A Third Way for Universal Healthcare

Apparently, more states are looking at implementing a single payer healthcare system. While universal healthcare for all citizens is something the government (and its citizens) can and should do, a single payer plan is not the way to do it. While some industries like national defense and (for the most part) highways and roads are best operated solely by the government and other industries (retail stores, coffee shops, etc.) are best operated solely by private parties, there are other industries where a partnership between government and private industry will be best. Healthcare is one of these industries where people would best be served by just such a partnership.

The status quo of a wholly private (already subsidized and supplemented by Medicare and Medicaid) system leaves too many persons without access to the care they need. There are fears that a nationalized system would do even worse, with everyone who gets a sniffle clogging up hospitals; not to mention the inefficiency and bureaucratic cold shoulder.

The answer is to pool funds (yes, through taxes) and then have the government negotiate and manage health care policies that would be provided by private insurers, e.g. Blue Cross/Blue Shield. Everyone would a personal health insurance policy that they paid for through taxes (yes, sometimes subsidized by others), provided by insurers just like they are today. The front end delivery of healthcare would be the same as it is today, but it would be available to everyone.

Now for the tough part...paying for it.

I think that this program would fit in well in a broader social security (and tax policy in general) reform that would create these third way social welfare accounts for persons to replicate and replace the current Social Security structure. Use the current method of collecting taxes (possibly remove the $90K ceiling) and create a real social welfare program that acts as insurance of a base level quality of life and streamline it all into one agency managed by the GSA (who, by the way, manages pension funds for far less than any private firm, efficiency anyone?). Whole Life Insurance (with survivor's benefits), Disability Insurance, Unemployment Insurance, Health Insurance, and a Pension.

Money (and risk) would be pooled and then redistributed (what a naughty word, but isn't redistribution at the heart of insurance anyway?), but each person would have her own private and personal account that was hers and that she had exclusive claim to. Congress couldn't borrow or spend it. Private industry would still be the provider, in fact, I could hardly think of a better financial boon for State Farm, Blue Cross, etc.

Another affect of it that eases the tax burden is that it frees up private industry from having to provided those services. Everyone already has their own insurance, so there is no reason for employers to provide it. Of course this would mean that they couldn't hide pay from taxes in benefits as well, but there are always trade-offs.

If private employers what to offer additional pensions, great. The reality is the government is already bailing out numerous private pensioners who would otherwise suffer from poor management by the private firms. Do the objections about state incompetence and inefficiency really hold up in the face of the emerging pension crisis? Besides that, people who want to can save more on their own, the government pension would hopefully mirror current social security payments, but it is in no way meant to ensure a life of luxury.

Ideally coupled with real tax reform that would have additional benefits to industry as in my earlier post, this third way of dealing with social welfare would be a far sight better than either what we have today, or what France and Canada use. Stay tuned for follow-up posts.

Economic approach to punishment

I read a story the other day but cannot currently find it. It was an interview with the man who dispersed the 9/11 fund. He talked about how he determined a value for each life and how that determined the awards he gave out. This got me thinking about other applications for a quantification of human life and it came to me --an economic theory of punishment.

There is a long list of literature on the subject of the cash value of human lives. This figures are used in personal injury and wrongful death suits, to list a few applications.

There are various computational methods used to determine these values. One that I am aware of is using real estate figures. For example, a researcher can find housing that is similar except for the amount of pollution in the area. By looking to environmental figures as to the loss of life expectancy due to exposure to the pollution and tying that to the difference in the market value of the homes, she can come up with a value that the market places on life. This is a simplified version of just one method. Many others focus on lost income, etc.

Once a value has been placed on a life, a limb, or an emotional hurt it has been brought out of the fog of qualitative analysis and into the realm of quantitative. Instead of "insufferable pain" there is $200K of damage. I think that this quantification could be used to great affect in determining the proper punishment for a crime.

This would have the biggest affect on crimes that primarily cause economic loss, e.g. theft and assorted white collar crimes. If we are to put any credence at all into the values that economists and others attach to life, limb, and emotions then the value of those damages should be reflected in the punishment. In the converse situation, the value of damages from primarily economic crimes should reflect the punishment.

The two most obvious places this would have an effect would be "victimless" crimes, e.g. drug use (although assertive prosecutors would find societal costs) and white collar crimes, e.g. Enron where the monetary damage was high, but the punishment low. A "victimless" crime that causes no economic loss can demand no punishment, while an Enron that causes massive economic loss demands the harshest of penalties.

For comparison, assume an average life is valued at two-million dollars (If I remember correctly, this is not an unreasonable value). Under an economic theory of punishment (I know, sort of a misuse of the adjective "economic") someone who causes two-million dollars in damages is as morally culpable as a murderer, and should be punished as such. Not very Utilitarian, but that's not the point.

There are, of course, problems with this approach, both ideologically and practically.

The immediate ideological objection is that if everything is quantified, then a person should be able to buy her way out of her punishment in a similar manner to how the rich avoided the draft in the U.S. Civil War. One way to confront this issue is to use a sliding scale similar to that used to value lives and limbs by basing the damages on lost income. I believe Sweden applies jsut such a sliding scale in traffic fines. (google "Nokia and Sweden and "Traffic fines"") and see what you get!)

The practical problem is that accurate valuation would not be possible. The answer to that objection is that these valuations are used now, and that there are enough aggregate figures that reasonably standardized values should be derivable.

With the constant battle for objectivity and equality in sentencing laws, tying punishment to a quantifiable damage (as found by the trier of fact in a court of law) is one possible solution.