The Mad Political Scientist
Hocking loogies from the ivory tower
Special Interests and the Scope of the Health Care Debate
Nov 5th
We’ve all seen it somewhere. Whether it be a high school parking lot, a dive bar in the rough part of town, or an upper-middle-class subdivision, there are fights everywhere. Some of these feature two fairly evenly-matched individuals, say two freshmen who feel the need to prove their manhood by shoving each other until an assistant principal tells them to stop. Sometimes, though, the fight escalates. If a middle school student tries to take the lunch money of a 4th grader, for example, the 4th grader may decide that rather than be pummeled by a much larger foe, it would be smarter to call in reinforcements in the form of an older brother. Then, using a similar calculus, the middle school student will call in his older brother, who happens to be an all-state wrestler. Then, the first older brother decides he might need some reinforcements, so he gets a friend or two to come along. The wrestler sees this, and knows he can’t take on three people, so he brings a few other wrestlers. And so on, and so on. Before long, the entire city is standing on opposite sides of the 50 yard line because one 7th grader forgot his lunch money.
OK, this is probably an extreme example. (Well, except for the “probably” part.) However, it highlights an interesting political phenomenon. When you expect to lose a political fight, the best recourse is often to increase its scope, bringing in more people sympathetic to your cause. The seminal work here is probably Schattschneider. (1960) Schattschneider, in addition to having one of the most fun names in all of political science, wrote about public and special interests in The Semi Sovereign People. He goes well beyond what I’m laying out here, and I highly recommend the book to anyone who isn’t in a political science program but wants to read classic pieces of political work from the 1960’s. That’s kind of a small group, so but is the group of folk who read these pages, so I figure I’ll just throw that recommendation out there. It’s worth a couple of bucks at a used bookstore, if you can find it.
That was in my reading list this week, and as I read it, I couldn’t help but think of the health care debate. In Schattschneider’s terms, the health care industry is a special interest. That can be a loaded term, so I should stop to define it. Special interest groups are organizations whose membership is contingent upon belonging to another group. Unions and professional organizations are good examples. Presumably, when lawyers, doctors, or contractors get together to discuss their policy interests, they are examining which policies would benefit lawyers, doctors, or contractors, not society as a whole. The latter benefit would be nice, too, but it’s a secondary consideration. The Lawyer and Doctor groups would be more interested in lobbying on the details of tort reform than, say, aid to developing nations. This doesn’t make them bad people, just self-interested. Please don’t misconstrue this as an effort to crucify one interest for the benefit of another. One could easily plug the local PTA into the above example.
This is in contrast to public interest groups. These groups are open to anyone. Good examples might include the ACLU or NRA. While there is still a specific policy interest, the goal is a general benefit, not a specific one. One need not expect to be executed for his/her political beliefs in order to join Amnesty International.
With these definitions and the earlier framework in place, consider two situations. In the first, a special interest is winning. In the case of the health care debate, we can see hospitals, pharmaceutical companies, individual doctors, and insurance companies “winning.” They are performing the service they set out to perform, doing it reasonably well, and being paid very well for it. Some individuals are having great difficulty with this system, being forced to wade through a maze of insurance paperwork to cover the soaring costs of medical care. These individuals are “losing.” (Use of asinine air quotes here is meant to highlight the fact that I’m oversimplifying things. A lot. My interest is in the debate itself, not which side is actually right. Feel free to write angry comments below, but know that you’re not going to wound my very soul with them.) It is in the interest of the medical industry to keep this conflict small. Sure, the current system isn’t perfect, and they’re missing out on some customers/patients because of high prices, but the industry is doing well, and would like to be left alone. Public advocates, however, see a public that is currently “losing,” by way of paying too much for health care and/or dying.
There is little that even a very large group of citizens can do alone. Storming the proverbial Bastille isn’t exactly an option, and the old capitalist saw of “voting with one’s feet” isn’t really practical when it comes to health care. The only remaining solution is to expand the scope of the conflict, allowing in more powerful actors sympathetic to the cause of these public advocates. In this case, the solution is to lobby for government intervention.
In short, large industries are too powerful for groups of citizens to take on without some sort of government intervention. Of course, the first criticism of such a statement is that citizens probably shouldn’t be too concerned with toppling large industries. After all, capitalism has been pretty good to us. While I wouldn’t completely agree with such an argument, a clarification is in order. I am not talking about putting hospitals and doctors out of business. To the contrary, our hypothetical group of citizens wants to use the services of these hospitals and doctors and is unable to do so. Achieving this goal, however, requires a change in the balance of power in the conflict.
At the same time, Schattschneider’s model in its most basic form predicts that those in the industry will try to keep the scope of the conflict as small as possible. This isn’t exactly what they have done; industry groups have argued that the American health system will fail if government involvement becomes the norm, that socialized medicine will destroy what we have built, etc. etc. etc. Schattschneider comments that special interests are likely to claim frame their arguments in terms of public goods when addressing public audiences. This does not mean that such claims should be ignored. It stands to reason that those in an industry will know it at least as well as those outside of it. Given that such groups aren’t exactly unbiased, though, such claims should still be taken with a grain of salt.
