Pool Party
Dean Baker writes about a Post article on health insurance in Japan:
The Washington Post gets to the bottom of Japan’s health care system quoting a professor of health policy that: "more than one-third of the workers’ premiums are used to transfer wealth from the young, healthy and rich to the old, unhealthy and poor."
That’s a striking statement. Fire insurance transfers wealth from people who don’t have house fires to people who do. Car insurance transfers money from people who don’t have car accidents to people who do. This is the basic concept of insurance. It protects people from bad events, transferring money from people who don’t have bad events to those who do. In other words, this quote is telling us that Japan’s health insurance system is operating like a health insurance system.
I get what he’s saying, now. I used to look at it more James Joyner’s way:
The whole idea of insurance is that the company collects premiums up front in exchange for assuming possible future risk. Insurance that is required to cover pre-existing conditions really isn’t insurance at all. If I’m uninsured and wreck my car and go to GEICO to buy a policy, they’re not going to pay for the wreck I already had. If I die without life insurance, my wife can’t go to MetLife and buy a policy on me and get paid. Why? Because these loses are no longer potential or in the future; they’ve already happened.
Insurance classic is about the pooling of risk. Contemporary health insurance is that, but it’s also the pooling of certainties.
Which is true as far as it goes. What James and I missed was the separate concept of social insurance. Social insurance can be about pooling risk of uncertain events over time, e.g. the risk of job loss. But it can also be precisely about pooling certainties. Everyone lucky is going to spend a fair amount of time healthy and some time sick and/or dying. (A minority of people will be unhealthy all their lives.) There is no uncertainty about whether you will need medical care at some point in your life. There is only uncertainty as to timing and magnitude.
For the individual-insurance model to be viable, the following conditions would have to obtain:
1. Everyone can buy an adequate policy when healthy that they can keep for their entire lives if they keep up the payments;
2. To the extent that some conditions might not be covered or might “bust the cap” on the individual policy, everyone can save the right amount of money in an adequate time frame to cover any possible contingency;
3. Society as a whole is happy letting people who can’t achieve the first two conditions sicken and die if their own income and wealth timing doesn’t synch up with the timing of their medical issues.
Of these conditions, only the third has ever obtained in the real world, and never sustainably, or we would never have social movements and even revolutions against it.
As to the second, boosters of “the American system of free enterprise,” or even genuine free enterprise, ought to think about just what kind of savings rate – and concomitant consumer-spending habits – Condition 2 implies. In particular, a lot of happy talk about the material comfort of ordinary people under America-style capitalism would be null and void. The general material contentment of the broad swath of the population has been bought with low-to-negative savings rates. Currently, apologists for American wealth inequality can just about argue from consumption inequality with a straight face. That would become much harder to do in a country where the bottom three quintiles – probably the bottom four – spent their lives desperately (and unsuccessfully) saving for medical catastrophe.
Which leaves the first. It mostly isn’t an option, currently. I don’t think we have health-insurance policies that are priced to be carried forever, the way a whole-life policy is, say. Market distortions certainly militate against this (the employer-based system), but so does individual psychology. (When you’re young and healthy you’d just as soon forgo health insurance. You’re healthy!)
I just don’t ever see the individual-insurance model working.
Under the social-insurance model, you are indeed pooling money from the currently healthy to help cover the expenses of the currently under treatment. At some point, the currently healthy will themselves need treatment, at which point they draw money from the currently healthy. In the end, it all has to be paid for, so it’s really a program of expense smoothing. It has its own vulnerabilities, but it cushions itself against them by maintaining a pool of tens or hundreds of millions of people.
There are perfectly coherent ideological arguments against social insurance. If you believe all taxation is theft, that government is illegitimate, social insurance is a form of taxation, and a crime. If you believe that what’s good about “the American system of free enterprise” is that fear of catastrophe keeps people in line, then social insurance undermines social cohesion, and that’s bad. If you believe that “people make their own luck,” or that fortune is a sign of divine favor and misfortune the judgment of the Almighty, then social insurance rewards the undeserving. I don’t find these arguments compelling any more, but they exist and are viable positions.
There are also incoherent arguments against social insurance, the chief of which is the notion that any version of it must somehow be worse than the bizarre patchwork of subsidies, regulations, entry barriers and backstops that we have now. But these are arguments against doing social insurance, not refutations of the concept.
Comment by abb1 —
September 7, 2009 @ 1:39 pm
A bit OT, I guess. From Wilkinson’s link:
Funny, I feel that it’s exactly the opposite: poverty, lack of economic opportunity, and systemic injustice are dangerous distractions from the real problem of income inequality, economic elite confiscating pretty much all productivity gains from the working people. This confiscation then leads to poverty, lack of economic opportunity, and (it is itself) systemic injustice.
I hear Wilkinson is a smart fella, and I don’t think I am a complete idiot either, so how is it possible that we see it like that, the opposite way? It’s odd.
Comment by Nicholas Weininger —
September 7, 2009 @ 1:51 pm
I still wish you wouldn’t call it “insurance”. As you admit, what’s being pooled are certainties; all social “insurance” schemes exist explicitly to be able to pay for things ex post as well as ex ante, on the theory that people should not really be held ultimately responsible for dealing with the costs that arise in (some aspect of) their own lives. And so they depend on *forced* transfers as ordinary insurance does not.
Which means that your point (3) is central here. Actually I think the vicarious risk-aversion in (3) generalizes beyond health insurance. In our current society most people are extremely uncomfortable seeing almost anyone “respectable”/careworthy suffer any really large loss, health-related or otherwise, when they could have gotten insurance against it but chose not to. In other areas there are other reasons, legal or customary, why nearly everybody taking the relevant risk already buys the relevant insurance. So really health insurance isn’t that different from other kinds of insurance where individual markets do work: it’s just that other kinds of insurance already have de facto individual mandates. There are still lots of people who slip through the cracks, of course, but we mostly manage to ignore them as not “respectable”.
