Health insurance, nudges, and guarantees

There’s been a tonal dichotomy of sorts coming from the Romney/Ryan (and the right in general, I suppose) camp towards people and health insurance. On the one hand they are determined to telegraph a message downplaying the utility of health insurance when it comes to denying coverage to those who would have otherwise received it under the Affordable Care Act (as usual, all bold emphasis are mine):

“We don’t have a setting across this country where if you don’t have insurance, we just say to you, ‘Tough luck, you’re going to die when you have your heart attack,’  ” he said as he offered more hints as to what he would put in place of “Obamacare,” which he has pledged to repeal.“No, you go to the hospital, you get treated, you get care, and it’s paid for, either by charity, the government or by the hospital. We don’t have people that become ill, who die in their apartment because they don’t have insurance.”He pointed out that federal law requires hospitals to treat those without health insurance — although hospital officials frequently say that drives up health-care costs.

Shorter Romney: All of you folks about to gain insurance thanks to the Affordable Care Act don’t really need it because it’s not as though you’ll die without it. Which is, of course, very much untrue.

On the other hand it’s a very very bad thing to not have insurance if people are denied employer-provided coverage as a result of the implementation of the Affordable Care Act:

“Look at all the string of broken promises. If you like your health care plan, you can keep it. Try telling that to the 20 million people who are projected to lose their health insurance if Obamacare goes through or the 7-point million — 7.4 million seniors who are going to lose it.” [Paul Ryan]“We didn’t — we didn’t also do something that I think a number of people across this country recognize, which is put — put people in a position where they’re going to lose the insurance they had and they wanted. Right now, the CBO says up to 20 million people will lose their insurance as “Obamacare” goes into effect next year.” [Mitt Romney]

Shorter Ryan and Romney: It’s a travesty that some folks may no longer get heath insurance coverage through their employer thanks to Obamacare.

This line of criticism is, as one might expect, not the full story. The Congressional Budget Office (CBO) actually estimated a range of 20 million no longer having insurance through their employer to a gain of 3 million relative to the absence of the ACA. Obviously the wide variance in those estimates reflect the uncertainty of the law’s impact, but the CBO also assumes a situation whereby:

“about 3 million to 5 million fewer people, on net, will obtain coverage through their employer each year from 2019 through 2022 than would have been the case under prior law.”

And as Sarah Kliff notes, that doesn’t necessary imply that those individuals would therefore be uninsured. It would be expected that many of those would then gain health insurance through the individual exchanges.

There is, by the way, a related dichotomy. A third and less-touted message from the Romney campaign concerns why employer-provided coverage is so prevalent – namely, the tax advantage of employers to provide health insurance. Despite the inference of such coverage as occupying a sacrosanct status when it comes to the effects of the ACA, their alternative objective is to erode the tax preference – which would undoubtedly leave fewer people with coverage through their employer. Now they would argue that having the same tax preference as individuals would allow them to get insurance as individuals (in an less-regulated market no longer bound by states, mind you), therefore making the loss of employer-provided coverage a nonissue. But then they’re essentially making the same argument as supporters of the ACA – no longer being covered by an employer is okay because people will have affordable access through the individual exchanges.

Of course that’s not the implicatory message coming from Romney and Ryan when they cherry pick the CBO’s estimates. Their inference is that the Affordable Care Act is bad, period, because some people who receive health insurance through their employer will no longer have that benefit after 2014. Fair enough (and despite their intentions to achieve the same result anyway). But to combine the messages we come up with something akin to “Repealing Obamacare and denying people health insurance is okay because it’s not as though your life depends on having coverage, but we also think it’s wrong that the law will cause people to lose heath insurance through their employer, even though our plan to is have fewer Americans receive employer-provided coverage.”

Now I’m attempting to sort this all out as an exercise to help me better understand, so bear with me here. In trying to think of a reconciliation of between those two messages, I come up with the distinction of health insurance only being a consumer product and health insurance as a social service (provided mostly by a privately-owned marketplace as a consumer product). The problem, as I think they see it, is one of subtraction versus addition. In their mind the ACA will result in a subtraction of consumer choice (consumption of health insurance as a form of employed compensation in the labor market) while creating an artificial alternative market. This artificiality would be due to heavy regulation that would stifle the dynamics (re: competition) that would otherwise exist in their preferred vision of an individual market. Their policy, on the other hand, involves people having the same tax preference as employers which will enable them to be viable consumers outside of the workplace as well as within — essentially creating additional consumer choice. Given this logic, it makes perfect sense to criticize the effects of the ACA while touting your own policy that would achieve the same results.

More importantly, though, thinking of health insurance only as a consumer product excuses downplaying the importance of the uninsured receiving coverage under the ACA. Thinking that a persons life doesn’t depend on having coverage removes all sorts of moral quandaries when thinking about public policy and healthcare. Furthermore, along the same line of thought, private charity is there to rescue the rare individual who really does slip through the cracks of private health insurance. In that mindset, then, there really isn’t anything to worry about. The only objective of the federal government in this regard is to make health insurance function more easily as a privately-owned commodity. Hence; selling insurance across state lines, relaxing rules on HSA’s, and equalizing the tax treatment of consumption choices. So perhaps it’s ideologically consistent for them to think that public policy should treat health insurance only as a valuable consumer product. Like other areas it should therefore be treated favorably in a manner more like a nudge than a guarantee.

Except that in other areas where we have favorable tax treatments to nudge beneficial behavior — housing, childbirth, tax-deferred retirement savings — we also have policies that guarantee access to those areas when the market isn’t enough — Section 8, Medicaid, Social Security. This duality to public policy is a recognition that some things are important enough to the general welfare of the American people that we promote them through nudge and guareentee. The political right seems intent on reputing the latter and promising that the former is enough. I don’t share their viewpoint, and the majority of Americans that want to keep the Affordable Care Act or expand it seem to agree with me.


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