Saturday, October 31, 2009

Disputing with Taraka

In a comment, Figment and Reality has pointed to HIPAA and COBRA as mechanisms for attempting to provide continuity of coverage. Read his comment and the link he provides to HowStuffWorks to get a sense of these programs. He’s right when it comes to group policies and Heaven knows I’ve benefitted from both HIPAA and COBRA. But however laudatory laudable the goals of both programs they are examples of a problematic relationship between government and corporations.

HIPAA and COBRA force private companies to serve societal goals - without society stepping up to pay the bill. It may all come out in the wash for insurers with regard to cost but it is another step down the road to private corporations acting as agents of the government rather than as independent entities. A road, obviously, that the health reform bills under consideration take us even further down.

I'm enthusiastically in favor of reasonable government regulation of corporations and I know the line where regulation becomes an unholy alliance is not clear and bright. Still I think it's important to remember the line exists and to understand when we are walking near it.

Why unholy? A private business should seek profit above all; in order to do so it must please its customers and compete with other firms. Those activities hold some of its more predatory urges in check. Government’s role should be to use regulation wisely to control the predatory urges that are not sufficiently controlled by market mechanisms.

Once a private business becomes an arm of the government, it no longer needs to please its customers and compete with other firms to make a profit; rather it needs to convince government to act in ways that make its business profitable. It will thus use every means at its disposal to persuade government to guarantee it market share by limiting competition from other firms and by making its customers captive. Government is inclined to go along with this because the firm is carrying out the government’s policies and it is in the government’s interest to insure the firm remains able to do so.

Now we have the worst of both worlds. We have a profit-driven firm that does not need to deliver a decent product in order to remain profitable and we have a government with no interest in checking the excesses of a private firm it now considers an arm of the government. Each party has contaminated the other.

Furthermore when the government forces private industry to serve government purposes doing so allows society to hide from itself the cost of a desired policy - even though knowing the cost of a government policy should be an important part of deciding whether to implement it. When New Jersey requires health insurance companies to provide excellent coverage the costs appear on insureds’ bills rather than on taxpayers’ returns. The costs of instituting the government policy were not openly borne by taxpayers through a government mechanism. Instead the costs were hidden in increased insurance costs for everyone who buys - or would like to buy - health insurance.

COBRA and HIPAA are the same thing although almost certainly with a smaller individual impact. As a society we can congratulate ourselves that we’ve forced insurance companies to provide more coverage and it hasn’t cost anything. It’s true that it hasn’t caused our taxes to go up (at least directly) but it must have caused a small increase in health insurance premiums. We don’t see that increase as driven by governmental fiat; we see it as a price increase by a private business and thus we can deceive ourselves about what we’ve done.

As I said, there is no hard and fast rule about when government regulation of business becomes an alliance of government and business. But we do ourselves no favors if we let government use private business to achieve ends more honestly achieved through direct government action. Neither do we do ourselves any favors if we let businesses use government intervention to achieve the profit that should come from fair competition in the marketplace.



On an - I think - unrelated note, what’s particularly odd about COBRA and HIPAA is that the government could have achieved the same goal more straightforwardly by simply allowing anyone who would be covered under COBRA or HIPAA to enroll in Medicaid and pay a premium. There was no need to force private insurers to provide the desired coverage.

The title of this post comes from Roger Zelazny’s Lord of Light. A (mostly) human man is possessed by Taraka, a powerful demon. The man eventually finds himself infected by Taraka’s evil, “disputing with Taraka” over which woman is most desirable, raising the wine cup or the dungeon whip by his own will. The analogy works nicely whether your ideology inclines you to assign the role of Taraka to private companies or to the government.


Grim said...

I don't think I agree that Medicaid is something you could swap out with COBRA.

COBRA is part of the deal, these days: you understand when hiring me that you're agreeing to take on the responsibility of helping me ensure health care for my family between my leaving you and finding my next job. That is part of the compensation packet for my services-to-be-rendered. You know it up front, I know it up front, and we enter into the arrangement willingly.

Medicaid is a welfare program, paid for by taxes: and taxes are confiscated. There's not any similar 'I agree to provide you with this benefit, if you need it, in return for X service that I need from you now.' It's just the government turning up at your door and taking a bunch of your money, and then giving it to someone else. You may never have consented to it at all; but if a majority of your neighbors vote to take your cash for this purpose, you're stuck.

COBRA, then, seems to me to be a moral program based on voluntary exchange. Medicaid is not that.

Elise said...

I'll give you some of this, Grim, but not all of it. COBRA may be understood up front these days but it wasn't when it was first introduced. At that point it put insurance companies which had never agreed to the deal on the hook for the health care of people after they left the employer with which the insurance company had contracted.

I agree Medicaid is coercive but I did specify that COBRA should have required someone who signed up for Medicaid to bridge the gap between one job and another would have to pay premiums. So while Medicaid may be coercive I wasn't proposing the government take your tax dollars to help me buy health insurance when I was between jobs. Although even in that case I'd argue that such an approach would be more honest about costs than doing what COBRA did and sticking the insurance companies (and therefore the policyholders) with the bill for a government program.

Grim said...

I admit that I wasn't watching COBRA when it first came online, so I'm not sure how it was done. What we have 'going forward,' as they say, is the program we agree is a voluntary exchange.

As for the 'premiums,' how does that work in your view? In order for it not to be subsidized by me, they'd have to be charged what the Medicare coverage actually costs. If they can afford that, though, there are only two possibilities:

1) They could also afford to buy coverage on the private market, or,

2) They can afford Medicare but not private insurance because Medicare is artificially suppressing prices through cost controls.

If (1), there's no logical reason to fold them into Medicare; let them buy on the market. If (2), someone is picking up the costs of those price controls -- doctors, perhaps -- 'at gunpoint.'

Elise said...

Yes, they would have to pay what Medicaid actually costs. And Medicaid does pay below "market" - lower even than Medicare.

So health care providers are picking up the bill. However as far as I know no one is forced to take on Medicaid patients - in fact I read occasionally that there's a bit of crisis in this regard since many doctors won't take Medicaid patients. So picking up the tab, yet; at gunpoint, no.