Indeed it seems to me your (1)/(2) are just corollaries of (3). (1), as you allude to, is largely due to regulatory distortions brought about by half-assed attempts to deal with (3). Saying that psychology plays a role too is really just saying “people might be dumb and not buy enough insurance and then we would *have to* bail them out” and that goes back to (3). (2) again only has force if (3) holds; you implicitly assume that “any possible contingency” *must* somehow be covered, because it would be Not Okay to just let people die when some non-covered or too-expensive health intervention could have saved them.
Of course, actually existing social “insurance” systems *do* sometimes let people die when non-covered interventions could have saved them, as indeed they must. Defining the limits of coverage then becomes a vexed political question, especially when the set of possible lifesaving interventions changes enormously over time.
And this brings me to a moral objection I think you unfairly neglect, namely, value pluralism. Not everyone values health, or health care, equally. Some people are perfectly and sincerely willing to say, “well, if it’s going to cost more than $X to save me then let me die instead, I’d rather keep the premium money required for coverage of the more-than-$X procedures and spend it on things I value more in my life.” And the value of $X will vary wildly from one person to another. Social “insurance” thus inevitably forces some people to pay for lots more health care than they want– not just in the redistributionist sense of paying for that care for others, but in the paternalist sense of making them pay for it for themselves. If you value respect for the separateness of persons, that’s a very bad thing to force people to do.
Now you may say that this is just a special case of an argument that the state is illegitimate and taxation is theft, because any state action necessarily infringes on value pluralism this way. And indeed I, for one, do think of it as such a special case, and this is a major reason why I’m an anarchist! But even if you accept some forced infringement on value pluralism, you may nonetheless believe that minimizing the extent of that infringement is a strong moral consideration. And forced health care coverage is a much larger infringement in the percent-of-income sense, for a much less fundamental purpose, than the traditional “minimal” state. So if you are going to convince even minarchists that it’s a good idea you still have a high bar to surmount.
Comment by abb1 —
September 7, 2009 @ 3:04 pm
Some people are perfectly and sincerely willing to say, “well, if it’s going to cost more than $X to save me then let me die instead, I’d rather keep the premium money required for coverage of the more-than-$X procedures and spend it on things I value more in my life.”
I’m sure some people are willing to say that when they are healthy, but when the time comes they are likely to change their minds and get in line for their chemo like everybody else. And I don’t want to be that guy who has to tell him: “this is your signature, mister, right? You signed this 40 years ago; now get lost.”
Comment by Glen Raphael —
September 7, 2009 @ 3:26 pm
To the question of whether it’s *possible*, “friendly societies” in times past are alleged to have provided social services in the context of larger, longer-lasting social groups such as a church. You belong to a church or Rotary or the Optimist Club or one of those other groups that put signs up outside small towns everywhere; that organization either contracts for health services or in some cases hires its own local doctor specifically to meet the health needs of members and pays him a flat salary.
It seems to me something vaguely like that might still work today if it hadn’t been crowded out.
Comment by All Your Summer Songs —
September 7, 2009 @ 4:25 pm
It looks like somebody didn’t read the Atlantic cover story from the wealthy exec who doesn’t like the public option &/or single-payer. If you were to have done that, you would know we could pay for health insurance as we do any other consumer good, & point two is not even something to consider.
Pingback by Psychopolitik 2.0 » While we’re on the subject… —
September 7, 2009 @ 4:56 pm
[...] a recent post, I suggested that the concept of insurance is itself proto-socialist in a way. Jim Henley approached a similar view this morning, in the context of questioning attempts to define that [...]
Trackback by Radios Appear —
September 7, 2009 @ 5:10 pm
Why Health Insurance is simply different…
Jim Henley has a post that points to and condenses a couple of other posts that I think do a great job articulating the fundamental difference between health insurance and other types of insurance. I think that understanding that health……
Comment by Glaivester —
September 7, 2009 @ 5:12 pm
I have to agree with Nicholas Weininger. “Social insurance” is just a euphemism for welfare (or in some cases for charity, if you include charitable organizations in your definition of “social insurance.”
I think the use of the term “insurance” is an attempt to try and obfuscate what we are really discussing here.
Comment by Glaivester —
September 7, 2009 @ 5:13 pm
the fundamental difference between health insurance and other types of insurance
There is no fundamental difference between actual health insurance and other types of insurance. It’s just that when it comes to health, we just choose to call things “insurance” that really are not insurance.
Comment by joe from Lowell —
September 7, 2009 @ 5:26 pm
That is a such a ridiculous statement. I defy to point to a single example of access to quality health care which has been universal or even close to universal without the, ahem, “half-assed attempts” to make it so. I defy you to name a single example of a society in which it was even close to being as available as in societies that make an attempt to do so.
I always see libertarians talk about health care as being like any other consumer good, that can be efficiently distributed by a market. It’s not, but let’s pretend it is. Large-screen televisions, automobiles, and other expensive consumer goods aren’t unavailable to the poorer members of society because of “half-assed attempts” to make them available, but because, like health insurance and medical care, they are expensive, and poorer people can’t afford them. That’s how a market works.
I think the complaints about the word insurance for what has always, since it was first invented, been referred to as “health insurance” is the actual attempt to obfuscate what we are really discussing here.
Seriously, Jim wrote several paragraphs discussing the redistributive aspect of health insurance. He’s not obfuscating anything; he’s just choosing not to use terminology which is sufficiently loaded for some people’s tastes.
Comment by joe from Lowell —
September 7, 2009 @ 5:42 pm
Furthermore, the point about health insurance covering that which is guaranteed to happen, and therefore not being “real insurance” and the provision of universal health care coverage being redistributive have nothing to do with each other.
If health insurance isn’t “real insurance,” then it is precisely as much not-insurance when my wife’s employer offers it as part of her compensation plan as when the government offers it universally.
Comment by Ceri B. —
September 7, 2009 @ 6:27 pm
I’d be very happy to talk less about “insurance” and more about “health care” myself. It seems to me that plans to deal with well-established, predictable costs may well not be best discussed as insurance.
