• Returning to health reform’s redistribution

    I came down hard on Greg Mankiw and Steve Landsburg for claiming that the purpose of the ACA is to redistribute income. I acknowledged in those prior posts that Mankiw and Landsburg had a point, one I want to revisit. I also think they missed something, the very thing I’ve been getting at in recent posts on equality vs. efficiency.

    It is undeniable that a goal of proponents of the ACA is universal coverage for health care, which the ACA won’t quite achieve. What is that goal, really? It’s a goal of providing some basic level of health insurance for everyone, independent of need or means. That is, it’s a view that health insurance is a merit good. (Actually, I think the view is that heath care is a merit good is really what’s at the heart of it, along with a belief that lack of health insurance is a key barrier of access to it.)

    If something, and in particular something as costly has health insurance, is to be provided to everyone, some redistribution of income is necessary. One can’t achieve equality without redistribution. That’s why equality is often (though not always!) in opposition to efficiency. To the extent that redistribution removes or blunts incentives for productivity, some efficiency is lost in the transfer.

    Now, one can argue, as I have, whether the motivation of health reformers is income redistribution or health. I think it’s the latter and the former is the means. But they cannot be separated, so I understand where Mankiw is coming from (Landsburg too). It’s just not how I think reformers think. The redistributive nature of reform is not really the motivation, it’s just inseparable from it.

    There’s one more critical point about this: there is nothing — absolutely nothing — incorrect about wanting greater equality, even when it requires redistribution, and even at the expense of efficiency. Likewise, there’s nothing wrong with valuing efficiency. Both are virtuous. Neither can dominate. In a capitalist democracy, it is critical to have some of each. How much, exactly, of each and for what goods equality or efficiency should be the principal aim and to what degree, are matters of taste and only that.

    Therefore, what I strongly object to is an implication or interpretation that “income redistribution” is a figurative four letter word. It isn’t any more than is “efficiency.” Equality can’t be all bad. Not in a democracy, which requires some redistribution. (How does one otherwise finance the protection of basic rights, including the right to vote, for example?) Efficiency can’t be all bad either, not in a capitalist market system. (How else does one motivate the populace to make good use of limited resources?)

    It’s one thing to debate how to increase equality in access to health care (or in health itself). It’s quite another to imply that equality in health care or health are improper goals because they involve income redistribution. On the other hand, it probably is the subjective nature of the equality vs. efficiency tradeoff that inspires vicious, no-holds-barred argument. There’s no place to secure a grasp on objectivity. You can’t do it, and neither can I. In that we’re equal, even in a very inefficient debate.

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    • That fifth paragraph is getting tacked to the bottom of the increasing long list of things I wish I had wrote myself.