Friday, February 28, 2003
Thursday, February 27, 2003
More on Healthcare for the Intemperate
Mark responds in an update to his original post to my response below, saying: “[Glen’s] answer -- essentially, the creation of a special underwriting category for alcohol and drug abusers, who would pay higher insurance rates than the more abstemious -- makes sense, as most libertarian solutions do, if you abstract from a few facts.” Allow me to respond to those facts one at a time:“Much health insurance is bought by employers for employees, rather than individually.” This is indeed a fact – one created almost entirely by the current tax code, which effectively gives a tax break on insurance only if you buy it through your employer. A sensible tax code would treat all health expenditures equally, thus removing the perverse incentive to tie your health insurance to your employment. But even if we take that as given, the fact that health insurance is typically attached to employment and sold in packages does have an upside, which is that it ameliorates the adverse selection problem. (Adverse selection is only an issue if the low-risk folk can opt out and the high-risk people can opt in, thus biasing the insurance pool.)
“Being an alcohol or drug abuser isn't (1) a simple yes-or-no; (2) a stable condition over time; or (3) an easily observable condition; the usual diagnostic approach is asking the person involved, which isn't going to work very well if the consequence of saying "yes" is having to pay higher insurance rates.” There do exist other means of diagnosis, including medical tests. They are not perfect, but nothing ever is. Moreover, premiums are adjusted based on medical history. Someone with a history of conditions correlated with alcohol abuse will see rising premiums. The fact that alcohol or drug abuse isn’t a simple yes/no proposition with a constant answer over time makes things more complex, but not intractable; being a “bad driver” is not a simple yes/no proposition either, but auto insurance companies are remarkably skilled at observing its correlates.
“Someone who isn't clinically diagnosable as an alcohol abuser can still wrap his car around a tree.” Since the whole problem Mark raised had to do with the failure of doctors to perform the tests they *do* have available, I don’t see how this is relevant. If the condition is not clinically diagnosable, then unperformed tests are beside the point. Now, it’s true that there could be an adverse selection problem here (the drunk drivers are more likely to buy health insurance that covers their drunk-driving accidents), but there are potential solutions. Here’s one that comes to mind: Insurance companies could offer a policy that will cover your auto-related injuries only if you are tested at the hospital for alcohol and the test comes back negative (or within certain parameters). Those who drive responsibly will happily sign onto this agreement. Those who don’t will have to pay a higher premium for a policy without this provision.
“Having all the drunks and drug abusers uninsured -- the likely consequence of charging them the expected-value cost of their health insurance -- means that the rest of us wind up paying for their care through the unpaid care accounts kept by hospitals and passed through to insurers, unless we're willing to have them die in the streets. The whole logic of treating medical care as an ordinary commodity falls apart once you say, ‘No, we're not prepared to have people who can't pay for care die for want of care.’” First, let’s recognize that, if it’s really true that drunks and drug abusers are unable to afford the expected value of their health insurance, it means these chaps are creating greater healthcare costs than they can afford. Are these people who deserve a public subsidy? I’ll happily concede that if you reject free-market policies in some respects, other free-market policies may not work very well, either. If we say that we’ll provide free or subsidized healthcare to people, *regardless of their poor choices and stupid behavior*, then the natural consequence is that we all end up paying through the nose. It’s not just that we pay for others’ healthcare – it’s that the costs will be inflated because people will choose to engage in even more irresponsible behavior (the moral hazard problem).
The next step, of course, is that the high costs imposed on the rest of us will be used to justify the abridgment of personal freedom and the regulation of lifestyle choices. When users of drugs and alcohol (and motorcycle riders, and high-impact sports participants, and those engaging in high-risk sexual acts) are held responsible for the consequences of their own choices, then their choices need not be any of the public’s business. But the liberal attitude that treats healthcare as a right creates a powerful incentive for the government to intervene. (As an aside, I think this is the primary reason that so many liberals, a group that libertarians used to agree with on issues of personal choice, are now drifting to the authoritarian camp by supporting legislation and/or litigation to control smoking, consumption of fast food, etc.)
In any case, the problem of “the rest of us wind[ing] up paying” follows from *any* position that accepts Mark’s premise that people deserve healthcare no matter what. If we have socialized medicine, then we all pay, plus we get moral hazard. If we have publicly funded ERs and clinics that must treat all comers (even when they’re not insured), then we all pay, again with moral hazard. If we force private insurers to cover all medical expenditures regardless of cause, then we all pay, plus we get adverse selection. If we use tax funds to subsidize the purchase of health insurance for all, then we all pay, plus moral hazard again. Does Mark have in mind some system in which we do not all pay? The only one I can think of is the one I propose and Mark rejects.
Political Economy of the Drug-Induced Stupor
Mark Kleiman, provocative as usual, blogs about laws in 38 states that permit health insurance companies to deny claims for medical care necessitated by the abuse of drugs or alcohol. As a result of these laws, trauma center docs routinely avoid testing for alcohol or drugs for fear of not getting their insurance reimbursements. This is unfortunate because a very large volume of medical problems are drug- or alcohol-related, and just a little bit of medical attention to the matter could (supposedly) induce the abusers to alter their behavior and reduce their health costs.I’m with Mark right up 'til the end, when he suddenly chucks the gauntlet at libertarians: “Go ahead. Tell me how the market is going to solve this one, in the face of the obvious adverse-selection problem: being the one insurance company that offers coverage for drinking-induced accidents is going to be a marketing advantage for drunks, who are lousy health care risks.”