Comment by Unqualified Neighbor —
September 7, 2009 @ 7:22 pm
I think this blog post is one of the most cogent, intelligent distillations of the medical insurance issue I’ve read. Hats off to you, and I hope that more people read this.
Comment by Jim Henley —
September 7, 2009 @ 8:18 pm
Whoah! That puts me one step closer to being the most popular blogger on my block! But hey, thanks!
Ceri: I am kind of with you. It’s more like a “service plan” than insurance classic. Oddly enough, when Megan McArdle tried to make this argument – she wrote “I don’t care if Healthy Person X has insurance; I care if Sick Person Y has access to care,” she got lambasted for it. For my part, I don’t see how you can assure universal baseline care without a universal pool of money.
Glaivester: I do not think that they will sing to me.
Glen: I used to be confident that government safety nets were just crowding out private charity, and I would love to see workable models of nongovernmental safety nets. But I concluded that it was facile of me to be sure that such things would exist without crowding out. For one thing, I think the history is that the private charities began agitating for state-provided social insurance because of frustration about the gaps in what they were able to cover.
Also, a puzzling thing: many libertarians and conservatives – I do not say you are one of them – insist that a key to reform is opening up insurance across state lines because it means wider risk pools, and the problem is that individual states make too small a pool to be viable. But then, shit, how big a pool is Grace Episcopal Church or BPOE Chapter 7303? (And of course, Denmark’s sub-six-million pop is smaller than many – most? – US states and it hasn’t stopped them from having a viable health-care pool.)
And, let’s say the civil-society-based safety-nets of old really did work then for what you or I consider enough of the population. There was not that much healthcare expense any one person could incur back then. Can we be sure, for any reason other than dogma, that those institutions would be financially adequate to contemporary health-care costs?
Nick: I’ll get to you later!
Pingback by Pick your poison « Dead Voles —
September 7, 2009 @ 8:18 pm
[...] Great survey and analysis of the difference between individual and social insurance here. Possibly related posts: (automatically generated)Financial Shock and AweExploring The Polarized [...]
Comment by bill —
September 7, 2009 @ 11:34 pm
Excellent Jim.
Comment by Kevin Carson —
September 7, 2009 @ 11:39 pm
Rather than calling it “sharing certainties,” it might make more sense to call it “spreading costs.” Either way, you make a good point.
Comment by Glaivester —
September 8, 2009 @ 8:25 am
If health insurance isn’t “real insurance,” then it is precisely as much not-insurance when my wife’s employer offers it as part of her compensation plan as when the government offers it universally.
A lot of privae insurance is really more of a pre-payment plan and a discount-negotiating bloc than insurance, as well.
Any plan that covers regular checkups, doctor’s visits, birth control, or other predictable expenses is really more of a pre-payment plan than “insurance.” (And a discount-negotiating bloc).
True insurance is insurance for catastrophic events, or insurance with a yearly deductible for the amount that one would reasonably be expected to pay in a year if everything goes well (i.e. so that if you make an unexpectedly high number of doctor’s visits, or have any other sort of mundane expense, but at a level higher than you would predict, those are covered).
Covering regular expenses is more of a prepayment plan. Taking advantage of a pool’s negotiating power is a discount plan. Mandates to cover predictable expenses that vary from person-to-person without charging higher premiums for the people liable to use more healthcare is a social welfare plan.
Comment by mpowell —
September 8, 2009 @ 9:13 am
This is a great post, laying out very clearly some thoughts I have had for some time. By the way, I have a great personal example of why the individual-insurance model is completely unworkable. My brother was diagnosed with Crohn’s disease when he was 16. This makes him uninsurable for life. Except, my parents had insurance for him from the time he was born. So why can’t he continue to pay for that insurance for life? That’s not how the system works. Even if we didn’t have the problem of insurance tied to employment, people can develop pre-existing conditions before they are of age. Understanding that, the individual-insurance model requires some very unpleasant conclusions.
Comment by Jim Henley —
September 8, 2009 @ 9:53 am
That’s an excellent example.
Now then, Nick, your post seems to boil down to “the problem is that we’re not as willing as we might be to let people die if they can’t afford care.” That’s not the same as saying, “The solution is to be more willing to let people die if they can’t afford care.” Is that in fact your position? (Expand death to “endure disability without feasible amelioration” etc.)
Comment by Picador —
September 8, 2009 @ 10:21 am
I agree with both sides of this debate insofar as:
1. “Health insurance” has always been called that despite not being “real insurance” (i.e. a hedge against uncertainty), so it seems to have the prior claim on the word “insurance”; but
2. It’s true that it would be handy to have a short word meaning “hedge against uncertainty”, and it sure would be nice if that’s what “insurance” meant, given that that’s how it’s often used.
Too bad, that. On the third hand, one can think of health insurance and other forms of social insurance as being “real insurance” if one adopts a Rawlsian mythology and imagines that we all signed up for these schemes while behind the veil of ignorance.
Aftwer all, if we can talk about a “social contract” that none of us remembers agreeing to, why can’t we talk about “social insurance”? It seems to me that the terminology is stricly analogous.
Pingback by The Pool of Health Insurance | Heretical Ideas Blog —
September 8, 2009 @ 10:26 am
[...] the record, I agree with everything Jim Henley says in this post about health [...]
Comment by norbizness —
September 8, 2009 @ 11:54 am
I thought it was best explained by Ron Devious: “You see, you unfortunately plumped for our ‘Never Pay’ policy, which, you know, if you never claim is very worthwhile, but you had to claim, and, well, there it is.”
Comment by JasonL —
September 8, 2009 @ 1:38 pm
So, I’ll open up with an observation about the current savings rate for healthcare – it doesn’t exist. I think Jim is right on target when he suggests that we ponder the implications of a necessary rate of savings to cover healthcare, but I am a bit confused about what conclusions he draws from such ponderings. It is absolutely astounding to me that we have somehow arrived at the notion that none of us are responsible for saving a single penny to smooth out our own health risks. That’s what savings is for, right? I transfer wealth from, check this out, young healthy me to older less healthy me. For whatever reason, this idea seems unethical or something to a big chunk of people debating this issue.
