Protect them from themselves?

Ezra Klein offers an analogy about mandates:

First, Obama aside, mandates matter because, sometimes, folks have to be protected from their worst instincts. That's why we force everyone to pay into fire departments through taxes. Otherwise, some folks would opt out under the theory that they don't do much cooking, and we don't want their houses to burn down.

But this is not true. We force everyone to pay into fire departments because fires have very bad negative externalities: if your house catches on fire, unless you live on a rural farm, there's a good chance that your neighbor's house will burn down too. Fire prevention is a genuine public good; most health care, with the exception of things meant to stop the spread of infectious disease, simply isn't.

One can make a modestly compelling moral hazard argument for a mandate--people will be tempted to free ride on the rest of us, knowing that we won't deny them health care in extremis, so the only thing to do is make them pay up front. But I'm persistently disturbed by the notion that most of our fellow citizens are intellectual children who need to be forced to do what is good for them even at massive cost to their liberty, and ours.

Comments

"That's why we force everyone to pay into fire departments through taxes."

that's a really lovely piece of Historical inaccuracy...

"Under Franklin's goading, a group of thirty men came together to form the Union Fire Company on December 7, 1736. Their equipment included "leather buckets, with strong bags and baskets (for packing and transporting goods), which were to be brought to every fire. The blaze battlers met monthly to talk about fire prevention and fire-fighting methods. Homeowner's were mandated to have leather fire-fighting buckets in their houses. Other men were desirous of joining the Union, but were urged to form their own companies so the city would be better protected.

Within a short span of time, Philadelphians witnessed the birth of the Heart-in-Hand, the Britannia, the Fellowship, as well as several other fire companies.

Thanks to the matchless leadership of Benjamin Franklin, the dire fear of fires expired in Philadelphia which became one of safest city's in the world in terms of fire damage."

http://www.ushistory.org/franklin/philadelphia/fire.htm

"...The logical next step was to form a fire insurance company. In 1751, Franklin and members of his Union Fire Company met with firefighters from other brigades for such a purpose. Over several meetings, insurance articles were discussed, drawn up, and presented publicly. All interested in subscribing to the project were told to sign a Deed of Settlement. The first to sign, Governor James Hamilton, was the son of famed "Philadelphia lawyer" Andrew Hamilton (see Independence Hall). Directly below Hamilton's signature are those of Benjamin Franklin and Philip Syng. Initially, over 70 prominent Philadelphia citizens became subscribers. On April 13, 1752, these men came together to elect a Board of Directors and Treasurer, who met for the first time on May 11, 1752.

At that meeting it was affirmed that those subscribed had agreed to establish an insurance company by the name of The Philadelphia Contributionship for the Insuring of Houses from Loss by Fire, and "to be and continue to be Contributors unto and equal Sharers in the losses as well as the gains." A dozen Directors were elected to the board. Franklin's name headed the list, followed by Philip Syng.

Syng, yet another of those extraordinary early Philadelphians, was an eminent silversmith and creator of the inkstand from which the Declaration of Independence was signed. In addition to being a vestryman at Christ Church and a member of the Philosophical Society, Syng found time to design the corporate seal for The Contributionship. Policyholders were required to affix these metal fire marks on their houses. Today, in Philadelphia, fire marks adorn many older and newer houses like a boutonniere on a suit."

http://www.ushistory.org/franklin/philadelphia/insurance.htm

contra to EK's marxist revisionism, the hated 'Free Market' gave us F.D.'s, only after their success were they, too, hijacked by the State..

Posted by MEH | March 6, 2008 7:50 PM

Megan,

Most Dems, both liberals and hard leftists, define "public goods" as any service that the government can provide that a Democratic voter would like to receive, regardless of whether the voter can or should pay for it himself. It's even more of a "public good" if they can hoodwink the voters into thinking that someone else is paying the taxes necessary to provide that service.

Most journalists, innocent as they are of even an introductory class in micro-economics, suffer the same delusion.

Posted by DBL | March 6, 2008 7:58 PM

No kidding - that kind of thinking got us Prohibition (not to mention the current drug war), and that worked out so well.

Posted by Arclight | March 6, 2008 8:00 PM

"I'm persistently disturbed by the notion that most of our fellow citizens are intellectual children who need to be forced to do what is good for them even at massive cost to their liberty, and ours."

That some of our fellow citizens are intellectual children is indisputable. Whether you can say "most" of them are...well, that's up for argument. On any given day, I'd say it's 50-50. Of course, that's just a guess. It could be worse.

Posted by Herb | March 6, 2008 8:29 PM

Herb-

That may be so, but does further infantilizing them make the situation better or worse?

Posted by Civilized Crank | March 6, 2008 8:40 PM

It is so obvious that most people can't make decisions for themselves, one shouldn't be allowed to argue otherwise. It only deludes them into thinking they aren't intellectual children and is thus harmful.

Posted by chris | March 6, 2008 9:16 PM

Megan I have to put my foot (paw) down here. Fires have many, many positive externalities. First you ignore the free rider problem. Second, your tragedy of the commons argument is rusticated by the enclosure of the commons problem--can't you figure that out stochastically? I thought you as an econoblogger would recognize that. (I guess I stupid.) Finally, if there was correlated equilibrium, but no trembling hand problem, then there would be no need for fire trucks in the first place because there would be no fires.

Posted by anony-mouse | March 6, 2008 10:08 PM

Megan, I think your claim that people lack of health care carries no negative externalaties is too narrow a claim. For example, lack of dental insurance leads to increasingly deteriorating teeth for millions of Americans. The deterioration of teeth directly impacts the kind of food people can eat (specifically fruits and vegetables) which undoubtedly has an impact on the supply and demand of particular types of food. Its an indirect relationship, but an important relationship nonetheless. The previous point was made by Malcolm Gladwell in a great New Yorker article (an article by the way that pointed out the flaws of health care savings accounts and the defects of moral hazard theory).

Anecodately, I would argue with the idea that our current health care system leads to more liberty. In my last job, I remember meeting a number of people who wanted to leave for a better position only to be fearful of losing their health insurance. Its a huge constrain on people's ability to freely find the jobs they want to do. I don't think I'd consider that a very "free" situation.

