Living Responsibly and Replacing Obamacare
P. J. O'Rourke, the libertarian author and humorist, made a side comment in a recent interview in which he offered three criteria by which to assess public policy proposals: does the policy promote the dignity of the individual, does it enhance the liberty of the individual, and does it encourage the individual to live a responsible life?
His comments struck me as a useful insight that could be applied to the policy topic du jour, the replacement of Obamacare.
Living a responsible life is almost a foreign concept in twenty-first century America. But if we want to remain "the land of the free", we must live responsibly. Responsibility is a necessary component of liberty and together responsibility and liberty enhance dignity.
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Relying on others for our welfare, be they parents, kind strangers or taxpayers forced to pay for social services, is inconsistent with dignity and liberty. Don't get me wrong. From time to time we need the help of friends, church, family and even the larger community. It is good and healthy to seek and accept such help, graciously offered, and graciously accepted. It is good and healthy to provide such help to others when the need arises. But as a matter of day to day living, one should not be reliant on "the kindness of strangers".
To the extent possible, public policy should be focused on providing channels for individuals in need to become responsible for themselves. Public policy which entraps individuals in a life of welfare dependency is at best, badly designed and at worst, immoral.
Which brings us to Obamacare. The entire justification for Obamacare was that many people (40 million was the estimate I recall) did not have health insurance. Not all of those 40 million people were irresponsible. In some cases, they could not get insurance because they were already sick or pre-disposed to sickness. In some cases, people wanted insurance but could not afford to pay for it. But in some cases, especially among the young and healthy population, individuals chose to risk a health catastrophe rather than use their disposable income on insurance. The responsible thing is to choose to buy health insurance over an iPhone, as Rep. Chaffetz (R- UT) pointed out last week in a politically incorrect, but entirely relevant comment.
The liberal Democratic response to the problem of 40 million uninsured people was Obamacare. A lack of responsibility resulted in a significant loss of liberty. Obamacare mandates that people buy a prescribed comprehensive insurance plan or face costly penalties if they do not comply. Obamacare worked very well at providing coverage to sick people and people pre-disposed to a significant health issue. Obamacare worked very well at enrolling millions of low income people into virtually free (to them, not to the taxpayer) expanded Medicaid. Those enrolled are now trapped in the welfare system. At least they have access to some health care. But Obamacare, despite the individual mandate, failed to force enough healthy uninsured individuals to buy the insurance. Without the monies these "irresponsibles" would have paid into the system, Obamacare is unsustainable. It is now in a "death spiral" which will lead to the collapse of Obamacare sooner rather than later.
We can learn a lesson from another social insurance program, Social Security. The main justification for Social Security back in the 1930s was also the failure to live responsibly.
Some people did not save for old age during their working years. Some adult children did not take responsibility for their elderly parents. Too many elderly people were left in severe poverty. The solution was a universal (with few exceptions) pension system that provided a minimally acceptable benefit.
Social Security is not comprehensive. By design it only covers about a third of the expected need in retirement. By design, Social Security leaves room for dignity and liberty as people are still responsible for their own well-being beyond the minimal pension it provides. Three generations later, poverty among the elderly is greatly reduced.
How can the lesson of Social Security be applied to the replacement of Obamacare?
We should accept the fact that without unacceptably draconian measures, not all people can be forced to buy expensive comprehensive Obamacare policies. Obamacare policies are loaded up with coverages the young and healthy will never use and are burdened with excessive premiums on the young to subsidize the cost of coverage for the sick and for older people. Many of the young and healthy will just not be responsible in the way Democrats want them to be.
We should also accept the fact that the Republican proposal, which does away with the mandate, is also unlikely to get people to live responsibly and buy health insurance. Sure, it may offer incentives to buy insurance, and it may offer cheaper, less comprehensive options which people really can afford. Still, many people will choose to risk catastrophe to buy that iPhone instead of insurance.
While we must accept reality, we should not accept 40 million people living irresponsibly, without health insurance. Society must act responsibly too.
The government should adopt the playbook of Social Security, and provide universal catastrophic health insurance to everyone. Without getting into details, of which there are many, universal catastrophic health insurance could provide a minimally acceptable level of protection. It could, for example, pay for major medical expenses that exceed a high threshold, such as $50,000. The government could then offer tax incentives and subsidies to individuals to encourage them to live responsibly and buy their own insurance to fill the gap.
If there are those who live irresponsibly, and choose not to get insurance, they will face a serious financial challenge if they have a major health event. They will be forced to look for the kindness of strangers to help them pay for their irresponsible choice. But they will not suffer a catastrophe, because the universal government program limits the financial damage.
Universal catastrophic health coverage will make the remaining health insurance market more affordable and competitive, not just for individuals, but also for employers struggling with the rising cost of health insurance. Universal catastrophic coverage will require a special health insurance tax, much like Social Security has its own tax source. To keep the loss of individual liberty to a minimum, the major medical coverage threshold should be large enough so that the special tax to pay for it is low, on the order of a 2% sales tax, for example.
Universal catastrophic health insurance is a realistic step towards a public policy which enhances dignity, at a minimal cost to individual liberty, and which still encourages people to live responsibly.