I would in the second place note, just as with any kind of insurance, insurance is a stupidly expensive way to pay low yield costs. I don’t buy grocery insurance for a pretty good reason. Insurance should be bought when the risk of a catastrophic expense is high enough to justify the costs of insurance.
So, fine, let us encourage savings for low yield healthcare costs, with all of the attendent advantages of market pricing and shopping around and expense mitigation, and let us have insurance for catastrophic expenses bought privately, and let us have a welfare program to cover catastrophic expenses of the uninsured.
Comment by abb1 —
September 8, 2009 @ 2:12 pm
I don’t see any mystery here. It should be a government service, like the police, public schools, fire department. It is, in fact, what it’s called in the UK: national health service.
Comment by Tom Scudder —
September 8, 2009 @ 2:35 pm
Proving that there’s nothing you can post on the Internets that won’t be nitpicked:
BPOE Chapter 7303
They actually only go up to 2865.
Comment by Seward —
September 8, 2009 @ 2:36 pm
For one thing, I think the history is that the private charities began agitating for state-provided social insurance because of frustration about the gaps in what they were able to cover.
(a) Friendly societies still exist; so they haven’t been completely crowded.
(b) The friendly societies basically shot themselves in the foot by lobbying for government intervention to tamp down on competition. Camel’s nose under the tent door. The various medical professional groups (which are basically quasi-government entities) also did not like how the friendly societies hired doctors, etc. because it undercut the higher wages they wanted.
Comment by Seward —
September 8, 2009 @ 2:43 pm
JasonL,
If we are worried about how little people save, well, we could get the government to stop encouraging people to take on debt.
___________________________________
As far as the issue of not letting people did is concerned; I think this is really an overblown issue (as is the issue of the uninsured, which is somewhat related) that effects relatively very few people. In the case of the uninsured, their unpaid for expenses make up just a few % of healthcare costs in the U.S.
Comment by Barry —
September 8, 2009 @ 2:47 pm
Comment by Jim Henley —
“Whoah! That puts me one step closer to being the most popular blogger on my block! But hey, thanks!”
It *is* a good post. Your Liberal membership card is in the mail
“And, let’s say the civil-society-based safety-nets of old really did work then for what you or I consider enough of the population. ”
Note – this is not something I’d agree with, without proof. To me it’s the ‘Leave It to Beaver’ view of history, where it’s too easy to assume a prettified view of things.
“There was not that much healthcare expense any one person could incur back then. Can we be sure, for any reason other than dogma, that those institutions would be financially adequate to contemporary health-care costs?”
This has been pointed out by others (e.g., Krugman) – way back not so long ago, the prognosis for many conditions was ’suffer and die’; if you were fortunate, you had access to painkillers.
Comment by JasonL —
September 8, 2009 @ 2:57 pm
Something worth pondering: the police do not have a mandate to protect every individual from crime. Public schools do not have a mandate to ensure every child is educated. The fire department can’t be held accountable if your house burns down under their watch. I’m suggesting here that the comparison is probably too easy to be accurate – a mandate to guarantee healthcare to each individual is in many regards dissimilar to these other public services – on a cost basis, on an execution basis, on a regulation of life decisions basis.
Comment by Seward —
September 8, 2009 @ 3:00 pm
FEE has a nice lecture on friendly societies, etc.: http://fee.org/audio/90/
Comment by Seward —
September 8, 2009 @ 3:08 pm
JasonL,
Well, also there are far more private police in the U.S. than there are public police; and of course the best way to make sure your home is not robbed at night is to buy a security light.
Opting out of the public school system is becoming more and more common; imagine how bad the system would be if ~15% of the population of school age people couldn’t opt out of the system.
…a mandate to guarantee healthcare to each individual is in many regards dissimilar to these other public service…
And no nation lives up to that mandate; especially if they are the exclusive provider and/or payer.
Comment by Seward —
September 8, 2009 @ 3:12 pm
JasonL,
And of course efforts to create a totalizing social insurance system will mean greater government intrusions into the private lives of individuals. More and more nannying by state actors. The only cost won’t simply be higher taxes and less affluence; it will be other aspects of liberty.
Comment by abb1 —
September 8, 2009 @ 3:17 pm
the police do not have a mandate to protect every individual from crime. Public schools do not have a mandate to ensure every child is educated.
What do you mean? Of course they do. You call the cops, they show up and arrest the bad guy. That’s your right and it’s their job. If you have a child, the public school in your town must enroll her. It’s the same exactly with the health service: you call the local clinic – they give you an appointment.
Comment by Seward —
September 8, 2009 @ 3:30 pm
abb1,
What do you mean? Of course they do.
They don’t. So sayeth the Supreme Court. See here: http://en.wikipedia.org/wiki/Warren_v._District_of_Columbia
Comment by Seward —
September 8, 2009 @ 3:31 pm
Whoops, US Circuit Court.
Comment by Seward —
September 8, 2009 @ 3:33 pm
abb1,
There is even a YouTube video on the matter: http://www.youtube.com/watch?v=lb3rAglRsqU
Comment by dhex —
September 8, 2009 @ 3:36 pm
abb, you’re misreading what he’s saying: you can’t sue the police because you got mugged and claim that they should have prevented it.
Comment by Seward —
September 8, 2009 @ 3:37 pm
You know what is bizarre about that; one of the claims made by defenders of the state is that it is claimed that we give up our liberty for the security that the state supposedly provides. Yet they need not provide it.
Comment by abb1 —
September 8, 2009 @ 3:52 pm
Maybe you can’t win a civil lawsuit of this kind, but nevertheless the police is required to protect you. These are two different things. Civil suit isn’t the only possible remedy.