To the post from "MEH". Whiled the history of fire departments was certainly enlightening, you have left out a big part of the story of privately run fire departments; namely that too many of them did exist for the public benefit, but merely for the benefit of the people wealthy enough (or connected enough) to use it. There's a great scene in the beginning of "Gangs of New York", that illustrates the corruption of fire departments (an extreme example I concede, but it serves my point.

Lastly, a more general point. This post exemplifies to me on a personal level that while there are practical reasons to lower taxes, get rid of regulation or move government in a more libertarian direction, as a matter of ideology I just can't support it. There a few key reasons, but one of which is this idea that our liberty is ONLY under threat from central government. I concede immediately the threat government can have on our liberty. But I just feel that libertarians underestimate the threat to our liberty that comes from private citizens and institutions (see Hezbollah in Lebanon, or the gangs of Rio for more extreme and well known examples).

Posted by Colin | March 6, 2008 10:09 PM

contra to EK's marxist revisionism, the hated 'Free Market' gave us F.D.'s, only after their success were they, too, hijacked by the State.. -- MEH

As is well known, in the US just as in every other country, private fire companies tend to become extortion rackets. No one argues that the free market doesn't create fire departments (or police departments, or armies). The point is that the free market demonstrably fails to guarantee that they provide universal coverage. See Luc Sante on fire companies in 19th-century New York and retired Berkeley linguistics professer Edward Li's forthcoming memoir, in which he relates how a private Shanghai fire company stood by watching the apartment building where his family lived burn until residents agreed to pay 10% of the value of the building and its contents, then, having put out the fire, threatened to burn down the building themselves if payment was not forthcoming.

One can make a modestly compelling moral hazard argument for a mandate--people will be tempted to free ride on the rest of us, knowing that we won't deny them health care in extremis, so the only thing to do is make them pay up front. But I'm persistently disturbed by the notion that most of our fellow citizens are intellectual children who need to be forced to do what is good for them even at massive cost to their liberty, and ours.

Health care reform isn't a major issue because people have suddenly had a mass insight into political philosophy. It's a major issue because the US health insurance/care system is not working well. It's eating up a huge and increasing portion of everyone's incomes, delivering mediocre care for most, and is unmanageably difficult to navigate and make choices in. All these points are strikingly true in comparison to the health insurance/care systems of most other first world societies. All of those societies, with the exception I believe of Switzerland (not sure about Singapore), either provide guaranteed health insurance or make insurance affordable and require people to buy it.

When one way of structuring an industry or service is dramatically superior to another way, the moral arguments shift. Let us take the case of someone who lives in a house far from any neighbor, as many Americans in fact do. (Wildfires spread far in California, but they are frankly unlikely to in Vermont.) Should such a person be allowed to opt out of paying for or receiving fire department service? If you allow such an option, many people will opt out, since the risk of fire is small. The result may be that your rural fire department is inadequately staffed and equipped to handle fires for those who do want the service; or, alternatively, that such responsible citizens have to pay dramatically higher premiums to equip the department. As premiums rise, ever more people will opt out, creating the famous "death spiral". End result: inadequate fire departments, more fire damage, everybody worse off.

In this context, the question is not "why should I have to participate"? The question is "why should you be allowed not to participate, and screw over everybody else"?

Let me try a broader way of looking at this that raises the usually unwise issue of socialism vs. the free market. It is crucial to recognize that part of the reason why the Soviet-style command economies were evil was that not only did they make forced demands on their citizens, but those demands did not actually deliver material welfare. In cases where forced demands on citizens DO deliver welfare -- particularly welfare of a fundamental human rights nature, like protection from fire and flood or decent health care -- the calculus changes. When Chinese emperors or Dutch provincial councils demanded everyone contribute to corvee dike-maintenance labor, that was not an illegitimate infringement on liberty. Even if they demanded labor from people whose houses happened to lie on high ground.

Posted by brooksfoe | March 6, 2008 10:12 PM

Personally, I strongly support the government taking my money, at gunpoint if necessary, and using it to pay for things I'm too dumb, reckless, or lacking in foresight to buy for myself. I mean it. I wish there were a law about how often I needed to get my oil changed, because otherwise I just keep putting it further and further off.

Posted by Christopher M | March 6, 2008 10:33 PM

Allow me to second Brooksfoe's very enlightening post, particularly on the point of the current system in the U.S. not working well. Indeed, it is a given that it would not be such an issue politically were people satisfied with the current level of service, cost, and ease of use.

Posted by Vermando | March 6, 2008 11:45 PM

brooksfoe,

this: http://www.alibris.com/booksearch?qwork=4063241&matches=45&author=luc+sante&cm_sp=works*listing*title

is what I found re: Luc Sante...

and to Colin,

it is all well, and good, to highlight the potential for abuse that Liberty allows, though it may be more edifying to concentrate our focus on these shores, as opposed to the problems found in far-off lands...

as Franklin showed, the response to the Problem was met, ably, by local, coordinated, action.

as it is always so, the Price of Liberty is eternal Vigilance. To think that the coercion of the State removes any manner of abuse is to deny our daily reality.

if you'd care for additional clues, do some research into 'response times' of F.D.'s and/or P.D.'s to calls from the various Socio-Economic strata in a given geography..

http://www.modelminority.com/article488.html

Posted by MEH | March 7, 2008 12:05 AM

I'm from Australia, and I cannot understand why Americans would even regard this issue as a matter of freedom. Here, everybody has a medicare card which takes care of about 80% of basic health costs. We just had 11 years of neo-liberal rule and abolishing medicare was never on the agenda. The idea that government involvement in the welfare of its citizens somehow subtracts from natural liberty is incomprehensible to me. In 21st century Australia, we pay for medicare, we pay for public media, and for many other things, on the understanding that this makes all of us better able to enjoy our freedom. And we have sophisticated policy debates about health care during elections, far beyond anything taking place in the USA right now. Nobody here is less free than anyone in the USA (and we don't even have a bill of rights). What seems childish from my perspective is an inability to make distinctions between negative government interventions and positive ones. Australia began as a penal colony, so maybe I can't be expected to understand freedom. On the other hand, glancing at debates in the USA, I often wonder whether it's your country that's stuck in the 18th century, at least when it comes to political ideas and ideals.

