The libertarians respond on big government and Obamacare
Friday’s post prompted quick but thoughtful responses from the Cato Institute’s Ilya Somin and Reason magazine’s J.D. Tuccille.
First, Somin elaborates at The Volokh Conspiracy on his alternative to the pursuit of social justice at the ballot box: “voting with your feet,” which I had suggested was a strategy better suited for the well-off. An excerpt:
In reality, as I discuss at length in the book and elsewhere (e.g. here and here), foot voting historically has benefited the poor as much or more than the affluent. This is true for several reasons: the poor usually have more to gain from moving to jurisdictions with better job opportunities and policies (in part because they are so much worse off to begin with), and they are less likely to own immobile assets such as land that are difficult or impossible to take with you. Dramatic examples of effective foot voting by the relatively poor include the movement of millions of poor African-Americans from the South to the North in the first half of the twentieth century, and the movement of poor and lower middle class people to Texas and various southern and southwestern states in recent years, partly in response to those states’ more flexible labor markets and cheaper housing (caused in part by less restrictive zoning laws).
I think there are some areas of agreement here. Any thriving economy needs significant internal migration (akin to blood circulation), and government can cripple the entrepreneurial spirit by trying to keep people in place, even with the best of intentions—through rent control laws, financial incentives for people to stay in areas where jobs are vanishing, and the like. Where we may disagree is in the importance of a safety net to minimize the human misery that inevitably comes with major economic change, as not everyone wins with “foot voting.” As for the role of the federal government, I’d say that any state that sends its citizens into the U.S. military has a moral claim on some assistance from Washington in times of economic distress. Our superpower status is strengthened by the nation’s size and natural resources, and we have an obligation to make sure that all states and municipalities within can provide a certain standard of living.
As for Somin’s examples, the migration of African-Americans to the North was prompted by the availability of good-paying (often union) jobs for those without a college education. That scenario would be tough to replicate today. The more recent migration to low-wage (or "more flexible labor market”) states like Texas is worth studying. Somin is correct that cheaper housing has a lot to do with this; the other side of the coin is that NIMBYism prevents “foot voting” to many areas of the country. I live in famously liberal Massachusetts, and one of the most cherished aspects of strong municipal government here is the ability to limit new housing and to keep out new employers that disturb residents (not just factories, but practically anything that brings in traffic). Liberals and libertarians may have a common interest in getting rid of the most restrictive zoning laws (and occupational licensing laws that stifle entrepreneurship among the poor, as Slate’s Matthew Ygelsias often criticizes). The question is whether the federal government has a role in fighting such restrictions at the state level (and, in turn, whether the state should supersede municipal control).
Getting back to the Great Migration of African-Americans to the North, that was also an example of limited foot voting, as these migrants were tolerated (“welcomed” may be too strong a word) only in cities that required new laborers. The city of Detroit, for example, was a major experiment in foot voting, as it attracted hundreds of thousands of both African-Americans and lower-income whites (many of them immigrants) in the first half of the 20th century. More recently, the city has lost hundreds of thousands of residents, first due to “white flight” from a majority-black city and then due to the decline of the auto industry. In the long term, one could characterize Detroit as a great success in foot voting, as it enjoyed several decades of productivity that helped to boost the national economy (all those car sales) before it reached obsolescence and its population drop hollowed out its tax base. I do think that the remaining Detroit residents, like all Americans, have a right to support candidates for federal office who promise to address poverty and unemployment, even if that means increasing the tax burden on more fortunate citizens, and “ignorance” of specifics like the cost of entitlement programs (the topic that started this back-and-forth) does not lessen the validity of their decisions.
Related: Kevin Clarke reports from Detroit.
Keeping your insurance under Obamacare
Reason’s J.D. Tuccille has a new post on my objection to his claim that under Obamacare, “it doesn’t matter if you like your health care plan, since you probably can’t keep it.” True, President Obama would have been more accurate, if less pithy, to say, “If you like your health care plan that you get through your employer, you can keep your health care plan.” And Tuccille, in turn, could have said, “it doesn’t matter if you like your health care plan that you buy on the individual market, since you probably can’t keep it.” What’s at issue is the Affordable Care Act’s coverage requirements for plans that individuals directly purchase through federal or state-run exchanges.
Sold, in part, as a measure to lower the cost of health care, the Affordable Care Act appears instead to be increasing costs and then attempting to shift them around, with the idea that “young invincibles” can be conscripted into the system to bear the burden and subsidize premiums for others. Part of those increased costs comes from mandated coverage (between ten and 50 percent “depending on the state, specific legislative language, and type of health insurance policy” according to the Council for Affordable Health Insurance). The mental health coverage that Sullivan praises is especially costly.
If, despite those cost-shifting subsidies, consumers still experience sticker shock when they go shopping, that’s going to drive them away no matter the penalty—especially the young invincibles who don’t really want to pay the premiums anyway. That leaves a core of sick patients in the system, driving costs up even higher, which puts upward pressure on premiums... This is what Reason’s Peter Suderman calls the “health insurance death spiral.”
We can agree that if average premiums for individually purchased policies skyrocket (or people lose coverage and must enroll in much more expensive plans), then Obamacare has failed in one of its chief objectives. We need more time and data to see if this is the case. (I don’t know how to judge the Weekly Standard’s example of a Florida woman whose premiums are supposedly going from $54 to $591 a month. The $54 rate seems very low to me, so I don’t know if it’s the result of skimpy coverage or absurdly high deductibles. If she’s a single person, $591 is ridiculously high, but the CBS report that the Standard links to notes that she may be eligible for subsidies to bring down her cost.)
But there does need to be a standard on what insurance plans cover, and I don’t have a problem with “young invincibles” having to contribute to the costs of insuring older and sicker Americans. I would not think it fair, for example, if young single men could comply with the health insurance mandate with cheaper, stripped-down policies that do not cover pediatrics or health services unique to women or the elderly. If premiums are so high that young adults avoid buying insurance altogether, we may need to look at changing the coverage requirements. But even young invincibles can end up with unexpected health problems (physical therapy after an accident, all manner of mental health issues), and we wouldn’t be better off if they fell through the cracks, or had to enroll in Medicaid, because they guessed wrong in choosing an insurance policy.
Full disclosure: As I’ve noted before, I purchase individual insurance through the Massachusetts-run Obamacare exchange (which, thanks to Mitt Romney, was begun years before Obamacare existed). My single-person plan is $365 a month, which is about the same as the COBRA plan I had before. After about three years, I’ve had no unpleasant surprises in terms of rate hikes, deductibles, or what services the plan covers. I feel safer—in terms of health and financial certainty—knowing that the plan has been approved by the state (and now federal) government.