Comment by JasonL —
September 8, 2009 @ 3:58 pm
Um. No. They don’t have any legal obligation to protect you the individual. If you think about it, they can’t have any such obligation. They only arrive after the fact pretty much every time a call is made. The police are conceived as a general deterrent to crime, not as a guarantor of individual safety.
Comment by abb1 —
September 8, 2009 @ 4:20 pm
The doctors too arrive after the fact: your appendix is already inflamed. They then deal with the consequences, just like the police deal with the consequences of a car theft; they find the criminal and put him in jail; and maybe, if you’re lucky, you’ll get your car back.
Sorry, I don’t really understand the point you’re trying to make.
Comment by JasonL —
September 8, 2009 @ 4:33 pm
I’m saying that if healthcare were staffed to the level and held to similar standards as a general public deterrent to crime like a police force, advocates would be pretty unhappy with the outcome. It is different when the basis of your advocacy of a publicly provided good hinges on the idea that each person who gets sick has a right to high quality care. That isn’t how other public services work.
A guy kicked my front door in last year. An alarm went off and eventually a cop showed up. He looked around, asked me if anything was missing, gave me a card and said don’t worry about it. That’s it. No interview of neighbors, no follow up.
Comment by abb1 —
September 8, 2009 @ 4:52 pm
Quality of service is a different question.
Obviously, a dozen of personal bodyguards provide better protection than a few town cops. Prep schools and individual tutors will probably provide better education than a public school. You can build your own park in your ranch with tigers and elephants.
Nevertheless, the government usually provide basic services, and most people take their children to a public park and send them to public schools. That’s just how it is.
Comment by JasonL —
September 8, 2009 @ 5:14 pm
“Quality of service is a different question.”
No, it’s not a different question. A mandate to treat each and every sick person in the US at at least as high a quality as they are getting now is really, really expensive compared to creating a park or even providing a police force that doesn’t have any obligation to solve your specific crime.
More specifically, you are arguing in favor of a system to provide a specific, personal, high quality service by comparing it to public goods that are in no way constructed for those outcomes, then you are handwaving the differences by saying “oh, quality is a different issue, and cost is a different issue too.”
Comment by Jim Henley —
September 8, 2009 @ 5:26 pm
Might be best, then, to get more specific in our analogies. What are the legal obligations of Medicare and Medicaid right now?
Comment by Nicholas Weininger —
September 8, 2009 @ 5:51 pm
Jim: fair question. I buried the lede in my overlong first post. The point I most wanted to make is that schemes of forced universal coverage necessarily violate value pluralism in a big, paternalistic way, and this is a strong objection even for non-anarchist libertarians and those who accept some forced redistribution. I’m still curious to hear your response to that.
Now to your question. In a sense, yes, I am saying it would be an effective solution to be more willing to let people die if they couldn’t afford health care and couldn’t get charitable funding for it. It is not a good solution, and I am not happy with it. Absent the Singularity I see no good solutions. I find it less bad than the commonly proposed alternatives, because those alternatives very badly violate what I consider to be moral side-constraints. But I agree with you that it is not politically feasible and that some of the commonly proposed alternatives might well be less bad than the mess we have now.
To expand just a bit, what do I mean by “effective”? Well, I mean that it would produce an individual insurance market that would work as well as any other insurance market. In particular, you’d be able to keep your insurance for as long as people keep any other type of insurance, and it would be available to anyone willing to pay according to their *expected* cost (which of course would be much higher for those with expensive preexisting conditions). Life insurance, which you allude to, is a good analogy: we have long-term policies in response to market demand, but if you want a cheap one you’d better buy it while still young and healthy.
I do not claim that it would produce anything close to universal coverage– it would almost certainly not. Providing universal guarantees of things is not what markets do. But the typical reasons people adduce for why markets supposedly “just don’t work” in health care (asymmetrical information, adverse selection, etc) are IMHO bogus and have been debunked at length; read Alex Tabarrok’s posts at MR and Bryan Caplan’s at EconLog on this. The fact that most people are more willing to adopt forced payment for care than to let people die for lack of payment is the real heart of the issue.
Comment by Nicholas Weininger —
September 8, 2009 @ 5:56 pm
abb1: you are making my point for me. If you are unwilling to let people precommit themselves to limitations on what will be done for them because you “don’t want to be that guy” who has to hold them to the limitations, it is *your* squeamishness that is the problem. You are saying in the face of consenting adults’ decisions: “I feel I must force you to pay for more health care coverage than you actually want, because I could not bear to see you suffer.” That is vicarious risk-aversion, it’s deeply paternalistic, and I think it’s rotten.
Comment by Ceri B. —
September 8, 2009 @ 7:17 pm
I don’t think value pluralism counts for a lot when vast wealth is being wasted and many people suffer and die unnecessarily.
We know a whole bunch of ways to fix that, and they all start with the state providing some fundamental guarantees. One of the things that keeps striking me when I talk with friends in other nations is the absence of fear about their well-being. Illness and disability can (and sometimes have) cut off career possibilities and otherwise limited choices, but have not thrown anyone I deal with into destitution the way illness and disability here have. Nobody I know outside the US has ever had to declare bankruptcy because of medical costs; too many people I know personally here have, along with the toll to my interests in popular culture from the suffering and death of people like Thomas Disch and George Effinger.
20 years ago there was a reasonable counter-argument that guarantees of health care and the rest of a social safety net came at the cost of social mobility. It isn’t true now – Europe’s passed us by. In serious concrete ways, our system dooms us to lost opportunity, to the real opportunity to pursue our various values if they are anything other than the continued concentration of wealth in the hands of the wealthiest. No other values need apply in the US.
Nor do trends suggest any reason to believe any of this will change as long as we continue with our current denial of what everyone else accepted decades ago.
Comment by Nicholas Weininger —
September 8, 2009 @ 10:27 pm
No one here, AFAICT, defends the current system. What we have now achieves the worst of all worlds: huge government spending and heavy-handed regulation and lots of corporate rent-seeking producing terribly slipshod, unpredictable, and inefficient outcomes.