Posted by greg | March 7, 2008 12:11 AM

brooks, why not try making your posts longer? They seem too short. You also need more idiotic jargon to punctuate your rambling thoughts. Keep up the good work--you might have Megan's job one day.

Posted by anony-mouse | March 7, 2008 12:40 AM

One can make a modestly compelling moral hazard argument for a mandate--people will be tempted to free ride on the rest of us, knowing that we won't deny them health care in extremis, so the only thing to do is make them pay up front.

There are actually two solutions to this problem.

Posted by Brandon Berg | March 7, 2008 12:43 AM

anony-mouse: ... Fires have many, many positive externalities. ...

ITYM "negative externalities".

Megan: One can make a modestly compelling moral hazard argument for a mandate--people will be tempted to free ride on the rest of us, ...

Sometimes it's sufficiently compelling -- e.g. air pollution. The cost of a catalytic converter for your car is far, far greater than the direct benefit, but probably less than the total benefit of having it.

Posted by Bill Woods | March 7, 2008 1:38 AM

anony-mouse, acting like an asshole never convinced anyone of anything.

greg's line "In 21st century Australia, we pay for medicare, we pay for public media, and for many other things, on the understanding that this makes all of us better able to enjoy our freedom. And we have sophisticated policy debates about health care during elections, far beyond anything taking place in the USA right now. Nobody here is less free than anyone in the USA" pretty much sums it up. The entire right-wing half of the American political spectrum has apparently convinced itself that Australians are a bunch of Communists, or something.

Posted by brooksfoe | March 7, 2008 1:41 AM

greg, brooksfoe: "but everyone else is doing it" is a really lousy reason for the government to interfere in an economy. If all the other governments jumped of a bridge, would you do it too?

In New Zealand we have truly socialised medicine i.e. the government owns and runs the hosiptals, though you can go private if you want. Strangely a great many people choose to buy insurance even though they can get "free" healthcare from the state. This may be because they don't want to die waiting for it.

Now, "there is a real problem and we need to solve it" is a good reson to bring government in, so you're definitely on the right track. However, you only want to bring government in once you have worked out what the problem is, and the best way to fix it with the minimum of damage to the market's function. The advocates of single payer seem to have jumped from problem identification straight to a favoured solution, skipping the diagnosis and solution design steps entirely.

Posted by James K | March 7, 2008 2:15 AM

First, Obama aside, mandates matter because, sometimes, folks have to be protected from their worst instincts.

This line of thinking indicates either insanity or evil. Either the government by, for, and of the people, or it is not.

Interpretation one: People tend to make foolish decisions about their lives. However, when we take these exact same people and put them in government where they make decisions for millions of people, these people will transform into geniuses.

This is madness.

Interpretation two: The common people are idiots. Thankfully the common people aren't in power. The privileged few, who the gods have thoughtfully spared from idiocy and bad breath, should use their control of the machinery of government to run the lives of the common people for them.

This is Sparta! (Or at least the philosophy of the Spartans concerning the helots)

Being a helot myself, I hope it's madness, but I fear it may be Sparta.

Posted by secret asian man | March 7, 2008 3:21 AM

Megan: But I'm persistently disturbed by the notion that most of our fellow citizens are intellectual children who need to be forced to do what is good for them even at massive cost to their liberty, and ours.

If you're disturbed by the fact that many people simply can't understand the nuances of a typical health insurance policy, and that said people might relinquish the responsibility of spending literally hundreds of hours learning about all the overlapping fields of law that go into a typical health insurance contract in exchange for paying the government to do it for them, then you simply need to realize that not everyone is as smart as you or has the same amount of spare time to teach themselves such things.

I honestly mean no offense. Many, if not most, people simply don't have the time you have to study these things. That's because, unlike you, they aren't paid to do so.

Posted by Immoralist | March 7, 2008 3:31 AM

Klein: First, Obama aside, mandates matter because, sometimes, folks have to be protected from their worst instincts.

secret asian man: This line of thinking indicates either insanity or evil. Either the government by, for, and of the people, or it is not.

If we, the people, who are ultimately responsible for what policies our government enacts, decide that mandates are needed to protect us from our worst instincts, then your problem is not with the government, but rather with the people, of which you are but one tiny, probably insignificant component.

Time will tell.

Posted by Immoralist | March 7, 2008 3:43 AM

Megan, I think your claim that people lack of health care carries no negative externalaties is too narrow a claim. For example, lack of dental insurance leads to increasingly deteriorating teeth for millions of Americans. The deterioration of teeth directly impacts the kind of food people can eat (specifically fruits and vegetables) which undoubtedly has an impact on the supply and demand of particular types of food. Its an indirect relationship, but an important relationship nonetheless.

It is indeed a "relationship," but it isn't a negative externality.

Posted by David Nieporent | March 7, 2008 4:37 AM

Re: Fire prevention is a genuine public good; most health care, with the exception of things meant to stop the spread of infectious disease, simply isn't.

This is incorrect, due to the fact that there is no such thing as an unpaid bill. If your neighbor gets sick and can't pay his healthcare bill the provider will have to raise his fees to cover that bill, and everyone else pays for it. So the fire department analogy is fairly accurate: your neighbors' lack of insurance threatens your budget too. Sure we could fix the problem by allowing health care providers to outright deny care, but that isn't going to happen for obvious reasons. So some form of universal healthcare makes sense even from a purely economic standpoint.

Posted by JonF | March 7, 2008 6:32 AM

People miss the main fear that people have about government-run health care: they don't trust the federal government. Sure, we have problems with the current system. But we can always make it worse.
The most effective argument that was used against Hillarycare was the question: Do you want the people at the DMV providing you with health care?
Have you flown lately? You want the TSA controlling your hospital?
Have you dealt with your local school district lately? Do you want them dictating policy to your pediatrician?
Yes, the insurance companies suck. But people's interactions with the government tend to be worse,

Posted by rhinoman | March 7, 2008 6:37 AM

There are few problems the government can't make worse. In NY, you can't buy health insurance that is really insurance - that is, protection against unlikely but potentially catastrophic illness/injury. Instead, I get to "buy" insurance that is extremely expensive and covers a lot of things I won't use.

