First off: That picture of Paul Ryan isn’t mine. I mean, obviously. Win McNamee/Getty Images.
So, by now you’ve heard that the Republicans in Washington have released their plan to replace Obama’s Affordable Care Act (ACA). They call it the American Health Care Act (AHCA). And also by now, you’ve heard that Congressman Jason Chaffetz (R-UT) said that if people were having trouble paying for their insurance, they should buy fewer phones:
Well we’re getting rid of the individual mandate. We’re getting rid of those things that people said they don’t want. And you know what? Americans have choices. And they’ve got to make a choice. And so, maybe rather than getting that new iPhone that they just love and they want to go spend hundreds of dollars on that, maybe they should invest it in their own health care. They’ve got to make those decisions for themselves.
Now, Chaffetz admitted that he didn’t make his comments “as smoothly as [he] possibly could,” so let’s be charitable and figure that he just misspoke. He wasn’t implying that there are a lot of people running around with the disposable income to buy either a phone or critical health care coverage (and that those people were choosing the former). Rather, he was trying to say (and this is speculative, but it is charitable speculation, so we’ll allow it) that citizens, as responsible consumers, need to make smart decisions with their purchases. And you know what? He’s absolutely right.
When a consumer is presented with options, especially high-value options, they have choices to make, and in a world of limited resources, that means opportunity costs, right? Spending resources on one choice necessarily means that the other choice has to be rejected. From an economic point of view, this makes sense: if it’s a choice between a cell phone or insurance, you need to make the most responsible decision, and it’s not the government’s job to make that decision for you.
Here’s the thing, though: Healthcare cannot be treated as a commodity, and for one simple reason: it doesn’t respond to supply and demand.
A simple example: as a smart consumer, I can make decisions between cell phones (keeping with the original terms). I can compare features, coverage maps, available accessories, and price. I can choose one over the other. If I pick the Android over the iPhone, Apple can decide to lower its prices to try and attract more consumers. If it drops its price low enough, it will sell out quicker, leading to scarcity, meaning that the price will rise. This isn’t hard, right? This is basic Econ. This is the most basic econ.
At it’s root, that little scenario is about choices, between Androids or iPhones. And that’s what Chaffetz, and, more broadly, the modern Republican party, is saying about healthcare. They want to give us more choices. They want to open up markets, reduce regulations, and eliminate taxes. Choice leads to competition, competition leads to lower prices. Consumers win. That’s true. We know that’s true. If you don’t believe me, look at the previous paragraph.
Here’s the thing: in that example with the phones, there’s a third choice that’s implied but unspoken: I can walk away. I can choose to pick neither phone. I can keep my money in my pocket, leave the store, and do something else. That’s not a choice I have with healthcare, and that’s what gets ignored so often in these debates. If I have diabetes, or cancer, or depression, or any number of medical problems, I can’t walk away (not if I want to maintain my quality of life). There might be any number of insurance providers, but there is a floor for prices, because at the end of the day, I can’t walk away. The demand is constant. It is always high.
The demand is infinite.
To put it another way, the demand is inelastic, which means that the demand does not change depending on the supply. Ben Shapiro makes this point about other utilities (specifically emergency services and the military) in an article for the Daily Wire. He writes that “Demand is also generally inelastic for police and fire — nobody calls the police and fire because they have access to them.”
Shaprio goes on to talk about how health care is elastic, because the level of health care you get is based on your access to it, but I think it’s pretty clear I disagree with that, and I think you will to as soon as you break a leg: your demand for a splint has nothing to do with what care is available. My demand for antidepressants is not determined by the supply of antidepressants. Does a diabetic need less insulin when he has no access to healthcare?
I could go on.
Shapiro is arguing from a point of fundamental divergence from me. He’s got very strong views about the role of government, and I have no doubt he’d be pretty disgusted with my opinions about it. Shapiro writes that
So what about health care? It is both rivalrous and excludable. If there is one doctor, his services are limited. And you do not have a right to his services. The cost to adding your health care to mine is double. It is a commodity more like a hammer or an apple than it is like fire service or police service. Health care is also the most personal good you can imagine, not a public good in any real way — every solution has to be individually tailored to you, or it will not work.
I don’t disagree with the individual nature of health care, at all. And I don’t even disagree with his statement about costs. Healthcare isn’t cheap (although if everybody in the country had it, say, through a mandate, it would be cheaper). But I think it is a public good. Here’s why:
I’m going to start from the assumption that we won’t allow people to die in the streets. I’m sure Shapiro would agree that that isn’t defensible, from a moral point of view. But more importantly, it’s indefensible from a practical point of view.
Since we won’t let people die in the streets, we have to treat them. But if they don’t have insurance, they can only access treatment when their condition becomes severe enough that they have to go to the ER. At that point, it’s more expensive to treat them than it would have been to prevent the illness in the first place (to be fair, it would be even cheaper to not provide the ER service at all, although maybe the street cleanup would eat into some of those savings). It’s the old “an ounce of prevention is worth a pound of the cure” kind of thing. Treating somebody for a gangrenous leg costs the taxpayer far more than simply treating the little cut in the first place.
Basically, this boils down to this: yes, health care is an individual good, but it is in the best interests of society as a whole to have a population as healthy as possible. The sicker a population is, the more expensive it is. It might have more up-front costs, but in the long run, you save more money and run more productively.
It’s all about outcomes. All things being equal, a healthier society produces better outcomes than a sicker one.
Anyway, ACA had a lot of problems. And AHCA is going to create a whole lot more.
Categories: Get Wonky