2009 10 11
Can we Distinguish Insurance from Stereos?
In response to what he dubs “the stupidest argument against health reform”–namely the argument that universal health insurance requires people to pay for someone else’s health care–upyernoz writes:
“paying for someone else” is the whole concept behind insurance. the idea of insurance is that there are certain things (floods, catastrophic medical costs, car crashes) which can be so economically devastating that individuals would be ruined if they had to pay the entire thing out of their own pocket. insurance is a way of pooling risk, everyone pays in, only the unlucky ones draw out. but then everyone can feel more secure knowing they have insurance to fall back on if disaster hits.
in other words, all insurance involves you paying other people’s bills (or other people paying your bills). that’s what insurance is all about. you can call it “socialism” if you want, that’s not an argument, that’s just slapping a label on something. but if you happen to believe it’s evil to pay for other people, then cancel all your insurance policies.
While I’m certain ‘noz and I stand united on the moral imperative of health reform that gives all Americans access to high-quality affordable healthcare, I don’t think his account of the argument he targets is fair, and thus I don’t think he offers a very satisfying response to the person who endorses that argument. Here, as I understand it, is ‘noz’s line of argument:
1. Proponents of the Stupidest Argument Against Health Reform maintain that they should not be forced to pay for another’s medical care.
2. But proponents of the Stupidest Argument willingly buy various forms of insurance without complaining.
3. But buying insurance just is the paying for another’s medicare care.
4. So to be consistent, the proponents should either withdraw their objection to health care reform, or else “cancel all [their] insurance policies.”
I think we can see clearly where ‘noz’s line of argument fails by changing the story a bit:
1. Opponents of income maintenance policies maintain that they should not be forced to pay for another’s wages/income.
2. But opponents of income maintenance policies willingly buy stereos without complaining.
3. But buying stereos just is the paying for another’s wages (namely those who make stereos).
4. So to be consistent, the opponents should either withdraw their objection to income maintenance policies, or else stop buying stereos.
It seems clear that while purchasing a stereo does in fact pay another’s wages, it is false to say that paying another’s wages is the “whole concept” of purchasing a stereo. But then what distinguishes purchasing insurance from buying a stereo? Each seems to amount to the same thing: parting with a sum of money to procure a good or service which is available to one only because certain others are willing to help produce that good or provide that service only because they too get something out of the economic arrangement.
The fact seems to be that those who wish to buy stereos and those who wish to buy insurance may not really care about the economic arrangements and contracts that lie in the background of these purchases. They do not really care that buying a stereo and buying insurance involves paying an amount of money a portion of which ends up paying another’s bills. The one person wants a stereo, and parts with a certain amount of money to get it. The other wants protection from the economic risks associated with (the treatment of) ill health, and pays an insurance premium to get it. It just so happens that, in our world, the reason why these purchases are available to one at all is that other people, who play different roles in the relevant economic domain, also get something out of their involvement. So, again, what could make the purported difference between buying stereos and buying insurance?
If this analogy is as revealing as I think it is, it shows why the proponent of the Stupidest Argument may not be making the silly mistake that ‘noz ascribes to him. To extend the analogy: Assume a tax is levied on all stereo purchases in order fund income maintenance policies for the unemployed. And assume that a would-be stereo-purchaser objects to this. Then that objection cannot be met simply by pointing out that he didn’t have a problem paying another’s wage through his purchase before the tax was levied.
In the case of health insurance, what would be the analog to the stereo tax that the proponent of the Stupidest Argument objects to? Since insurance is typically paid for through premiums, the proponent will likely claim that he should not have to subsidize another’s premium. But this raises the question of whether the initial distribution of income is itself fair, as that is the distribution that determines who has what to put toward premiums. To the extent that it is unjust that some work long hours in dreary jobs for what is now a largely depreciated compensation package, that can provide a reason to ask those who are favored by the structure of the economy to give some back to subsidize the premiums of those who get the short end of the stick.
Another barrier to insurance access has to do with differentials in health status (of which “pre-existing conditions” are one kind). To use a stylized example, assume that you and I form a two-person health insurance market, and that I am fairly healthy and you have a disease that can be treated with only very expensive health interventions. In this situation, each of us is presented with the option to buy insurance. But which insurance we buy, if any, will be influenced by which insurance products are available. If the only insurance product is one that pays for the sort of interventions you need, that product will be very expensive. In that case, I may choose not to buy it, since I feel there are other things I’d rather spend that amount of money on. But that may leave you without the prospect of insurance, since the resulting premium for you will be the same price as the expensive medical care you were hoping to avoid having to pay for directly by purchasing insurance in the first place. You will face a similar problem if there are in fact several insurance products available, and if I choose one that is cheaper. For that one will be cheaper precisely because it doesn’t not cover the expensive treatment you need. So while you may be able to afford that cheaper product, it doesn’t do you much good.
These thought experiments seem to show that the proponent of the Stupidest Argument is also probably objecting to having to subsidize the insurance choices that the market makes expensive for others because they are either more risk averse than he his, or because they in fact require more expensive insurance than the proponent himself wishes to purchase with the funds he has chosen to dedicate to health risk reduction. This is in fact not an objection we should dismiss as stupid, as I think the two-person example shows.
I’m sure ‘noz and I agree that when the simple two-person example is replaced with the much more complex picture presented by the macro situation in the U.S. today–a situation in which income is not distributed fairly and where individuals’ health status is profoundly influenced by myriad social circumstances beyond their control–there is a solid argument in favor of providing all Americans with at least basic health care paid for by general, progressive taxation. But even if we are right, we cannot dismiss the objections of those who disagree with us simply by pointing out that all insurance involves using what was once one person’s money to pay for the health care of another.
The moral of the story is this: it is false to say that the “whole concept” of insurance as such is to pay for another’s care. Yes, it involves that, but the sense in which it does is just the sense in which buying stereos involves paying another’s wage. Not much of moral relevance follows. But, it is absolutely true that the whole concept of certain social insurance schemes is to spread risk and cross-subsidize care for appropriate moral reasons. But those reasons cannot themselves be teased out of the idea of insurance as such.
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