Buy is in quotes because it's not a purchase - it is a "take it or leave it" option for me - just pay the employee share of the premium. For my wife, it's something the union negotiated and is part of her compensation.

Having "bought" this "insurance," heaven help me if I ever need to use it. Mere mortals will never know what is covered or not. Benefits are unknowable by mere mortals - you tell me how to determine what eighty percent of reasonable and customary charges means in an industry where nobody list their prices. Go ahead, get hospitalized. I can guarantee you will be billed for services used by approximately 5 people. Or is there a better explanation for $1200 rooms and $5 aspirin?

The government created this mess with their mandates and regulations. The insurance companies have made it worse. More government is not going to fix it.

Posted by MarkD | March 7, 2008 8:26 AM

"But I'm persistently disturbed by the notion that most of our fellow citizens are intellectual children who need to be forced to do what is good for them even at massive cost to their liberty, and ours"

Perhaps you haven't seen this:
http://www.boingboing.net/2005/10/24/scary-evolution-surv.html

Posted by Nate | March 7, 2008 8:44 AM

To respond to John F,

"Re: Fire prevention is a genuine public good; most health care, with the exception of things meant to stop the spread of infectious disease, simply isn't.

This is incorrect, due to the fact that there is no such thing as an unpaid bill. If your neighbor gets sick and can't pay his healthcare bill the provider will have to raise his fees to cover that bill, and everyone else pays for it. So the fire department analogy is fairly accurate: your neighbors' lack of insurance threatens your budget too. Sure we could fix the problem by allowing health care providers to outright deny care, but that isn't going to happen for obvious reasons. So some form of universal healthcare makes sense even from a purely economic standpoint."

By this logic, every individual's unpaid bills are a threat to us- there's no reason this problem would be confined to health care. We've all seen the problems with the housing market when large numbers of people can't pay their mortgages. If universal health care makes sense, why not have the government run the housing sector?

I suppose you could be talking about unexpected medical emergencies, which would be different from routine housing costs, but if thats the case, why not have the government cover all the costs of unexpected emergencies. After all, whether your spouse dies, you get cancer, or your home gets flooded, you're still talking about big bucks that you don't have, costs that could be passed on to the rest of us.

Posted by Garrett J | March 7, 2008 9:31 AM

Would Nate care to explain how the average person is harmed by having erroneous ideas about evolution?

Posted by Paul Zrimsek | March 7, 2008 9:33 AM

rhinoman:
You do understand who has been running the government for the past 7 years, right? Did FEMA every have any Katrina type problems under Bill Clinton? Do you understand that Clinton hired a disaster management specialist to run FEMA? Not some Arabian Horse Association flunkie. As the saying goes, you get the government you deserve. If you want Grover Norquist type government, that is what you have now. I wish I could remember Kos' exact quote about Republicans and their governing style. Something to the effect that: How can you run a government when you say you hate it. Basically that Republicans will always screw things up. Just look at the banking/financial sector now!!

Posted by Joe Klein's conscience | March 7, 2008 10:10 AM

We're talking about health care here, right?

I'm not super familiar with the minutiae of it but my understanding of most of these proposals is that it would make having health insurance mandatory. It's not that health insurance is available for everyone who wants to have it, but it is literally mandatory, you must have health insurance whether you want it or not. The issue of who will be running the system, private industry or the government, is a another issue entirely.

My biggest fear in all of this is that once the government starts forcing people to purchase health insurance that it may be subsidizing to some degree, it will follow that the government, under the rationale of cost control of health care, will further encroach on the ability of the people to make their own lifestyle choices. Since they are paying for your health care, that gives them the right to tell you how to live "healthy". I'll sign a disclaimer to go off and die in peace if I happen to get critically ill in exchange for my freedom (maybe this is not a problem in other Western countries with socialized medicine but few, if any, of them have such authoritarian tendencies ingrained into their culture as does the USA).

I am also annoyed that if such a plan were to indeed make it into law, it would probably be something where the government acts as a single payer to private insurance companies (because fully socialized medicine is apparently something only "communists" do and is completely against the grain of American society). This will probably be one of the biggest government subsidies to private industry of all time. It rubs me the wrong way. Why enrich all of these health care execs on the public dime?

The totally socialized system "feels" better to me because it "looks" like you're just paying the government, it goes no further than that, and you have no choice but to pay your taxes anyway. With the single payer private system, the government is ultimately just forcing you to hand your money over to some capitalist who's making a profit from the captive market.

Snap up those HMO stocks while they're cheap..

Posted by STC | March 7, 2008 10:15 AM

Nobody here is less free than anyone in the USA (and we don't even have a bill of rights)

Bought any guns to defend yourself from the rising Australian crime rate lately?

James

Posted by James R. Rummel | March 7, 2008 10:21 AM

But I'm persistently disturbed by the notion that most of our fellow citizens are intellectual children who need to be forced to do what is good for them even at massive cost to their liberty, and ours.

No offense, Megan, but how do you justify this statement in light of your overwhelming enthusiasm for carbon taxes again?

James

Posted by James R. Rummel | March 7, 2008 10:23 AM

I trust that everyone will be as reassured as I by Joe Klein's argument that government-run health care will be fine so long as we never ever elect any more Republicans.

Posted by Paul Zrimsek | March 7, 2008 10:39 AM

You do understand who has been running the government for the past 7 years, right?

Yes, I do. Bureaucrats. And so it will be under any other administration or even political system. Unlike you, I have lived under a very different political system for quite awhile. Believe me when I tell you that once you control for the language and nationality (should I say race?) bureaucrats are identical.

Posted by ...Max... | March 7, 2008 11:11 AM

A hurricane never struck a major U.S. city that had half of it built on a flood plain. Are you suggesting that the Clinton Administration was able to direct hurricanes to areas of minimal impact?