To sum up, groups bring more people into a conflict when it is necessary to win. This has a couple of implications. First, the equilibrium seems to be one of total involvement. In other words, if I am losing, I will bring in enough outsiders to achieve victory, but then my opponent will attempt to do the same. If he is successful, then I will again go seeking others to join my cause, and so on. Before long, every issue becomes like my fictional small town, half on each side of the 50 yard line over lunch money. The second implication follows from the first. Those who are paying attention to politics should be able to find an interesting frame for any issue. My previous blog on health care as gender politics is an example. Of course, a great many people aren’t paying attention in any meaningful way. While that’s unfortunate for all of us, I think it’s mostly their loss; it’s a very interesting time to be alive, politically.
The Public Option as a Gender Issue
Oct 22nd
When I was 24 and single, I decided it was time for a new car. The Hyundai that had served me so well since graduation just wasn’t cutting it anymore. Like every 24-year-old, I really wanted to go ahead and get a head start on my mid life crisis, and test drove a convertible, a Mustang Cobra SVT. It was and still probably is the best car I’ve ever driven, and the only one that really qualified as “high performance”. Since it was used, it was even fairly affordable (by car guy standards). I called my insurance company to check on a rate. I had been with them since I was 20, always paid on time, etc., and figured I would get a reasonable rate, having given them lots of money while puttering around town in my painfully practical economy car. You probably know what’s coming next. Despite my spotless driving record and long history, my insurance payment would be roughly the same as my car payment. As it turns out, the problem had to do with the shape of my genitals. Apparently, since I had not yet committed to one person with differently-shaped genitals, I was predestined to use any Mustang in my possession to play chicken with Lamborghinis. Some number cruncher somewhere had crunched some numbers (it’s what they do; it’s right there in the job title), and figured out that putting a single 24 year old behind the wheel of a 400hp convertible muscle car was probably not the best way to keep collecting premiums without paying for any repairs. I mumbled and groaned for about ten minutes. I complained that I was being discriminated against, even though as a white protestant male who grew up in a nuclear family and had both parents and grandparents around to help with the expenses of college, I knew everyone else in the world had it much worse. Then, I got over it. I bought a lower-powered, more practical ragtop, which I still drive and enjoy today. I paid a much less absurd amount in car insurance. The end.
Interesting story, huh? Well, believe it or not, there’s a politically relevant element in this tale of unconscionable social injustice. (I’ll stop complaining about this eventually, but that car was really, really awesome.) My main problem in acquiring affordable car insurance was something entirely beyond my control; I was (and still am, last I checked) male. Through no fault of my own, I’m in a group more likely to drive dangerously, especially at age 24 and behind the wheel of a car capable of race track performance. (Again, awesome car, but stay with me; I’m getting to the political stuff.) As I said, my (admittedly trivial) problem came into being when an actuary somewhere determined that covering the costs of young men in muscle cars would be expensive, and the insurance company would have to charge accordingly to stay in business. A more relevant problem, though, comes about when that same actuary looks at the health care costs of men and women.
I think we all basically know how insurance works, but let’s take a moment to examine it from a mathematical perspective. Let’s assume that, statistically, I will be in a wreck at some point in the next twenty years. Let’s also assume that the average cost of the wreck will be $15,000. Maybe my car will be totaled. Maybe I’ll have some medical expenses. Maybe I’ll just happen to scratch the fender of a very expensive car. There is, however, a problem. I don’t have $15,000 just sitting around, and if I did, I wouldn’t want to keep it laying around waiting on this car accident. Well, there’s good news. I’m not the only person who has this proposition to deal with. There are lots of other guys out there who will also probably get into a wreck in the next 20 years, costing themselves about $15k. Some enterprising guy (or gal) looks at this situation and sees the chance to make a buck. Some of our potential car-crashers would probably prefer to pay a smaller amount every month than pay a very large one-time cost. Since the cost of one $15k wreck per 20 years works out to $62.50, he offers a proposition. For $70 per month, he will agree to cover the costs of an accident for anyone willing to take him up on the offer. He will make, on average, $7.50 per month off each contract, essentially a surcharge for insulating his/her customers against risk. The original $62.50 from each customer is put into an account, from which the costs of accidents are paid. If we assume that all of the probabilities I’ve laid out above are correct, then after twenty years, when everyone has had an accident, he will still come out slightly ahead, and will have provided all of the drivers with some measure of security.
