The Hard Work of Health Care Policy
Insurance is kind of a funny thing. When I decide to purchase life insurance I’m essentially saying to the lender, “I bet you I die.” The lender takes a look at me, considers the odds of my demise, sets a price accordingly, and responds, “I bet you don’t.”
All insurance works this way. And, when the market is functioning efficiently, insurance is a great deal for both lenders and purchasers. Consumers receive protection from emergencies at a price consistent with the chances of an event occurring. If I choose to live on the beach in Florida, hurricane insurance will cost more than if I lived in Colorado. Then again, life insurance is likely to be more expensive if you are regularly rock climbing in Colorado.
Insurers profit by “winning” their bets with policy purchasers. As all smart investors know, they increase their odds of coming out ahead by diluting risk. By insuring as many skiers and Florida homeowners as possible, insurance companies can make payments to the very few who actually make use of their coverage and remain profitable.
Health insurance functions in largely the same way as other forms of insurance. Consumers bet they will get sick, and insurers bet that they won’t. However, the health insurance market has characteristics that distinguish it from other insurance markets and make it quite complicated as a matter of public policy. Here are just five examples that demonstrate the complexity of public health:
- Though many choose not to live in hurricane zones or to ski, everyone needs health care at some point in their lives.
- Though individual behavior is a key component of health, sometimes health care is required regardless of choice, as with genetic disease or children born with a disability.
- Health is deeply personal. It can affect our whole lives and is often a matter of life or death.
- Health care is incredibly complex. Consumers often can’t understand the technical nature of disease diagnosis and treatment, and therefore must rely on others’ expertise when making decisions.
- Health care is expensive. Advances in medicine and technological innovation have led to new cures, remedies and diagnostic techniques, and have greatly increased both the odds of survival and lifespan. All of this comes with a hefty price tag. When coupled with the costs of bureaucracy, regulation, malpractice lawsuits and the gulf between consumer and price, the sum mounts quickly.
As a result of these and other factors, health care policy has been a primary cause of debate in American politics for years. In 2010, President Obama and Democrats in Congress were able to pass the Patient Protection and Affordable Care Act, commonly referred to as Obamacare. The administration’s intent was to solve the problem of coverage for those without access to insurance through existing means, such as through an employer, private insurance market, veteran’s benefits, Medicare or Medicaid.
For some, lack of insurance was due to a “pre-existing condition,” a medical scenario of some type that occurs while an individual is uninsured that prevents a company from providing coverage. For others, insurance was simply too expensive or deemed unnecessary.
The Affordable Care Act was a divisive one, a bill that did not receive a single vote from congressional Republicans. Public polling showed a majority disfavored the law at the time it passed. (The same holds true today.) The reasons for discontent were varied, but at the core of the debate was the role of government, specifically in a key provision called the individual mandate.
The individual mandate requires Americans who aren’t receiving health care coverage to purchase health insurance. This is a key point: the mandate forces individuals to purchase a product they would otherwise choose not to buy. Additionally, it requires employers such as small businesses and not-for-profit organizations to provide a certain minimum level of coverage to their employees. Burdensome financial penalties are leveled against those who fail to comply.
On Thursday, the Supreme Court is expected to rule on the constitutionality of the law, with specific attention to the individual mandate. There are a number of possible results, but most believe the Court will decide one of three ways: uphold the law in its entirety; strike down the law in its entirety based on the unconstitutionality of the mandate; or strike down the mandate but allow that the other parts of the law may stand without it.
I believe the Court will — rightly — strike down the mandate. The president’s administration has argued the mandate falls well within the bounds of the commerce clause, the part of the Constitution that grants the federal government authority to regulate interstate commerce. The government has relied on the commerce clause as the basis for all kinds of regulation since the landmark Supreme Court decision Wickard v. Filburn, in which a farmer was denied the right to grow and consume wheat on his property because his actions were deemed to affect the national wheat industry.
Opponents of the Affordable Care Act have argued that unlike the active behavior of wheat growing addressed in Wickard, the individual mandate regulates inactivity. The law rests on the government’s power to regulate an industry in which an individual has chosen not to participate by electing not to purchase health insurance. Carrying this logic further, many have asked, “Can the government also require individuals to eat broccoli?”
Should the court rule against the Affordable Care Act, public health will return to the forefront of American policy debates. Problems of the cost of health care, the availability of affordable health care to the uninsured, and malpractice lawsuits must be addressed. Republicans in Congress have proposed numerous alternatives that speak to these crucial questions in various ways. Essentially, Republicans favor a market-based approach that offers more flexibility and options to consumers by allowing individuals to purchase insurance from any state, deregulating the industry, and incentivizing innovative insurance products like Health Savings Accounts.