Posted by mishu | March 7, 2008 11:52 AM

If the government wants to create a catastrophic care guarantee through some moderate tax, similar to the uber-high deductable insurance I have with Blue Cross, then that's one thing and shouldn't be a bank breaker for most people, the rest of whom will benefit from the government's stepping in to guarantee the care will be there. However, my sense is that many if not most people are accustomed to the stem to stern full service care they get through their employer-provided plans, and would expect no less from government mandates, which would create an impossibly expensive entitlement funded by taxpayers, and ultimately because of the costs would lead to the type of "lifestyle rationing" and denial of service if the individual smokes, drinks, (insert socially-undesirable ill here), etc.

The guy who said the problem is not universal health care, it's that no one trusts our government to be able to get it right, hit the nail on the head. I just don't trust these heavily-agendized idiots to do anything properly where my wellbeing is concerned, and that's a bipartisan criticism.

vic

Posted by vic sapphire | March 7, 2008 11:54 AM

"Did FEMA every have any Katrina type problems under Bill Clinton?"

uhhhh....

http://www.post-gazette.com/pg/05254/568876.stm

Posted by realityman | March 7, 2008 11:55 AM

I live in Massachusetts, where I'm allowed to buy health insurance from any state-approved company. But, thanks to lobbyists for esoteric medical and quasi-medical services, the only policies that get state approval are bloated and very expensive. Another mandate applies to prior conditions: If I'm diagnosed with something seriously expensive like cancer, an insurance company *has* to issue me a policy even if I've never insured myself before. This is very humane, of course, but it's a powerful disincentive to buy insurance when I'm healthy.

And I can't even make a rational decision to buy health insurance with a huge deductible. Someone (?) has decided to make such policies illegal, no doubt because an evil insurance company would sell these policies to dumb people who think they're getting a bargain. So I end up buying insurance to pay for occasional office visits that cost less than a week's groceries.

I have no way to know how much these nanny-state mandates drive up the cost of health insurance here, but I suspect it's a staggering burden.

Posted by jt | March 7, 2008 11:56 AM

Greg (from Australia):

... glancing at debates in the USA, I often wonder whether it's your country that's stuck in the 18th century, at least when it comes to political ideas and ideals.

... and proud of it. For example, we have a "Bill of Rights." Thank Ghu we don't have the 20th century equivalent, a "Bill of What the Government Owes You."

Posted by SteveA | March 7, 2008 11:57 AM

Joe Kleins conscience- So the hurricane Andrew response was a model of efficiency and speed? Somehow I don't remember it that way.
RS

Posted by Bob S | March 7, 2008 11:58 AM

But I'm persistently disturbed by the notion that most of our fellow citizens are intellectual children who need to be forced to do what is good for them even at massive cost to their liberty, and ours.

+1

Would it be obnoxious link whoring to point out my piece on PJM on health insurance today? I'm linking this as my QOTD. ;-)

Posted by Charlie (Colorado) | March 7, 2008 11:59 AM

Actually, Joe Klein's Conscience, as I remember it, FEMA responded faster to Katrina than to Andrew. The difference is that New Orleans and Louisiana have been under Democrat control for a century and a half, where Florida is occasionally Republican. There is a very different attitude amongst the people regarding who takes care of you, which is why there were no deaths directly as a result of Andrew (the only deaths were from tornadoes in the trailer parks in later months), which is exactly what we're trying to preserve with opposition to "universal health care".

Someone else: someone's failure to pay their bill is not an externality, because businesses can't just raise their prices to cover their expenses, because raising prices would diminish demand and the health care provider would take in less revenue over all. The business would stop offering services that people can't afford, or they'd go out of business.

Someone else again: actually, rural fire departments, where people experience less positive externalities from fire control, do offer fewer services than urban ones. Often, it's a volunteer service. The taxes are lower, the services are fewer, and there's a lot of free-riding on the good-nature of the volunteer department members.

STC: businesspeople that benefit from government single-payer system are not Capitalists; Capitalism is the belief that government should not take sides in business competition. In fact, most businesspeople are not Capitalist, because they believe the government should take their side against their competitors. Capitalism is a political philosophy, mostly engaged in by people that don't trust businesspeople.

Posted by Jon | March 7, 2008 12:00 PM

Secret Asian Man:
Interpretation 2 is madness as well; it assumes that people incompetent to run their own lives are competent to decide who will run everyone else's lives. Of course, this is completely backwards. People are much more likely to make good decisions in their own lives, where their decisions have important consequences, than they are to make good decisions at the ballot box, where the odds of a single vote making a difference are essentially nil.

Posted by Brandon Berg | March 7, 2008 12:04 PM

FEMA has received much criticism in the past, during Hurricane Andrew (which, by the way, was in 1992, so Clinton was not president), and during Hurricane Floyd in 1999, etc.

Posted by Yancey Ward | March 7, 2008 12:06 PM

Immoralist:
If you're disturbed by the fact that many people simply can't understand the nuances of a typical health insurance policy, and that said people might relinquish the responsibility of spending literally hundreds of hours learning about all the overlapping fields of law that go into a typical health insurance contract in exchange for paying the government to do it for them....

Okay, fine. Let's pay the government to do it for them. State governments can each publish a quarterly report rating the various private insurance plans available within their states on several different metrics. There's really no reason this can't be done in the private sector, but if it's that important to you, we can let the government do it.

That's what you meant, right? Surely you don't think that this is an insurmountable problem that can only be solved by nationalization of health provision and/or insurance?

Posted by Brandon Berg | March 7, 2008 12:13 PM

And I can't even make a rational decision to buy health insurance with a huge deductible. Someone (?) has decided to make such policies illegal, no doubt because an evil insurance company would sell these policies to dumb people who think they're getting a bargain. So I end up buying insurance to pay for occasional office visits that cost less than a week's groceries.

I have no way to know how much these nanny-state mandates drive up the cost of health insurance here, but I suspect it's a staggering burden.

JT, the estimated coast of all of those mandates is about 20-30% of your health insurance premium (click on my name for more info). You’re correct that by requiring that people buy prepaid health care rather than actual insurance it has the effect of pricing more and more people out of the health insurance market, particularly those who buy their own insurance or who work for smaller employers. Government workers, particularly at the federal level, tend to have some of the most generous health care benefits that cover more items at lower costs to the user (which means they’re passed along to the taxpayer).