Of course, I’m leaving out a lot of stuff to give a very basic view of the actuarial sciences. The truth is that not everyone has the same probability of being in a crash. Some people are very good drivers, and some people only drive while texting about how much their martini glasses don’t fit in the cup holders. That second group is going to have to be in a second pool, and because of their higher risk, they will have to pay more if our hypothetical insurer is still going to get his $7.50 for tolerating their risk. Basically, if the expenses are going to be higher, then an insurer will have to charge more if he/she is still going to make a profit and stay in business.
OK, now that we have that out of the way, let’s return to health care. Consider for a moment the fact that health care costs for women far eclipse those for men, particularly below about age 50 or so. Seriously, before you go on to the next sentence, consider that point for a moment. Done considering? OK, good. If you really did stop and consider this point, then you know what’s coming next. If you lied to me, please stop that. Here’s the logical conclusion, though. It costs more to insure women, and not a lot can be done about it. My insurance problem had a pretty simple solution: buy a less powerful car. I did that, and aside from a little bit of ennui when I see someone lay a patch of rubber down the main drag, nothing bad happened. Health insurance, however, is far different. I stopped being a single guy in a high-powered car. It’s far more difficult to stop being a woman. (And your insurance probably wouldn’t cover it anyway.)
So what do we do? One solution is simply to require that insurance companies not be able to include sex when figuring out potential health care costs to set their rates. The argument for this is that it would be more fair, or failing that, at least justifiable on egalitarian grounds, since women make less than men on average. There are, however, three arguments against this, and I’ve only seen one of them get serious airplay. The well-known argument is that it’s a bit silly to require that my health insurance premium include the possibility that I will get pregnant, suffer from ovarian cancer, etc. The odds are REALLY long, and I would basically be subsidizing insurance for others who do need this coverage, regardless of whether or not I can afford to do so. Trust me when I say that political scientists are not particularly well paid, and mad ones even less so, making this situation a bit uncomfortable.
The second argument, one that I wish got more airplay, is a statistical one. Removing gender from a list of variables doesn’t really remove it. I know that sounds like an odd thing to say, so let me explain. I have it on good authority that there are a great many ways to skin a cat, but there are far more ways to measure a concept. In fact, early in the design phase of a project, it’s not uncommon to spend hours of office time kicking back and forth different ways of measuring even fairly straightforward ideas. Certain bits of medical history (child birth, for example) are exclusive to women, giving a way to measure sex without technically including it. Even if these details are also removed from the equation, there are plenty of other measures that, while not exclusive to women, still predict gender very well. Women are more likely to have a regular history of checkups than men (we hate the doctor’s office), see a variety of doctors, etc. If I am not allowed to put sex into an equation predicting health costs, I can easily compensate for that by plugging in various bits of medical history instead.
Is this in the spirit of the proposed law? Of course not. Is it evil, underhanded, and despicable? That’s debatable. It’s not fair that women require a greater amount (measured in dollars) of medical care than men. However, one could also argue that it’s equally unfair (and more actively so) to inflate costs for a low-risk group to subsidize a high-risk group’s coverage. Of course, all of this is moot if insurance companies don’t find good predictors of sex in their data sets. This, however, is all but a certainty. Insurance companies put a great deal of time and money into creating accurate data within the confines of state and federal regulations. It’s the lifeblood of their business. Using other data to get at forbidden predictors is nothing new. Insurance companies can and will try to do this; at best, regulatory agencies are relegated to playing whack-a-mole, determining which considerations are tantamount to discrimination and which are acceptable predictors of loss.
What is the implication of all this? It’s harder for women to get and keep insurance, and said insurance is and likely will always be more expensive. Some have even argued that being female is tantamount to having a preexisting condition. (If you just want some Senatorial incivility, click here instead.)That’s certainly some loaded language, and therefore not terribly productive. I would argue that this is better understood as a situation in which an unregulated market will fail to produce the easily accessible public good that is most often cited as a justification for its existence. Please don’t misunderstand; markets work a great deal of the time. When a market produces a repeated failure, however, it’s time to consider other options.
If a public option is sufficiently well-populated and does enough business with sectors of the industry that cater to women’s health concerns, it will be able to get the best possible deals on those sorts of health care. This is exactly how private insurance companies function. By getting deals that are ostensibly bulk discounts on hospitalizations, X-rays, and the like, they are able to turn a profit while still keeping premiums relatively low (remember our earlier $15,000 car crash example and think about the costs of health care; relatively is certainly a key word here).
What we have here is a case where there is no perfect solution. As I’ve said before, health care policy is a policy of compromise. We do not solve every problem, but rather decide which problems we are willing to tolerate in order address others more fully. However, the difficulties in creating a “sexless” insurance system effectively take the option off the table in the private market. All but the most dogmatic supporters of the free market would agree that in cases where the market does not create a feasible alternative (public goods like roads and national defense, for example), the government can intervene. My political leanings aside, I have to wonder why this part of the debate isn’t on the front burner. It seems like a good way to mobilize half the population in favor of a controversial policy.