salan takes this predicament seriously, avoiding any knee-jerk reaction that ideological pre-disposition might suggest. 

Agree or disagree, it is an excellent and insightful discussion of the underlying issues shaping the private insurance market of the future.

I agree that this is fascinating. Insurance pools rely on a diffusion of risk. But what happens when that risk is removed? Sure, we'll all still face accidents. But I imagine most health costs that are in theory predictable, and do not involve broken limbs or infectious diseases.

Fundamentally, this goes very deep, down to our assumptions about human agency. To what extent are we in control of our lives? Any insurance pool is weighted towards people at greater risk. So what about people who make poor decisions? One model is that they could have chosen otherwise, and so the consequences should be born entirely by them. If you eat too many Cheetos and get type II diabetes, you should pay for your own insulin (this is assuming no genetic pre-disposition to overeating is found). But another model says that we - our choices - are in large part socially determined. So it is through life experience, education, etc. that one individual is more likely to be susceptible to weight gain. That there are social predictors (demographics and social capital trends) for obesity is evidence that we are not all operating with the same level of human agency. How then is risk apportioned? Should one really be considered responsible (that is, should society *not* be responsible) for the burden of this disease?

And then there is the more morally simple question of those who indeed have a genetic (not social) predisposition to disease. Should they bear the burden alone? Society already makes many sacrifices for those we consider "deserving" of our help.

But health care, unlike say, car or fire insurance, has a number of different components. Driving or owning a house is generally egalitarian where risk is concerned. To the extent that insurers are able, they make adjustments. But for most people the difference is marginal (for those of us who don't live in fire-prone environments, or have clean driving records). But what's more, the stakes aren't nearly as high. Health care is infinitely more complex and for many people a matter of life and death, whereas auto or fire insurance is considerably less so.

In other areas of life, we just assume that society should guarantee a basic level of access no matter what - the alternative would be at best onerous, and at worst horrible. For instance public education, roads, parks, etc. are all things that we basically say, "OK, we'll just do this and everyone can have it." The idea that only certain individuals would be allowed to send their kids to school, have access to 911, drive across certain bridges, etc. is almost absurd (even though yes, this was certainly the case through much of American history).
So the discussion is complicated. There are competing interests and compromises to be made. But it is a discussion that, as Salan points out, will only become more critical as society becomes increasingly capable of delivering more useful information.

The Inherent Immorality of Health Insurance (cont.)

A Media Matters video is making the rounds that demonstrates the absurd levels of dishonesty that some pundits are willing to go to to advance their ideological agenda.  In it, Bill O'Reilly claims to have found no evidence that his FOX co-workers ever promoted the idea that people will be jailed if they don't buy health insurance - even offering that they had "researched" the matter.  A long succession of clips are then shown of them saying exactly that, culminating with O'Reilly himself.  Crazily enough, O'Reilly is generally considered to be one of the more reasonable FOX pundits.



The really crazy thing, however, is how willing Americans are to go along with the idea that paying over $10,000 a year for health insurance (if you can get it) is something to be happy about. That's an absurd percentage of income - for a middle class family, it's over 10%!


If it were looked as a tax, the expenditure would not only be huge, but very regressive. People struggling to get by would be paying through the nose while those with higher incomes would pay a very small share.

The argument for a private system is of course that it offers higher quality care. From an outcomes standpoint that is irrefutably false. There may be some merit to claims it is more convenient. But that is debatable.
In the end, fighting to pay twice as much for similar care that (until the AHCA) millions were locked out of, and is horribly regressive in cost, is quite a pathetic portrait of ideological pathology.

The Inherent Immorality of Health Insurance

Matt Yglesias points to one of the main pieces of Health Care Reform.

One of the most important elements of the Affordable Care Act is the requirement that insurance companies maintain a “medical loss ratio” of at least 85 percent—which is to say, spend at least 85 percent of what they take in in premiums on purchasing health care, rather than on profits and salaries for insurance company employees.

He provides the following chart:

The strange thing to me about the entire health care debate (or gosh, is it over?) is that there is an enormous conflict of interest inherent to the health insurance business.  In order for businesses to be successful, they need to, well, be businesses - in other words to try to make money.

But unlike just about every other business, health care determines people's lives.  I mean, if people don't get proper treatment they get sick and die.  But that can get really expensive, thus caps and pre-existing condition lock-outs.  So now, to try and make things more moral (i.e. not force people into dangerous ER situations and the cost-shifting that involves), we require equal access.  But as businesses, this is terrible for the industry.  It basically means sacrificing profit for morality. So then you get the mandate, the subsidies, the 3-legged stool, yadda, yadda. 