Something to note is that while we’ve all been focused so much on Clinton’s proposal for an individual mandate (requiring that every individual buy health insurance) and both Clinton and Obama’s support for an employer mandate (thereby tying insurance to employment by law rather than just the perverse incentives in our tax code), the real danger is Obama’s proposal to create a new program based on the federal employment health care system and to require that any private plan be “as generous” as his new program. Basically the problem we have now with mandates pricing people out of the private market will be further exacerbated by Obamacare’s new round of unfunded mandates that will drive up the cost of health insurance for the rest of us, thereby pricing more individuals and smaller employers out of the market leading to them either going without or signing up for Obamacare.

Posted by Thorley Winston | March 7, 2008 1:05 PM

Megan, I think your claim that people lack of health care carries no negative externalaties is too narrow a claim. For example, lack of dental insurance leads to increasingly deteriorating teeth for millions of Americans. The deterioration of teeth directly impacts the kind of food people can eat (specifically fruits and vegetables) which undoubtedly has an impact on the supply and demand of particular types of food. Its an indirect relationship, but an important relationship nonetheless. The previous point was made by Malcolm Gladwell in a great New Yorker article (an article by the way that pointed out the flaws of health care savings accounts and the defects of moral hazard theory).

First of all, that would only be right if dental insurance actually existed and covered more of the population than it does today. And, that those who held that insurance actually used it more often for maintenance that maintained their teeth beyond emergency care. If you read dental statistics, you'd know that argument would be false.

There is no way that the lack of dental health care has changed our diet or food supply chain significantly over any demographic or period of time. In fact, you'd be better off to argue that better meat processing and flour grinding has prevented the degredation of teeth and allowed people to keep their's longer. Considering that bones in meat and chaffe, sand grains and tiny pebbles in grain wore down our not to distant ancestors' teeth.

Find a different argument. The only way that a lack of dental insurance impacts anyone is that the dentist may charge you a little extra to make up for his expected losses through private paying citizens. Particularly those who DO have insurance and then don't pay their co-pays.

If you want to blame people for the rising cost of dental or medical health care, look no further than half the readers of this blog who very likely have not paid their secondary or co-pay amounts for medical care received. People have some strange reasoning go through their mind that, since the insurance company paid some amount, the provider should be happy they got paid at all.

Write offs for these services amount to appx 5% (sometimes as much a 8%) of all net revenue across the health care industry (higher in some specialties than others). If any other company or individual providing products or services had to write off as much of their net charges, they would either stop serving those customers or, as has been done, raise the rate across the board to their other customers to be able to stay in business and remain profitable.

Healthcare providers are generally stopped from limiting services due to law that mandates care. Thus, option number two becomes more feasible.

Posted by kat-missouri | March 7, 2008 1:06 PM

Posted by Vermando | March 6, 2008 11:45 PM

"Allow me to second Brooksfoe's very enlightening post, particularly on the point of the current system in the U.S. not working well. Indeed, it is a given that it would not be such an issue politically were people satisfied with the current level of service, cost, and ease of use."

I call shenanigans on you both.

Nonsense. Polls show people are satisfied with their own healthcare but worried the system does not work for others...

This opinion does not show the system not working.. it shows propaganda telling people it is not working... is.

Posted by Thomass | March 7, 2008 1:16 PM

For example, lack of dental insurance leads to increasingly deteriorating teeth for millions of Americans.

[Posted by Colin | March 6, 2008 10:09 PM]

Colin, your example here would be much better if you could show that the tremendous improvement in American teeth in the 20th century was the result of the people procuring dental insurance.

Posted by Dusty | March 7, 2008 1:26 PM

anony-mouse, acting like an asshole never convinced anyone of anything.

FWIW, that's not me. I thought about having my name legally changed once, since it's pretty common and leads to occasional confusion of this sort, but then I would have to update the coat of arms and notify the extended family and all of that. And have you ever seen a tree detailing a mouse's extended family?

Hmm...maybe I could switch from hyphens to underscores, though...

Posted by anony-mouse | March 7, 2008 1:51 PM

Nobody here is less free than anyone in the USA (and we don't even have a bill of rights).

Really mate?

Want to show me your concealed carry permit for a handgun?

Posted by The Ace | March 7, 2008 2:52 PM

Did FEMA every have any Katrina type problems under Bill Clinton?

Your ignorance is pathetic.

But, do tell us, when did a hurricane the size of Great Britain hit the United States during the Clinton presidency?

Bonus question: since Mississippi took the brunt of the impact, why did New Orleans have most of the problems?

Posted by The Ace | March 7, 2008 2:56 PM

wish I could remember Kos' exact quote about Republicans and their governing style. Something to the effect that: How can you run a government when you say you hate it. Basically that Republicans will always screw things up.

Maybe this genius can explain why cities with the highest crime rates, worst schools, and barely functioning social service agencies are run by Democrats.

I'd love for you to explain the governmental failings of Washington, DC to the class.

Your answer will be illuminating.

Posted by The Ace | March 7, 2008 3:02 PM

Seconding the morass that is the Massachusetts plan. There are no savings to individuals. I cannot get a better deal than my company offers, in fact if I go through the state's Connector program I will spend MORE money for less coverage! And my own premiums went up this year.

And it is costing taxpayers more, so I'm going to end up paying even more money for the same service. Ain't liberalism great?

Posted by 8 | March 7, 2008 3:45 PM

"In New Zealand we have truly socialised medicine i.e. the government owns and runs the hosiptals, though you can go private if you want. Strangely a great many people choose to buy insurance even though they can get "free" healthcare from the state. This may be because they don't want to die waiting for it."