Well, let’s see. First of all, we libertarians oppose laws that grant special interests the right to renege on their contracts – such as, for instance, the 38 state laws in question here. A non-libertarian might reply that these laws merely “permit” the health insurance companies to deny certain claims, so these are actually libertarian laws. I don’t have the text of the laws in front of me, but generally, special interests don’t have to lobby for new laws to permit them to do things they are already entitled to do by the basic principles of freedom of contract. If the insurance companies wanted to deny claims for alcohol-induced conditions, they could just write that into their contracts. But that is not what they want to do. They want to write contracts that *appear* to cover conditions they actually do not, and they want to assure that their competitors can’t undercut them by offering some customers a better deal. That is what I highly suspect these laws are intended to accomplish: regardless of what your health insurance policy *says* it will cover, *in fact* it does not cover alcohol-induced conditions. Repealing these laws would mark a (partial) return to the traditional law of contract, whereby parties are actually held to their promises.
Second, if these laws were repealed, there is every reason to think the market would be able to deal with the problem of drug- and alcohol-related health problems. Mark cites the adverse selection problem, but keep in mind that adverse selection is a problem of asymmetric information: if the insurance company cannot tell the difference between customers with different degrees of risk, it will have to charge them the same premium, and that premium will be most attractive to the higher-risk customers. But if the insurance company *can* tell the difference (say, through medical testing), or if it can identify factors correlated to the difference (such as medical background, previous conditions, etc.), then it can charge differential premiums that take into account the different degrees of risk. If "the one insurance company that offers coverage for drinking-induced accidents" attracts more drunks, then it will charge a higher premium than the other health insurance companies, just like auto insurance companies that specialize in insuring people with lousy driving records. Yes, that means alcohol and drug users will have to pay more for health insurance – and that’s exactly as it should be. The alternative approach, which contends that people should have to pay the same amount regardless of their health or behavior, leads to both adverse selection (as the low-risk customers opt out of the insurance pool) and moral hazard (as the abusers realize their bad behavior is being partially subsidized by the rest of us).
Wednesday, February 26, 2003
The Word Mint
Thanks to Chuck for drawing my attention to a truly excellent website: The Word Spy, which documents recently coined words and phrases, as well as old ones enjoying a renaissance or transformation of meaning. Among the recent entries: "snob hit," "stunt programming," and "wife acceptance factor." If you're a logophile, this site's for you.Dogged by Racism
For some reason, I was fascinated by this Slate article that asks the question, "Can a dog be racist?"Return of Bride of Reductio Creep
As though to prove the point I made below (“Bride of Reductio Creep”), Ronald Bailey of Reason offers another example of the “bad ideas never die” syndrome. Bailey’s bottom line: “[N]o proposed regulation ever dies—its proponents just lie in wait for another crisis to justify ramming it down the throats of a temporarily alarmed populace. Thus do our liberties erode imperceptibly over time.”Tuesday, February 25, 2003
Bride of Reductio Creep
There must be a (shorter) name for this phenomenon: every bad idea eventually comes to pass. This is related, of course, to the problem of reductio creep, but it’s somewhat different. The problem here is that slaying a demon once is never enough -- you have to keep slaying the same demon over and over again, and eventually you’ll have a bad day and lose.Exhibit A. If you thought you’d heard the last of “universal healthcare” back in 1994, when Clintoncare met its demise, you were mistaken. According to this L.A. Times article, Democrats intend to pound that old drum loudly in the 2004 presidential race.
Exhibit B. Did you breathe a sigh of relief when a judge struck down the lawsuit launched by fat people against McDonald’s? Well, it’s time to inhale again. According to this Sacramento Bee article, the plaintiffs have modified and refiled the case. And even if this case ultimately fails, it won’t be the last; the lawyers leading the charge are considering a variety of legal strategies, including “suing school boards for entering contracts with fast food and soft drink manufacturers; suing the milk industry for milk mustache ads that don't disclose the benefits of skim milk; and suing the pork industry for portraying ‘The Other White Meat’ as healthy.”
And it’s worked before: “It took hundreds of cases, starting in the 1950s, before tobacco lawsuits brought by smokers finally went to trial, and another hundred cases to finally win, [tobacco-litigation veteran John] Banzhaf said. But by the end of the 1990s, with public opinion against them, the industry agreed to a massive settlement, paying billions of dollars to states that had sued to recover tobaccorelated [sic] health costs.”
Bad ideas just keep coming back, until eventually they win. This process needs a name. I’m thinking “Voorhees Syndrome” (after Jason Voorhees of “Friday the 13th” fame), or perhaps “Terminator Syndrome” (I’ll be back!). Or maybe somebody’s already come up with a better name -- Julian coined “reductio creep” months before I tried to name it.
Monday, February 24, 2003
Irksome Expressions and Turns of Phrase #2
“Have a safe and happy holiday!” I’ll bet people under the age of 20 think this is the standard form of well-wishing before a vacation. But I remember the good old days when people said, “Have a great holiday!” The word “safe” appeared about the same time monkey bars over 5 feet tall disappeared from the nation’s playgrounds (along with the asphalt, which I don’t miss quite as much). For a while, “safe and happy” appeared only on elementary school bulletin boards, but now I actually hear people utter this in conversation with peers. If this keeps up, people will soon be wishing you a “tasty and nutritious meal” instead of a “nice lunch.”Irksome Expressions and Turns of Phrase #1
“I don’t care if you’re black, white, yellow, blue, or green with purple polka dots!” As an expression of non-racism, statements like this leave me cold. First, it comes off as defensive. Second, it makes you wonder if the speaker couldn’t think of any actual races, other than black and white, and so just started naming colors.
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