Explaining the ins and outs of public health policy in a short space is difficult. I’ve been forced to leave out a lot. I wish I had space to explain the problem of distancing consumers from cost and the moral hazards created for doctors under current law. I had to almost entirely the consequences of personal behavior for health (obesity, for instance) and the morality of requiring society to subsidize costs associated with poor choices. I have also left out any discussion of end of life care, which accounts for a large percentage of total health care costs. I would love to have space to outline a dream vision for health care policy that removes employers from the equation and deregulates to allow individuals to choose from a variety of health products. Oh well.
I hope I have made clear that health care policy is complex, but important and worth the hard work of crafting quality public policy. I’ve argued (quite briefly) that the Affordable Care Act is unconstitutional and will need to be replaced. And I’ve outlined some broad guidelines for alternative legislation.
I’m afraid that what Eric Teetsel (and most Republican alternatives to Obama’s ACA) fail to take note of an essential point that Amy Black makes at the outset of her essay, namely, that when it comes to health care market forces do not work well due to inelastic demand. It is one thing to shop around for a new car to get a better price or to hold off on buying a new car until prices come down. It is something quite different when the health—and perhaps even the life—of a loved one is at stake. When facing open heart surgery who wants to shop around for the cheapest surgeon? Eric Teetsel in his essay and most Republican-proposed alternatives emphasize efforts to rely on and to improve market forces in the health care area seem not to take this basic nature of the health care market into account to a sufficient degree.
Teetsel begins his essay with a clear and accurate description of the insurance industry and what it rests on. If I can wait to purchase fire insurance for my house until wildfires are burning within a mile of it, the home insurance industry would collapse. Obama’s ACA individual mandate that requires all to purchase health insurance, which has now rightly (in my opinion) been upheld by the Supreme Court under the government’s taxing powers, seeks to address this problem. Either there must some means requiring all of us—whether healthy or not—to carry health insurance OR we must allow insurance companies to deny coverage to persons with “preexisting conditions” or who for other reasons pose high risks (age, genetic risk factors, etc.). But if insurance companies can deny coverage for such reasons, many will be left without insurance and will face the very real possibility of financial ruin and even premature death. This runs counter to biblical principles such as justice and support for the common good.
I appreciate Eric’s focus both on the nature of insurance, and on the unique characteristics of the health insurance market in particular. In an well-functioning insurance market, consumers receive protection from emergencies at a price consistent with the chances of an event occuring. Insurers, meanwhile, attempt to “dilute risk” by insuring as many as possible; in that way, they can make money as they make payments only to those few who actually make use of their coverage.
Following this logic, it seems to make sense to spread the risk around to the greatest extent possible: that is, to everyone. This might be an argument for a single-payer system, but it seems to apply as well to the Affordable Care Act. Of course, as Eric and Amy both point out, there are some unique features of health care that present challenges: inelastic demand curves, high complexity, high costs. But the especially difficult challenge is that there are some people who are unable to acquire insurance: companies are unable to offer policies to these people at rates they can afford.
Because of the importance of access to health care, both for individuals and families and for the well-being of the society at large, I see this to be a type of market failure: rational behaviors on the part of market actors are resulting in outcomes that we cannot accept. As such, it seems appropriate for governments to seek to correct the failure. There are many corrective mechanisms that we might adopt, but requiring universal participation makes sense, given that the whole point is to spread risk around. Comparing such a requirement to eating broccoli might make a nice line rhetorically, but it’s not clear to me why a requirement to purchase insurance is different in principle than other requirements imposed by the state: to pay taxes to support public schools, to wear a seatbelt, or to drive on the right side of the road.
What much of this debate by passes entirely is the fact that America is unique in its belief that health care should be treated as a marketplace commodity rather than a matter of public concern. Thus, those who are fortunate enough to have a salaried position with a company or institution that provides this commodity as part of its compensation package are allowed access to its benefits, while those who are less fortunate aren't. Which means, in essence, that the poorer you are (or the lower your salary) the more you are asked to pay. The fact that medical care will not be refused (at least emergency medical care) to those who aren't insured simply ensures that the costs will continue to outpace inflation at an alarming rate, which means that if we stay the course we will soon reach the point where only those who work for major corporations or large institutions will be allowed the care that all human beings need.
What concerns me most about this is that Christians aren't up in arms about this. Christian friends from Scandinavia often say exactly this: "how can Christians support this injustice? Why aren't you outraged?"