In Canada they have (I'm glad I left) a similar system, except that, in order to make it more "fair" to everyone, it is ILLEGAL to offer private health care - it would be a violation of the Canada Health Act, though apparently spending days on a guerney in the emergency ward and contracting SARs while you do is perfectly permissible. Don't get me wrong, I think that the US system (or chaos) is a majot pain and needs to be reformed, but to think that having the federal government run it would be an improvement boggles the mind. In Canada the provinces run the systems - so the biggest one has about 9 million clients (Ontario) and the smallest 40k (PEI) - so basically the bigger ones are the size of largish HMOs - and they are still too big an impersonal to do a good job. In BC where I hail from, one pays high federal and provincial income taxes, and then one pays again for their healthcare premiums (I guess you don't have to pay, but if you don't you aren't going to be able to see a Dr, since they are all in the system) - of course the very poor don't have to pay these, so they are covered by other taxpayers. Of course, this system doesn't pay for things like dental, orthodics, glasses etc - so you'll want to get a supplementary plan from your emplyer anyway - to which you will also have to contribute. So now you (or the government) has directed a goodly chunk of your income into this system - and now you suffer a nasty fall and break your hip and need to have it replaced. Welcome to hell. You will now be placed on a waiting list, and depending where you live, may wait up to two years for the hip replacement surgery - and may very well become a pain pill junkie while waiting. You have no recourse - there are no doctors in the country that are not part of the system - and you can't afford to go to the States for the work, since you have already spent so much of your income on taxes and other fees to support this system.

Instead of warching Sicko by M Moore, rent "The Barbarian Invasion", which actualy won an oscar
and learn the truth about the Canadian health care system which so many Democrat politicians seem so eager to emulate.

Posted by holdfast | March 7, 2008 4:32 PM

I truly am surprised, in all of the very erudite comments herein, there is no mention of the fact that there is no Constitutional authority in the Enumerated Powers for any such program/mandate to exist in the first place.

Even Klein will set the Constitutionally ignorant Obama aside.

Posted by Cato | March 7, 2008 4:56 PM

Re: By this logic, every individual's unpaid bills are a threat to us- there's no reason this problem would be confined to health care.

The difference is that most people do not run up huge unpaid bills for food, housing etc. There are two reasons for this: First, practically every other expense in life is predictable and one can budget for it. I know how much my monthly rent will be, and I can guess to a high degree of accuracy how much my monthly grocery bill be. I cannot really do that with healthcare since my expenses are unpredictable: probably I will just need some over the counter meds and maybe a doctor visit for a check-up-- but the possibility exists I could have expenses ranging into the hundreds of thousands. Secondly, in almost every other area there exists what economists call "inferior goods" meaning that there is a very wide range of alternatives at very different prices all of which will serve the fundamental need. One can live in a rented room or in a mansion (if one's budget allows); one can eat filet mignon or ramen noodles. One can drive a BMW or ride the bus, a bike or even just walk. But this is not the case with healthcare (other than a few things like generic drugs where they exist). Otherwise you need exactly the treatment indicated and (significantly) cheaper substitutes of the "ramen noodle" sort simply do not exist. This latter problem is largely insoluable, it's part of the nature of healthcare. However the first problem, unpredictability, is solvable, if you do the budgeting over large groups of people as insurance plans, and public health plans, do. Owing to the law of large numbers we can predict with reasonable accuracy what the healthcare expenses of a million people will be. This is the main reason it makes sesne to socialize healthcare funding (nota bene: not healthcare itself just its finances!) whither through public plans or private plans, or a mixture of both.

(By the way, the government does cover much of the costs of natural disasters. As for one's spóuse (child etc.) dying, that's an emotional catastrophe but not necessarily a financial one: there are some fairly affordable alternatives for funerals and low-benefit, basic life insurance, (sufficient to cover funeral costs) is also very affordable.)

On mandates: Here in Florida the government mandates various standards on construction so that structures have a hope of surviving hurricanes. Presumably this is true elsewhere, and in California of course there are earthquake mandates on construction. Now, if your house collapses in a hurricane or earthquake it really doesn't directly affect anyone but you, so will the libertarians here also start opposing these building code mandates?

Posted by JonF | March 7, 2008 6:59 PM

On mandates: Here in Florida the government mandates various standards on construction so that structures have a hope of surviving hurricanes. Presumably this is true elsewhere, and in California of course there are earthquake mandates on construction. Now, if your house collapses in a hurricane or earthquake it really doesn't directly affect anyone but you, so will the libertarians here also start opposing these building code mandates?

That’s nice but the equivalent of building codes to ensure structural soundness of a building in the health insurance field isn’t mandating that health insurance policies must cover certain procedures, it’s requiring that health insurance companies are financially solvent so that they can pay out on their claims.

Posted by Thorley Winston | March 7, 2008 7:22 PM

Otherwise you need exactly the treatment indicated and (significantly) cheaper substitutes of the "ramen noodle" sort simply do not exist.

No, but "live with it without treatment" does exist. And that precisely the solution that rationing, waiting lists and refusal to adopt new (expensive) procedures creates.

Health care is expensive in large part because it consumes large quantities of economic resources to deliver. So amount of "socialization" can magically make expensive treatments cheap.

Posted by Rob Lyman | March 7, 2008 7:26 PM

If there were a working market in individual (or small business) health insurance in the US, I'd hold with the libertarian side of this.

But there isn't. And there won't be. It isn't just the fault of the government - it's human nature. People underestimate risk and don't buy insurance when they're young and immortal, and other simply choose to freeload.

Since we will not be denying care to those who can't pay, we end up paying the darned costs anyway, but inefficiently, which is probably one reason we have such an expensive health care system.

If you are lucky and smart, you can buy your own insurance. You can even get the tax deduction if you make yourself into a business (easy if you are earning money). But if you have a medical condition, regardless of whether you caused it or not, you are screwed. You will not be able to buy insurance, at *any* price. Your assets will be at risk for a medical event - and the distortions caused by the partial socialization of risk means that you will pay as much as 4 or 5 time what an insurance company or the government pays.

Put simply, the *fact* that we will not deny care gives us the choice of paying for the health care of others inefficiently (after they go bankrupt, or when they show up in an ER with a sore throat), or the choice of mandating care.

Mandate care, or pay for freeloaders. Today, there is absolutely no alternative.

So we all pay for freeloaders, while at the same time we are all at risk of losing insurance (how long does your employer's insurance last when you get too sick to work for a couple of years... right... you end up uninsured when you need it the most).

If you don't feel insecure about health care payment issues, you are either wealthy, a free-loader, or ignorant of the problem.