I second, by the by, AYSS’s recommendation of David Goldhill’s extraordinary Atlantic article. What Goldhill proposes is not precisely, as AYSS would have it, “paying for insurance as we pay for any other consumer good,” but it would be an enormous improvement on the current system from both liberal and libertarian points of view, and it would in particular provide state-guaranteed universal coverage.
The point of bringing up value pluralism is to make the apostles of security recognize the liberty cost of their proposals compared to a real free market, and be honest about the fact that to achieve that security requires the use of mass force in a way that should be problematic to anyone of a libertarian bent. Not everyone will give this moral consideration the same weight. I recognize that I am a radical outlier in thinking it decisive. Nonetheless like Sumner I want the Forgotten Man remembered, even if not all esteem him so much as I.
Comment by Jim Henley —
September 8, 2009 @ 10:38 pm
Nick? You just wrote the phrase, “even if not all esteem him so much as I.”
Comment by Ceri B. —
September 8, 2009 @ 11:39 pm
Nicholas: The point of bringing up value pluralism is to make the apostles of security recognize the liberty cost of their proposals compared to a real free market, and be honest about the fact that to achieve that security requires the use of mass force in a way that should be problematic to anyone of a libertarian bent.
Then again, what have people of libertarian bent actually done for the American commonwealth lately? When I was a libertarian, the community was pretty much gung-ho for the Reagan revolution, which now looks to me like a moral, social, and financial disaster. In the ’00s, the community added a lot of zeal for imperialistic war – the folks here were and are regrettably unrepresentative.
The stuff Jim is pointing to as social insurance is giving more health and social opportunity and reduced cost. Mostly, it looks to me, libertarian enthusiasm gave us endorsement of corporate thugs and kleptocracy. And like I said in my earlier post, I am looking at health outcomes, social mobility, and states of mind, outlooks for the future, and like htat. I hate living in fear myself and I hate seeing so many of my fellow Americans live in fear, and I don’t see that that fear matters to a lot of people who claim to be prioritizing liberty. There are great exceptions hither and yon, but not enough.
Comment by Ceri B. —
September 8, 2009 @ 11:41 pm
It’s also true that I’m bitchy and grumpy in the wake of a day spent waiting for news of friends in emergency rooms with strange symptoms, and thinking about what their care will cost them as compared to what it would to our friends elsewhere. If I sound unfair, I’ll revisit the whole thing some other post when calmer.
Comment by JasonL —
September 9, 2009 @ 9:39 am
I think Medicare and Medicaid are the reasonable public services we should use to compare a proposed national health system. What are the costs of universalizing Medicare or, for the really adventurous, what are the costs of universalizing Medicaid? How do you mitigate those costs?
That’s a good general question: What are the tradeoffs you are willing to make to get to a public plan? We know that adding heads will add costs, and pinning advocates of a public plan down as to how costs are going to be controlled is a difficult thing. The answers are unappetizing to most people. We know that price caps affect supply. They also affect innovation. We know that we spend probably way too much on end of life care. So, maybe the government should decide when enough’s enough for everyone?
I get that people would rather not have to think or worry about health risk. It’s just that, on the cost side, there isn’t a lot of acknowledgement of what it exactly would mean to centrally control costs. There isn’t a lot of acknowledgement about the degree to which the pricing of systems people say are so efficient depend on higher pricing in the US market such that when pricing smoothes out, our prices go down but everyone elses go up, making the bang for the buck argument less impressive. There isn’t a lot of acknowledgement about the implications making healthcare purely political (this is the same politics that gave us GWB, you know). Finally, and most troublesome, there isn’t a lot of acknowledgement about where the replacement for private investment in R&D is supposed to come from. So, yes, I understand that there is a value in having someone else pick up the tab no matter what happens to you, but what are the tradeoffs?
Comment by dhex —
September 9, 2009 @ 9:45 am
the libertarians are ineffectual and responsible yet again!
they are truly magical folk. we should rub them for good luck.
more seriously:
“I don’t see that that fear matters to a lot of people who claim to be prioritizing liberty.”
well, if you’re prioritizing one thing, it will have to be at the expense of other things.
fear drove a lot of bad news during the days of bush the younger. i’m not sure it is a particularly good argument for much on the policy level, though it is a good explanation for how many policies come to be.
Comment by Barry —
September 9, 2009 @ 11:15 am
JasonL, I’d note that costs seem to be out of control now, and that innovation seems to work quite well in the rest of the world.
Comment by JasonL —
September 9, 2009 @ 12:06 pm
“JasonL, I’d note that costs seem to be out of control now, and that innovation seems to work quite well in the rest of the world.”
Right. Total costs are high now. To what extent is that the result of marketing boner pills, to what extent is it overconsumption, and to what extent is it the result of everyone else, Medicare included, being able to export their costs into our market? If you take out the high priced market, where do innovation dollars come from? More ominously, what happens to the incentive to take voluntary investment risks to drive innovation on an ongoing basis? I’m not sure you could demonstrate that innovation works well in the rest of the world once you’ve factored out the profits earned in the US market. If you can demonstrate that, I’d sleep better for sure. What worries me is that national plans are positioned as tradeoff free. It doesn’t pass the smell test. You can erase the differential in US pricing from the bottom line and have NO EFFECT on investment? Really?
Comment by abb1 —
September 9, 2009 @ 1:04 pm
Nicholas, I don’t think this is exactly ‘paternalistic’. For example, if you’re riding in my car, would I be justified in forcing you to wear the seatbelt? I am not being paternalistic, I just don’t want you to fly thru my windshield if something happens. I am motivated by most virtuous purely selfish feeling. You can go home and kill yourself, for all I care; just do get me involved.
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September 9, 2009 @ 1:59 pm
[...] 9, 2009 in curse of knowledge, history and current events | by eric Jim Henley’s nice post appreciating the concept of “social insurance” moves me to provide this link to, if not [...]
