TOC Health insurance, the real mandate debate Your Turn

April 3, 2012

Can the US Government "force every citizen to buy health insurance or be penalized"? Few will tax Alan Rappeport of exaggeration for writing "the case is one of the most significant in decades" (*). Already my faithful readers wonder how this national debate, now before the US Supreme Court, can possibly be linked with eprivacy, as they know it must lest this fillip take an unhealthy leave from its mandate.

Hopefully such readers will not be disappointed. My point indeed is that, however important, the current debate hides another, even more capital decision, which every responsible leader wants to delay for after he or she retires. But they must be patient. Today's emergency cannot be skipped.

Perhaps the most fascinating aspect of the case is that nobody knows what it is about. I am not here casting doubt on the principal actors' mental acumen. Oral arguments before the Court are a joust between highly trained experts in the law. I am only reflecting the nature of the dispute.

"Justice Antonin Scalia compared the purchase of health insurance to the purchase of broccoli", Paul Krugman reminds us (**). Yet, Alan Rappeport reports, for "Donald Verrilli, the US Solicitor-general", health insurance was not so much a product, let alone a produce, but "a method of payment". Still the case "could leave the US Government open to challenges trying to block taxation on other issues", argued "the court appointed [...] outside attorney, Robert Long". But, as Justice Ruth Bader Ginsburg said, can the mandate be a tax if "this is not a revenue-raising measure"?

Truly the outcome of the case will be determined by the very name picked by the justices, be it a tax or a broccoli floret. Shall I supplement Justice Scalia's famed dictionary diet with a definition of my own? An insurance is a pooling by people who face a random risk at once high and uneven.

Historically European workers created such pools as they had the wish and the means to join them and could lose it all to some severe illness. Health insurance is typical of the social solidarity which springs from shared fear. Thus "Paul D. Clement, representing 26 states challenging the law" is right in ironizing "that's a very funny conception of liberty that forces somebody to purchase an insurance policy whether they want it or not" (***).

Adam Liptak suggests this quote targeted Justice Anthony M. Kennedy, seen as the swing vote who will settle the case. In another dispatch (****), his pen records said Justice's remark that "most questions in life are a matter of degree", a judicious principle to keep one's freedom of mind. For Pascal, answers also depend on where one lives. The essence of liberty this side of the Pyrenees may be unconscionable beyond.

Is it true that in the United States "a union may require that employees either join the union or pay the equivalent union dues" (1)? What shocks a French sense of individual honor may look normal to more gregarious Americans. But to the latter the United States may be less than a union.

The strength of Justice Kennedy's principle lies in its potential to account for the twisting march of History. Since the XIXth century, two trends have in fact hollowed my definition of health insurance. First the randomness of severe illnesses has gradually retreated as medicine interprets family history, genes, past and current habits. Second religious charitable drives have progressively fostered a state duty to enforce social justice.

The first trend breaks down the wish to share risks on an equal footing. "I'm in good shape, I don't eat meat, I don't drink excessively, I've never smoked" (*****). And so Mr. Lodor tells Abby Goodnough he resents being lumped with his less virtuous neighbors. The second trend does away with free markets. Hospitals may not reject emergency patients for their inability to pay. Insurers may not discriminate based on one's genes (2).

No matter what the Supreme Court decides, it will not alter these secular trends. No longer a free market product, health insurance must be a tax.

A tax does not have "to raise revenue", redistributive justice through private actors never does. The presence of private actors does not turn justice into commerce either. Do privately run prisons allow one to confuse jail birds with turkeys? Yet "in the long history of political thought sincerity has, if anything, been discouraged", R. Jay Magill Jr. explains (******). Denying it is a tax, the Court is bound to obfuscate as much as it adjudicates.

However we should pay close attention to Wayne Lodor's lament. Unless misrepresented for partisan gains, neither social solidarity nor capitalism encourage the free riders who irk him. But how to detect them if not by forcing people to bare their all? Free insurance companies to set their premiums according to the best science or free the state to become the Real Big Brother of our nightmares, either way eprivacy must be crushed.

A pure market approach is helpful to reveal the economic value of eprivacy in negotiating a transaction. He who keeps his cards from the other wins. If I have a precondition but can avoid it to be documented, I will pay less. If the company knows my risk of developing a costly cancer is low but does not share this with me, it can induce me to pay more. Car and white goods salesmen call this lucrative practice extended warranties.

Still free riding is itself "a matter of degree". All the risk factors Mr. Lodor mentions are under his direct control. He does not so much reject social justice as he stresses personal responsibility. Without it, social justice injustly burdens society with the ever escalating costs of what economists call moral hazard. Not for nothing my motto reads "Privacy, Identity, Responsibility". There can be no human rights without duties.

What is the solution then? While historical reality makes it a tax, the United States may want to brand it Extended Medicare, to use a name under which mandated insurance has gotten quite popular. To respect eprivacy, one should calculate the tax in the absence of any personal confidential data. But to honor responsibility one should discount the premium for those who want to benefit from their good habits and thus accept monitoring commensurate to their bonus. Good management already demands to model the risks and costs of personal behavior.

In this approach, I would surrender neither responsibility nor privacy, especially if the Supreme Court were to forbid the sales of my health data behind my back. True, my insurance company might get to know how much broccoli I eat but only if this lowered my bill and I authorized it. As for Mr Lodor, "who is 53", he would not have to risk bankruptcy in view of an unexpected and severe condition indifferent to his bonus bearing habits and die of shame. For, too young to take shelter under Medicare and thus rendered destitute, he would have become a free rider after all.

Of course the helix of history might soon make apparent how strongly some bad habits correlate with poverty. But this is beyond my mandate.

Rather, as everyone flees responsibility, as the Court denies eprivacy to be a right, be assured commerce will remain free to fix markets.

Philippe Coueignoux

  • (*) ........... Supreme Court judges set to decide fate of healthcare law, by Alan Rappeport (Financial Times) - Mar 27, 2012
  • (**) ......... Broccoli And Bad Faith, by Paul Krugman (New York Times) - Mar 30, 2012
  • (***) ....... Appealing to a Justice's Notion of Liberty, by Adam Liptak (New York Times) - Mar 30, 2012
  • (****) ..... Sharp Questions in Court On Health Law Mandate, by Adam Liptak (New York Times) - Mar 28, 2012
  • (*****) ... In Real World, Mandate Stirs Some Dissent, by Abby Goodnough (New York Times) - Mar 28, 2012
  • (******) . The case against sincerity, by R. Jay Magill Jr. (Boston Globe) - Apr 1, 2012
  • (1) see the union shop practice in the wikipedia, an information the author has not had the time to corroborate.
  • (2) see GINA in the wikipedia
April 2012
Copyright © 2012 ePrio Inc. All rights reserved.