Can one change one’s mind on the health care mandate?

I never have, but some people have, see this post too.  I don’t care to guess at their motives (which are totally cynical), but let’s consider this as a question in pure logic.  It is harder to make a mandate work when a) health care costs are high, and b) income inequality is high.

a) The higher are health care costs, the more the mandate is forcing lower income consumers to buy an inefficiently high quantity of medical care.  (Forcing everyone to buy the same quality toothpicks is not a big deal, but forcing everyone to buy the same quality car, or house, is tougher to pull off.)  Of course subsidies offset this problem to some extent, but the poor person still may be worse off or only marginally better off, the subsidy is itself costly, the subsidy raises fairness questions, in a pluralistic health care system the subsidy may cause inefficient burden-shifting into the subsidized sector, and the subsidy involves higher implicit marginal tax rates as it is phased out for higher income classes.

b) The higher is income inequality, the more serious are the problems discussed in a).

Circa 2080, imagine a world with two classes, the very rich and the fairly poor.  The very rich pay thirty percent of their $1 million a year incomes on health care.  The fairly poor earn $100,000 a year.  How are we supposed to roughly equalize health care consumption?  Does it make sense to give the fairly poor 3/4 of their real income ($300,000 out of a total of $100,000 cash plus $300,000 health care benefits) in the form of health care benefits?  And could we enforce that with a mandate + subsidy?  Probably not.

Of course both health care costs and income inequality have been rising in this country.  It is a critical question — and one which remains unanswered — at which margins these problems kick in decisively.

Under “Medicaid for everybody plus private cash top-offs,” this same problem does not arise, but there is also less egalitarian redistribution.  I would favor that blend over a mandate.

Here is related commentary from Ezra Klein.  Here is related commentary from Andrew Sullivan.


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