Posted by John Moore | March 7, 2008 10:18 PM

Oops, it should read:

Mandate insurance, or pay a lot for freeloaders. Today there is absolutely no alternative.

Posted by John Moore | March 7, 2008 10:20 PM

I don't know how many people are still posting and reading the comments from this blog, but I felt I needed to respond to those who believe that my example of dental insurance was an invalid one. First of all, I do agree that dental insurance (or lack there of) can not be the sole reason for improved teeth in the past century. I am sure there are many factors including the above examples like the improved processing of food. Furthermore, enhancements in dental technology has also helped, I am sure. Lastly, I have no doubt that people not taking on the responsibility of scheduling regular appointments does play a role in teeth problems.

However, I have to believe that dental insurance played at least SOME role in bringing access to dental care to millions of Americans. More importantly, many were indirectly arguing that I did not give a source to my contention regarding dental insurance. I actually did mention the article by Malcolm Gladwell in the New Yorker. A search of the website with keywords such as "moral hazard" should bring you to the article. He gives plenty of examples of how lack of dental insurance impacts people's lives. I am sure many of you could cite reasons why his evidence or logic is incorrect and I welcome such arguements.

As to another point addressed that dental insurance and the supply and demand of food is not a negative externality, I guess is a good one. I think one problem is defining what exactly constitutes a defintion of "externality". I know the economic definition, but I feel as though it needs to be expanded upon. However, that is probably a discussion for another day.

One more thing, I alluded to eariler that a previous poster had mentioned that a big problem with dental insurance is people not making preventative appointments and not properly paying the costs. It is an excellent point and I thank the poster for bringing it up. But I come back with an anecdotal story of my own. At a previous job I had a co-worker who after a routine checkup had to get further dental work done. But while the initial check up was covered, the follow up work was not. The thousands of dollars it cost was then added to her already existing student loan debt. This co-worker was not an irresponsable person, but rather someone who suddenly faced bills she could not pay (or had great difficulty paying). This experience actually scared me into delaying a trip to the dentist longer then I should have. I was just out of college and worried about medical debt. I worked in a mortgage company at the time so I was well aware the impact large amounts of debt had on my ability to procure loans such as mortgages. Now the person in question is not bankrupt and will hopefully see through her debt. There are those of you out there who would claim that whatever her anxieties, she "tightened the belt", "pulled herself up by the bootstraps" and got through just fine. However, the overall point is that she should never have been put in that situation. She paid her bills, worked hard at her job, was responsible with her health and still found herself in this situation. The reality is, it didn't have to be that way. The system of private insurance failed. A system by the way that came about almost purely by accident of history when Unions in the 1940's were striking for better pay and businesses came up with our current employer funded system. Again, I'm sure many will point out that her problems were the result of excessive costs caused by government intrusion, improper incentives etc. and I don't deny that at least some of this is
true. But I would argue that relying on insurance companies who have an interest in doing what they can to deny care to people is also a problem.

Lastly, many of you have cited the slippery slope theory regarding creating universal health care (or plans like Obama's and Hilary's that steer us more in that direction). Basically, if we further allow government into healthcare, before we know it government will tell us what to eat and then what to think, and soon "Big Brother" will take over. This sort of sentiment is why I do not like "slippery slope" arguments and find them to be a cruch to resist any change or just win arguments. I have the same problem when it used by the "Left" as well. First of all, government already has plenty of laws that tell us what to do, like seatbelt laws. The reality is the improved safety seatbelt laws bring outweighthe incredibly small amount of liberty lost requiring you to wear one. I am aware that expanding health care is a much greater government intrustion of our lives, but the slippery slope argument that this is one step along the way to totalitarian government I think is waaay overblown rhetoric (Now the issue of Gitmo and possible future consequences to civil rights, a whole other can of worms. Again an argument for another day). I know this post is a bit rambling and I have more coherant thoughts on the subject at hand. But I have written too much.

Just would like to say. Leaving aside much of the ideological vitriol, many of the posts, especially the more right wing posts that I have often disagreed with have highlighted issues I had not read about and I hope made a difference on my thinking of the subject. I bring this up because recently Andrew Sullivan has had posts regarding why there shouldn't be comments on his blog and the comments I have read here show why I think they are valuable.

Posted by Colin | March 7, 2008 10:54 PM

'm persistently disturbed by the notion that most of our fellow citizens are intellectual children

This from the romper room. Irony is completely lost on you, isn't it, McArdle?

To think that the Atlantic was once worth paying for.....

Posted by sglover | March 8, 2008 12:15 AM

When someone gets seriously ill and is not insured, the rest of us end up paying for it one way or another.

If you envision a society that can let someone die in the street without offering assistance, and then force his relatives to dispose of his body at their own expense, at gunpoint, and then force them to pay for the people who wield the guns, and then deal somehow with their employees who are laid off because their business went bankrupt to pay for the gun wielders, and so on, then first create that society.

Then you can argue against health insurance because it has no "externalities."

Posted by Peter | March 8, 2008 1:44 AM

because fires have very bad negative externalities

As does industry, agriculture, etc. It's nice to see a libertarian acknowledge that externalities exist; usually they are ignored entirely.

Posted by Ordained Atheist | March 8, 2008 9:34 AM

Megan's final sentence cuts to the heart of the issue: "Whose life is it anyways - yours or the government's?"

When this gets applied to the health care issue, the question becomes:

Should government bureaucrats decide how and for what people can spend their own health care dollars? Or do they respect the individual's right to make that decision according to his own best judgment for his own benefit?

I come down firmly on the side of the second position.

Lin Zinser and I have published an article on this issue in the Winter 2007-2008 edition of the journal "The Objective Standard" entitled:

"Moral Health Care vs. 'Universal Health Care'"

We argue that the current crisis in American health care is the result of decades of government interference and violations of individual rights in health insurance and medicine. Hence the only moral and practical solution to the problem is not more government controls but instead to gradually and systematically transition to a rights-respecting, fully free market in those industries.

The full text of the article is available online for free at:

http://www.theobjectivestandard.com/issues/2007-winter/moral-vs-universal-health-care.asp
or http://tinyurl.com/25zffu.

Posted by Paul Hsieh, MD | March 8, 2008 2:48 PM