And that, to me, is the the bottom line question: why aren't we outraged? Why, in fact, are Christians, particularly evangelical Christians, trying to undo the first steps taken towards righting this wrong? What, in fact, are they suggesting in place of the Affordable Health Care Act? There are no tenable plans on the table, which leads one to assume that the reason may have to do with the fact that those who oppose this act tend to be among the elite who have health care plans – which includes clergy.
Perhaps the best thing we could do at this point is insist that everyone pay for insurance – right across the board – clergy, professors, senators, people who work for corporations – let everyone shell out the $15,000-20,000/year to call the bluff of those who demand that our entire economic life be determined by marketplace forces. If that happens I believe we would have a truly viable plan on the table within months, if not weeks and that it would look a lot like what Europeans take for granted – universal health care. What every other nation in the world has we would have as well.
Unfortunately that isn't going to happen, which means that should the radical arm of the GOP have their way we will revert to the status quo which will mean the injustice will remain.
What much of this debate by passes entirely is the fact that America is unique in its belief that health care should be treated as a marketplace commodity rather than a matter of public concern. Thus, those who are fortunate enough to have a salaried position with a company or institution that provides this commodity as part of its compensation package are allowed access to its benefits, while those who are less fortunate aren't. Which means, in essence, that the poorer you are (or the lower your salary) the more you are asked to pay. The fact that medical care will not be refused (at least emergency medical care) to those who aren't insured simply ensures that the costs will continue to outpace inflation at an alarming rate, which means that if we stay the course we will soon reach the point where only those who work for major corporations or large institutions will be allowed the care that all human beings need.
What concerns me most about this is that Christians aren't up in arms about this. Christian friends from Scandinavia often say exactly this: "how can Christians support this injustice? Why aren't you outraged?"
And that, to me, is the the bottom line question: why aren't we outraged? Why, in fact, are Christians, particularly evangelical Christians, trying to undo the first steps taken towards righting this wrong? What, in fact, are they suggesting in place of the Affordable Health Care Act? There are no tenable plans on the table, which leads one to assume that the reason may have to do with the fact that those who oppose this act tend to be among the elite who have health care plans – which includes clergy.
Perhaps the best thing we could do at this point is insist that everyone pay for insurance – right across the board – clergy, professors, senators, people who work for corporations – let everyone shell out the $15,000-20,000/year to call the bluff of those who demand that our entire economic life be determined by marketplace forces. If that happens I believe we would have a truly viable plan on the table within months, if not weeks and that it would look a lot like what Europeans take for granted – universal health care. What every other nation in the world has we would have as well.
Unfortunately that isn't going to happen, which means that should the radical arm of the GOP have their way we will revert to the status quo which will mean the injustice will remain.
What much of this debate by passes entirely is the fact that America is unique in its belief that health care should be treated as a marketplace commodity rather than a matter of public concern. Thus, those who are fortunate enough to have a salaried position with a company or institution that provides this commodity as part of its compensation package are allowed access to its benefits, while those who are less fortunate aren't. Which means, in essence, that the poorer you are (or the lower your salary) the more you are asked to pay. The fact that medical care will not be refused (at least emergency medical care) to those who aren't insured simply ensures that the costs will continue to outpace inflation at an alarming rate, which means that if we stay the course we will soon reach the point where only those who work for major corporations or large institutions will be allowed the care that all human beings need.
What concerns me most about this is that Christians aren't up in arms about this. Christian friends from Scandinavia often say exactly this: "how can Christians support this injustice? Why aren't you outraged?"
And that, to me, is the the bottom line question: why aren't we outraged? Why, in fact, are Christians, particularly evangelical Christians, trying to undo the first steps taken towards righting this wrong? What, in fact, are they suggesting in place of the Affordable Health Care Act? There are no tenable plans on the table, which leads one to assume that the reason may have to do with the fact that those who oppose this act tend to be among the elite who have health care plans – which includes clergy.
Perhaps the best thing we could do at this point is insist that everyone pay for insurance – right across the board – clergy, professors, senators, people who work for corporations – let everyone shell out the $15,000-20,000/year to call the bluff of those who demand that our entire economic life be determined by marketplace forces. If that happens I believe we would have a truly viable plan on the table within months, if not weeks and that it would look a lot like what Europeans take for granted – universal health care. What every other nation in the world has we would have as well.
Unfortunately that isn't going to happen, which means that should the radical arm of the GOP have their way we will revert to the status quo which will mean the injustice will remain.