Health care, D.C. statehood and the American yen for win-win solutions

Radiologist Saurabh Jha, writing at the Health Care Blog, diagnoses the continuing rebellion against the Affordable Care Act: “This is the root of Obamacare’s problem: its attempt at a Pareto improvement. Named after Italian economist Vilfredo Pareto, this is policy which makes some people better off without making others worse off. A Pareto improvement was promised by the president at the launch of his signature reform. ‘If you like your doctor, you can keep your doctor,’ he assured.”

This is a good observation. If you have an economically diverse set of acquaintances, you can easily find individuals who consider themselves worse off since the implementation of the ACA. Some may have had bare-bones policies and are now paying more for plans that meet the ACA’s coverage requirements. Jha introduces his blog post with the celebrated example of Harvard University professors miffed that they now have to pay higher copayments and deductibles on their “Cadillac” health plans.


Jha reminds us, “Insurance is, by definition, redistribution.” Health insurance is a redistribution of resources from the healthy to the sick, and any system that provides basic care to the poor (even if it’s just pre-ACA emergency-room treatment) draws resources from the wealthy. Jha warns, “As Republicans think of alternatives to Obamacare they would do well to read my lips. Let me parse slowly. There is no Pareto optimal healthcare reform. None. Never. Someone will be worse off. Always.”

The trouble is, America insists on at least the illusion of a Pareto solution to every problem. This is inevitable, given the antipathy toward political factions in our early days, which led to a system of government in which it is almost impossible for a party to gain enough control to pass legislation with clear winners and losers.

The Pareto impulse—so close to the word “panacea”—is one reason slavery held on for so long in the United States, as political leaders came up with one “compromise” after another in an attempt to gradually scrub the stain from our democracy without making slave owners “worse off.” The North achieved a military victory in the Civil War, but the political imperative of minimizing harm to the Southern slaveholder class doomed Reconstruction and resulted in another century of American apartheid. (See the Slate video by Jamelle Bouie and Chris Wade on Andrew Johnson’s part in this fiasco, which makes him a strong candidate for “America’s Worst President.”)

So many problems in America go unaddressed because of the obsession with a Pareto solution. We can’t raise the gas tax to improve public transit because motorists would feel worse off, and the federal government can’t prioritize repairs in the states with the most dangerous roads and bridges because other states would feel left out. The biggest obstacle to reducing the greenhouse gas emissions that contribute to global warming is that we can’t figure out a plan that doesn’t inconvenience the producers of greenhouse gas emissions.

Tax reform has to have good news for everyone, so in order to help working families (say, by raising the earned income tax credit), Pareto logic dictates that we also give a tax break to high-income individuals. This tradition makes it difficult to get very far in addressing income inequality.

The District of Columbia has a right to statehood, or at least full representation in Congress, but it still hasn’t happened because no one can figure out how to give its residents political rights without reducing, by an infinitesimal amount, the political power of American citizens who already have representation in Congress. A few years ago there was a Pareto plan to give D.C. a congressional seat with voting privileges and pair it with a new seat for Utah—thus balancing a sure Democratic seat with a sure Republican one. But Republican support evaporated when Democrats balked at an amendment stripping D.C. of its right to pass gun-control laws. The gun lobby, you see, doesn’t cotton to the Pareto principle. It can’t stomach a plan that does it no harm when there’s a chance to increase its power.

Once in a while, an interest group or industry seems to be a clear loser in public policy. That can be an illusion. Tobacco companies have faced more and more obstacles to selling their cancerous products to Americans, thanks to bans on TV advertising, heavy cigarette taxes, and publicly financed anti-smoking campaigns. But as John Oliver reported on his HBO show this week, American tobacco companies like Philip Morris are making more money than ever, thanks to overseas markets—where they market their products to children and bully governments out of enacting public-health laws that would discourage smoking. So Philip Morris may have had some setbacks in the United States, but it can rest assured that it has suffered no harm overall.

America takes an active role in certain worldwide health problems, such as preventing the spread of AIDS and working to ease malnutrition. We’re not likely to show much concern about smoking-related deaths in other countries, though. The Pareto solution to cigarette addiction in the United States is to look away when tobacco companies recoup their losses and simply cause more deaths elsewhere. “Do no harm” is, after all, the American way.


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