Comment by Ceri B. —
September 9, 2009 @ 2:10 pm
dhex, I’m still far too foul-tempered to be actually civil on practicalities, but as a matter of principle there seems to me a huge difference between “here’s why this burden, which is real and significant, is nonetheless worth bearing” and “that’s not really a problem, hush your whining.” Every cause has some people for whom the costs of their favored course just don’t seem like a big deal, but if we’re talking about law and social concensus, I think we owe it to the people we’re trying to persuade (or intimidate
) to show that we understand that the tradeoff may mean more to them and make some effort to deal with it.
I’m not doing this today with regard to libertarian concerns about/fears of social safety nets because I’m in a FOAD mood about them, but then I acknowledge that and wouldn’t expect anyone to be persuaded by my anger over my friends’ (unnecessary, from my POV) expenses of yesterday.
Comment by dhex —
September 9, 2009 @ 2:50 pm
tact only matters in terms of (certain types of) persuasion and general manners. so i tend to agree with you in that regard, and hope things turn out ok for your friends, etc. so if i were trying to convince you of one position or another* i would take this into account and respond/manipulate accordingly.
i suppose it all depends on what you’re trying to get out of having a conversation with someone. there are exchanges of ideas, of course, but even in as genteel a place as uo, with its high teas and whatnot, there’s always going to be an awful lot of “you’re a baby-raper!” vs. “no, *you’re* a baby-raper!” to which i can only add that none of us are politicians and michael jackson’s dead so babies are probably safe around us.
more seriously, as i said in response to thoreau’s “what do torture apologists get out of their waterboarded baloney sandwiches?”, a lot of this sort of communication is a kind of emotional regulation, a safe way to joke, malign or even lash out at real or imagined terrible people. that said, i’m sure people are afraid of dhimmitude too, but that doesn’t mean all fears can be assuaged or even should be assuaged. people are afraid of truthers, gun nuts, bears, the apocalypse – mayan and otherwise – christianists, non-christianists and that kids text too much on their cell phones and won’t read wuthering heights. i’m afraid of cops, the increasing power of child services goons and anime fans. however, as you said, being aware of one’s fears – reasonable and otherwise – can help one keep perspective, and expecting people to dance around them is probably unreasonable on a day-to-day accounting.
*my only positions are a) the current situation sucks it and b) it’s not really going to change, check the ad buys, follow the money, blah blah blah i’m a nihilist and a bad man blah blah blah blah.
Comment by dhex —
September 9, 2009 @ 2:52 pm
btw, when i say tact only matters in certain cases, i mean that many online environments thrive on hostility. check out patterico’s goons or hit and run or pandragon or dozens of other blogs; even the non-troll dissenters really only serve as a sacrificial lamb for the emotional knives of the regulars.
Comment by Nicholas Weininger —
September 9, 2009 @ 3:35 pm
Jim: touche. I am, I know, given not just to overlength but also to overfanciness of rhetoric. Nonetheless: what about value pluralism?
Ceri: I am sorry to hear about your friend’s travails, your anger is understandable, and I wish the best to all involved. I hate living in fear too, but I hate the use of mass force more. Like I said, this is a choice of lesser evils.
abb1: actually, yes, you would be paternalistic (and a jerk, frankly) in that case, if your passenger were a consenting adult, and if his not wearing a seatbelt didn’t endanger you. Other-regarding preferences are obnoxious; you should have more respect for the right of others to make their own decisions.
But, however obnoxious, you would be within your rights. In the health care case you are not, because a country is not a car; it is not the collective property of its members and does not thereby give them all say over each others’ private preferences. People who are living peacefully, minding their own business, and just don’t want to be subject to your presumptions about their health care, are not under your rightful authority. You have absolutely no business forcing them to act in ways that make them safer just because that increased safety makes you feel better.
Comment by abb1 —
September 9, 2009 @ 6:42 pm
But I don’t care about them being safe, I don’t mind them killing themselves if that’s what they desire; killing themselves quietly and privately, like decent people do.
I simply want to make sure that when they grow older and (most likely) change their mind about dying from a treatable disease, they are not going to come to me begging and make me upset, make me uncomfortable. I’m simply being proactive in assuring (insuring?) my own comfort.
Comment by abb1 —
September 9, 2009 @ 7:26 pm
@45: A mandate to treat each and every sick person in the US at at least as high a quality as they are getting now is really, really expensive compared to creating a park or even providing a police force that doesn’t have any obligation to solve your specific crime.
I suspect the price and complexity of it is greatly exaggerated. Doctors are assumed to be some sort of high priests, but I noticed all they do these days is taking your blood, running it thru a machine, and prescribing pills based on the machine’s print-out. The machine could probably print the name of the appropriate pill as well, and even transmit the order to your pharmacist. Does it really have to be “really, really expensive”?
Comment by Jim Henley —
September 9, 2009 @ 7:56 pm
Jason @ 57: Re your last paragraph, I think I’d say what John Holbo said about essentially the same debate with Megan McArdle. These are weak arguments. That doesn’t mean they’re BAD arguments. They are things that, hey, could happen. And factors to consider. But you haven’t established that of all the various factors impinging, these will dominate.
Comment by Barry —
September 9, 2009 @ 8:36 pm
Seconding Jim (’cause everybody knows how I like to s*ck up; Jim promised me an internship here):
Megan has been making lots of arguments, few to none good, and falling back on pulling numbers out of her *ss. In the end, it comes down to assuming what hasn’t happened in other countries will happen here, because We Are Different (and not in a good way).
Comment by Joshua Holmes —
September 9, 2009 @ 9:38 pm
In the ’00s, the community added a lot of zeal for imperialistic war – the folks here were and are regrettably unrepresentative.
The LP, Lew Rockwell, and Cato all came out against the war. (I’m pretty sure the LP & Lew were against Afghanistan, as well, and they’re all 3 against it now.) I’d say that’s as broad a sample of libertarianism as you’ll find. Remember, the “respectable libertarians” have influence because they serve the ends of power, not because they represent the majority of libertarians.