But all of this to account for the fact that insurance companies, to provide a social good, must sacrifice profitability.  We don't ask other businesses to do this.  It would be like, in the absence of a public school system, requiring private schools to take on charity cases from the neighborhood.  The only reason we wouldn't dream of that is that we allow for a certain level of decency to children that we don't adults.  (Although many people have been perfectly willing to allow kids to go uninsured.  These people are sick.  And Republican.  And they wonder why they get a bad rap?).

It seems reasonable that in markets where there is a moral obligation to sacrifice profit, morality will lose out.  It isn't as if some noble insurance companies decided to open their doors to pre-existing conditions "out of the good of their hearts".  They wouldn't be very good businesses if they did.

Health Care Fantasy

Health care is often described as a "market".  But I think this is wrong.  How could anything like a market exist when some people are going to have life experiences that make them 100x more costly than others? If we compared health care insurance to auto, life, house, or other forms of insurance, it would be like certain people living in houses on fire, or driving cars with broken steering wheels that continually crash into other vehicles!

The reason we get around this today seems to be that there are structural systems that manage risk. The first would be employee pools, next pre-existing conditions, and finally just really high insurance costs. But such a system depends on a high degree of callousness. Those in fields where no employee pool exists, or the where wages don’t support it are kicked out. Then those with a pre-existing condition are left out. Finally those who can’t afford it are left out. And here we arrive at the high level of uninsured, those who don’t get medical treatment, and those who simply die.

To me this comes down to basic morality. We as a society can afford to cover everyone. Maybe more clumsily, but adequately. Our taxes will be higher, but our economic system won’t collapse. It hasn’t in every other Western country that guarantees some form of universal HC. Yet we choose not to. Throughout history societies have chosen different levels of compassion, having decided on different moral standards. Our American system of health care right now depends upon on tolerating a certain level of human suffering.
This is a moral determination. All sorts of fancy economic or philosophical reasoning is put forth. But in the end it seems a simple matter of morality. Yet one that also seems to depend (as limited compassion usually does), on a failure to empathize because of a failure to witness. Few people would argue that we deny people access to emergency rooms, should they not be able to pay. Yet having no insurance isn’t much different. Yet the situation is less clear-cut. It happens on calm afternoons, when medications are not picked up from pharmacies, when problems go undiagnosed, when bills pile up and homes are quietly foreclosed. The story becomes part of that elusive tapestry of unacknowledged, unwitnessed poverty.

It is here that the sweeping philosophical and economic rationalizations for our current system reside. Here in this emotional vacuum the specifics and details crumple into dust beneath grand gestures. The human lives that hang in the balance are absent. They cannot enter, for they would immediately disrupt the natural symmetry between our present system and a most basic level of human sympathy. In this way it is not that opponents of HCR are without compassion, but that they must actively disengage from the reality of their position’s consequence.

A Real Republican Roadmap to Balancing the Budget

Paul Ryan, Republican congressman from Wisconsin and ranking member of the House Budget Committee, has introduced "A Roadmap for America's Future", his alternative budget proposal.  But unlike most other republican proposals, his actually balances the budget.  It does so mainly via steep cuts in social programs, namely a massive cap on Medicare spending.

The basic idea is to give seniors a voucher, which they can then use to purchase health care on the private market.  The way this cuts costs is that this voucher will be substantially lower than what what Medicare currently covers.  Although the program doesn't go into effect until 2020, the annual cost adjustment is far below expected actual increases in health care costs.  What is more, the age of retirement coverage will have risen, further limiting coverage.  What it all amounts to is massively rationing health care for seniors.

The amazing thing about the plan is its intellectual honesty.  It takes a philosophy of limited government - low taxes, low spending - and actually proposes implementing it.  The problem most Republicans face is that their rhetoric has over-reached their policy recommendations.   During the Bush years, tax cuts were made, yet without the painful cuts in spending that would pay for them. 

Republicans, now in the minority, and facing record deficits, seem to have rediscovered fiscal discipline.  Yet to complain about the deficit without proposing steps to actually balance it, is intellectually dishonest.  The ease with which this incongruent rhetoric is employed likely explains much of their current low approval rating.

Interestingly, the Tea Party movement seems to be tremendously popular.  Its main thesis would be very approving of the Ryan proposal.  Yet much of its rhetoric is even more extreme, if somewhat incoherent.  Aside from the demagoguery of Obama, a main theme seems to be the detestation of any form of socialism in government.  This has been largely directed at government involvement in health care - even if many of the Tea Partiers seem to be very attached to their medicare.  But one wonders how far the logic might really extend.  Public schools?  Libraries?  Ostensibly the objection might solely lie with federal government.  But how would state spending on social services be any different.  The same philosophical deference to individualism and markets would seem to apply.

