Tuesday, March 7, 2017

If the rich don't fund health care, young people will

During the debates leading up to the passage of Obamacare, Republicans settled in early November 2009 on a new messaging strategy: Obamacare exploited young Americans. Cato's Aaron Yelowitz laid out the case: Obama's health care bill
would drive premiums down for 55-year-olds but would drive them up for 25-year-olds - who are then implicitly subsidizing older adults.
...the premiums of older, less healthy people will be subsidized by the premiums of younger, healthier people.
 Dick Morris, in Front Page Magazine:
Under 30? Get ready to pay...these mandates will mean higher costs for the younger and healthier population. This bill is, in effect, a tax on the young.
 Diana Furchtgoot-Roth and Jared Meyer at The National Review:
...the law artificially holds down premiums for older people and raises the price for the young...the insurance companies have no choice but to pass the health-care costs of older people on to the young in the form of higher premiums. 
Will Wilkinson, at The Economist:
...the young and healthy will experience some "rate shock" at the Obamacare exchange not only because they will be subsidising those with a much higher cost of care...
Scott Gottlieb, at Forbes:
Obamacare is asking young adults to effectively subsidize the healthcare costs of older Americans. So far, Millennials are resisting this age-based transfer of wealth.
There are a million articles like this, particularly in right-wing publications, and they all invoke age-based transfers as a reason for young people to be skeptical of Obamacare.

The Republican alternative

Today, we got our first glimpse of what is evidently going to pass for the Republican "alternative" - and among other stipulations,
The Republican plan would offer tax credits ranging from $2,000 per year for those under 30 to $4,000 per year for those over $60.
If this is not an age-based wealth transfer from the young to the old, I don't know what is. Like Obamacare, the Republican alternative also includes some circumstantial and income-based adjustments that offset some of the more regressive effects of this formula. Nevertheless, the basic redistribution from young to old remains, which is why this stipulation exists in the first place. All this new plan does is make the ageism much more explicit.

Young people should blame capitalism

Health care policy presents an excellent case-study in how capitalism engineers ageist outcomes in our society.

At its heart, health care provision is a redistribution problem: some people are less able to afford health care than others. The direct solution would be to simply transfer the medium of health care access (wealth) from those who have it (the rich) from those who do not (the poor). This is the general form of socialized health care, which typically funds access to all by disproportionately taxing the rich.

Since capitalism frowns on wealth-based redistribution, however, our health care policy has to engineer all kinds of indirect workarounds that approximate a similar outcome. And while there are all kinds of ways you can do this, an obvious approach is to redistribute money from the young to the elderly. The elderly generally need more health care than the young, and the young generally have more income than the elderly; thus, an ageist redistribution scheme will at least imperfectly replicate what you would achieve by basing your redistribution on wealth. But only imperfectly - it does not, for example, help you to avoid the ageist injustice of a poor young person paying for the health care of a rich old man.

That's why, even in the Republican health care plan, the ageist redistribution mechanism has to be offset with income-based adjustments. Ultimately, the GOP is vulnerable to the same accusation of ageism as Obamacare was, and it only manages to escape this insofar as it abandons capitalism and indulges in wealth-based redistribution. Democrats would do well to target this political liability - but this attack only works if they abandon Obamacare and embrace the redistribution of wealth.