Interestingly enough, there was a helluva lot of enthusiasm for imperial war on both sides of the aisle.
Comment by Jim Henley —
September 9, 2009 @ 11:28 pm
I’ll go with Joshua, mostly. As a political tendency, libertarianism did at least no worse than other groupings. I felt at the time that we should have done better, but that was probably unrealistic.
Comment by Ceri B. —
September 9, 2009 @ 11:33 pm
Fair enough, Jim and Joshua.
Actually, what I’ve realized is that I need to take a lasting break from American politics. I’ve hypertension and diabetes to get under control, and gender transition, and a new career to build, and I’m just fucking worn out from the argument. I’m going to be donating to worthy causes and let that be my bit of leverage. A debate that would flounder into ruin without my two bits wasn’t doing that great anyway.
Comment by Seward —
September 9, 2009 @ 11:35 pm
No one has demonstated that we will see any improvement of the current situation by Obama’s plan (whatever it is) or by social insurance generally. Indeed, from what I have heard and read from other sources, the chief defense of social insurance programs is that it is cheaper than what we have right now with similar outcomes. Which is not much of a defense at all given what we know of the claims by governments of what they spend on anything. Look at the claims about medicare administrative costs for example; which do not account for the all the off the books expenses that other government agencies do with regard to medicare’s administrative costs.
Anyway, I question the very notion that social insurance leads to better outcomes than the bastardized, government dominated system we have today.
Comment by Seward —
September 9, 2009 @ 11:48 pm
I am afraid that it may he that the best we can hope for as libertarians is what we see in education and other areas of our lives; that we can opt out of the system (though not out of paying for it). In Canada until recently you could not legally opt out of the system in Canada; though you could come to the U.S. For a system you could not opt out of see Canada, or of course the socialist healthcare plans that used to dominate in eastern europe.
Comment by Joshua Holmes —
September 10, 2009 @ 12:40 am
I might also add that libertarians like the Mises Institute were pointing out the bubble early, that libertarians of all stripes have been against the bailouts, that libertarians are against torture, etc. Should some of this stuff be a no-brainer? Yes, it should, but it isn’t anymore, and we’re right about it almost to a man.
You know what else we’re going to be right about? Health care reform. I pointed out that politics, being the art of the possible, was going to be the current system subsidized around the edges (q.v. comment 50). No savings, no efficiency, lots of pork and subsidies for insurance companies…lo and behold, Obama goes on TV and says exactly that, then says that if you don’t want insurance, tough shit, you’re getting it (in violation of what he said during the campaign).
Why, it’s almost like both sides are working for the same folks!
Comment by Seward —
September 10, 2009 @ 12:48 am
Joshua Holmes,
Let’s not forget that when system gets in trouble, old evil capitalism and libertarians will be blamed for it.
Comment by JasonL —
September 10, 2009 @ 11:51 am
Jim@66:
You’re feeling is that the concern is of unknown magnitude and may not even happen, so that shouldn’t stop us. Something like that?
I guess I’d turn that around. How can we directly target the profitability of medicine and expect anything other than loss of investment? Where does the private investment get replaced in any of the proposals?
To say this won’t happen or won’t be relevant seems to be suggesting only a few possibilities:
1) A decrease in private investment will happen but it won’t matter because that money is mostly wasted.
2) The decrease in private investment won’t be large because the profitability of the US market is being overestimated in this argument. (This one I really struggle with – if we are paying that much more, that money is going somewhere).
3) A decrease in private investment will be offset in some way by the nationalized arrangement. I have not yet heard this issue addressed even once, which is why I think innovation is the sacrifice we are willing to make. Future sick people don’t vote.
Which is closer to your opinion, or is there another angle I’m missing? Am I unfairly classifying the position? At the end of the day we may just be at odds about access vs innovation as drivers of health, but what surprises me is the extent to which many advocates of national plans seem to think there is no tradeoff. What I envision is something that would deter private investment in, say ACE inhibitors. Say those had taken another decade to get out the door. How many dead people is that? I’m not trying to be alarmist, that is exactly the nature of my concern, and I get more nervous the longer we go without addressing what innovation dollars look like in the new systems.
Comment by JasonL —
September 10, 2009 @ 11:56 am
You’re should be your, of course.
Comment by nj —
September 10, 2009 @ 1:20 pm
Just to add, I think it is important to note that one of the most prominent antiwar sites is run by a bunch of libertarians.
For the most part, movement libertarianism was good on the war ( though reason was awful).
Comment by Seward —
September 10, 2009 @ 3:44 pm
nj,
Reason staffers were all over the board, but the majority of Reason staff were as far as I know against the war from the start. The staff has of course changed somewhat since 2003, but here is what they thought in 2008: http://www.reason.com/news/show/125577.html
Comment by nj —
September 10, 2009 @ 6:07 pm
Seward, I know the history. I was just baffled that they decided not to take any position on the war( it was only one of the most important issues of our time) and give a platform to people like Michael Young. Maybe, I am being too harsh. I tend to hold libertarians to a higher standard.
Comment by Seward —
September 10, 2009 @ 8:14 pm
nj,
I actually appreciated the forum they gave to Young (even though I totally disagreed with him on the issue of the war); because Young is probably the most articulate defender of the war I know of. It is good to be challenged that way.
Anyway, as far as I know the ‘zine itself never takes a position on anything; only the individual contributors do. I think this may be because the editors do not like collective, unsigned op-eds.
Comment by Jim Henley —
September 10, 2009 @ 10:50 pm
Some of my favorite people worked at reason in those years and most of them were against the war. But Nick was wishy-washy about setting an official editorial line – which he would happily do on drug policy and such, but not aggressive war. And the antiwar writers on staff tended to approach the issue gingerly. So hawkish blowhards like Young (and Young) and Bailey set the tone by default.
They were much better on torture.
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September 13, 2009 @ 3:29 pm
[...] Jim Henley on what health insurance is, and what it is supposed to do. [...]