To the extent that republican policy proposals have not adequately matched their rhetoric, they have been difficult to take seriously.  The Ryan plan is honest, and logically consistent.  That its Medicare provisions would not really begin taking effect for 10 years likely reflects the political impracticality of its acceptance.  But at least it is something with which to reasonably debate.

Finger Pointing

My prospects for getting health insurance are pretty good in the future, considering I’m an experienced teacher with a Master’s degree; unemployed now but as soon a the local market opens up I’ll no doubt find employment. I also have chronic pre-existing conditions, which makes me uninsurable. So I feel like I have a dog in this fight.

And so while the president's agenda has a pretty big direct impact on my life, I’m still not clear as to why all the finger pointing at Obama. If politically feasable, he would have supported single-payer. But he’s stuck with where the Dems are at. As far as I can tell, the main complaint is that he isn’t “fighting” hard enough. But what the heck does that even mean? It seems like a straw man to assume he has so much theoretical power over congress.

I mean, look what it took to get Ben Nelson on board. What could Obama possibly do that would top that pay off?!! I’m all for arguing that he be more aggressive. But what is being argued is that Obama’s lack of aggressive influence on the process is largely what has kept the process not only from resolving but being less liberal to boot. This is simply not true.

What troubles me most is that this rhetoric feeds right into the ignorance of independents who don’t appreciate the real underlying liberalism of Obama, and so right him off as “another politician” in their reductionist and misguided understanding of American politics – and who thus end up voting for the Scott Browns of the world out of spite.

Health Care Is Not A Right

I've thought about this occasionally, but only recently have I come upon what I believe is a truer expression of a liberal philosophy of health care.

The political argument is obvious: by calling health care a "right", you automatically justify guaranteeing coverage to everyone. By evoking a natural principle, you are fundamentally answering opponents by claiming that health care is a moral, not economic issue.

But this is not generally how we think of rights. We usually think of them as simple freedoms that require little in the way of effort on the part of others. Freedom of speech, movement, worship, or privacy all require little other than being left alone. Of course, the definition of a social contract includes the quality of living with others. Thus it implies a level of engagement with one's fellow man.

It is within this expansion into the social realm that the liberal inserts an added clause: duties. Duties are all the things we must do for one another to maintain our individual freedoms, or "rights". They are of course more difficult to define, much less to achieve. But they are as elemental to the provision of man's rights as the established state itself.

Throughout our nation's history we have defined them differently, as have other modern democracies: We reserve the right to draft men into military service to protect from foreign threats. We reserve the right to declare martial law. We reserve the right to tax income and commerce. We reserve the right to guarantee things like education or legal defense. Though at times they may be defined differently, they are the same in that they represent an expression of duty towards the common good. Each requires a level of sacrifice - often different depending on the individual - to the idea of the "common good".

Universal access to health care is now being called for by liberals. It is being argued that, by virtue of being a citizen (for many like myself, simply a human being) one should be guaranteed a minimum standard of free health care. Or to put it another way, it is the DUTY of every citizen of this country to contribute in some way to ensuring universal health care coverage to every man, woman & child.

Health care is a duty.

It deserves to be said

Health care is a right.

Now, one could easily say - sure, so is a cold beer. Why should anyone deserve to see a doctor to get his blood checked. We don't have the right to food or water. We don't have the right to shelter.

But we actually do - when it threatens our health. Sure, we let bums rot under bridges. But if they are lucky enough to have someone notice them and call 911, then they are certainly guaranteed to have their condition stabilized at the nearest hospital. So yes, health care is a right.

Everyone is guaranteed health care access. The only difference is when and how it gets paid for. People with insurance get preventative treatment. People without it get expensive interventions. No one is turned away from the hospital and no one will likely ever be. People are, however, denied treatments that will either save their lives in the long run (and without costly yet futile emergency procedures), or denied preventative measures that prevent illnesses from ever developing.

How it is paid for is tricky. Depending on the hospital, city and state, uninsured patients are subject to different levels of accountability for payment. I'm not sure how much of the cost of the uninsured is absorbed by the system and how much is recouped from the patient. Certainly families often bear the brunt of expensive treatments the patient is unable to afford.

But should they be required to pay for their own care outright, especially if it is something that could have been prevented had they the means to access care earlier?

As a society, we can sort out who pays for what, via taxes, monthly payments, co-payments, etc. But everyone will get care.

My last thought on moral accountability: if our neighbor lies dying in his home, we are not responsible to save him. But if he lies dying on the sidewalk before us, we are required to do everything we can to save him.