From: andy@SAIL.Stanford.EDU (Andy Freeman)
Subject: Re: Bush/Quayle's Health Plan -- vouchers?
Organization: Computer Science Department,  Stanford University.
Date: Mon, 14 Sep 1992 21:17:21 GMT

In article <92258.132750DGS4@psuvm.psu.edu> DGS4@psuvm.psu.edu writes:
>In article <1992Sep14.163017.5798@CSD-NewsHost.Stanford.EDU>,
>andy@SAIL.Stanford.EDU (Andy Freeman) says:
>>It isn ineffective only because "we" insist on picking up the pieces
>>for people who do that.  That's our fault.
>
>No.  Humans are very myopic.  Even if they are well-informed of the
>costs and benefits of the future, they tend to discount it.

We incur the costs because we insist on picking up the pieces.  They
didn't "make" us do that.

>>>If you want people to stop smoking, to stop drinking, to stop engaging
>>>in unhealthy behavior
>>
>>I don't want people to stop smoking, drinking, eating fatty foods, not
>>exercising, and so on.  I'm not a health nazi - if someone wants to
>>swim with sharks, that's fine with me.  I'm just saying that they
>>should pay the costs because they get the benefits.
>
>And I don't disagree.  Read what I've written.  My argument is that a
>policy that tries to make people pay the costs of their behavior will
>work better if it puts the future costs of needed health care into the
>the product price, rather than into the health insurance price.

And, I've shown that that can't be done; so much for "work better".
Taxes are avoidable; ignoring that is policy-suicide.

Moreover, to the extent that certain costs are caused by behavior and
not taxable goods/services, that approach requires intervention in
that behavior.

>It's not a question of whether or not people should pay the costs of their
>behavior, but how to assess those costs.

Hint: unimplementable assessment systems can't be a solution.

>>>t is far more efficient to raise the direct
>>>price of the behavior, rather than raising the cost of health care
>>>(through higher ins. prem.) to deter the behavior indirectly.  If you
>>>want to deter smoking, and make people pay the full costs of smoking,
>>>then you tax it like crazy.
>>
>>We tried that in the US for alcohol; it was called Prohibition.  We're
>>trying it with cocaine and MJ; it's called the war on drugs.  That
>
>Do you have a logic problem?  Prohibition is outlawing the sale of the
>good.

My logic and examples are completely correct.  A ban is just an
extreme tax.  MJ isn't banned at the federal level, the tax rate is
merely very high.  (I think that cocaine is the same.)  Surprise - it
is avoided, as much more modest cigarette taxes are avoided as well.
Hiking those taxes isn't going to help.  (BTW - Cigarette smokers are
actually subsidizing the rest of us now.  They die right after they
start collecting their pensions, so the rest of us get "their" pension
money and they don't incur higher life-time health costs.)

>All I've said is that we should tax the goods so that relative prices
>reflect the additional health care costs likely to result.  The person who
>undertakes the activity still can buy and sell the good (it's not prohibited)
>but will also see the price reflect the future costs of health care which
>will be paid for in a national health insurance system.

Since we can't collect those taxes, it is silly to rely on doing so.

>>approach does not work, so any system that depends on its success is
>>doomed.
>>
>>It doesn't even apply to not exercising and other PRACTICES (not
>>associated with products) that are unhealthy.
>
>Every good and service has a price, so your argument is incorrect.

How are you going to tax my unhealthy practices that don't involve
goods or services provided by others?  How are you going to tax
services provided by people who are smart enough to figure out that
they can both undercut their legit/taxed competition and make more
money by not playing tax collector for you?

Note that avoidance INCREASES with the tax rate, so the "tax" policy
fails most when we're supposed to depend on it most.

Need I point out that tax rates aren't set rationally?

>>If society wants me to pay for the health costs of people who don't
>>exercise, I'm going to bring the power of the state down on people who
>>don't exercise.  I'm going to institute standard diets.  If you don't
>>want me to have this kind of control over your life, don't ask me to
>>pay for it.
>
>Read what I've written.  All I've suggested is that the government, if
>it is going to provide national health insurance, can attempt to make people
>internalize the health care costs of their behavior by adjusting relative
>prices of key goods and services to make them reflect these health care
>costs.

And, I've shown that that attempt will often fail; the failure rate
increases with our dependency on it.

>No mandatory diets.  No required exercise programs.  No
>"controls" over anyone's life. People are perfectly free to make their
>choices within the framework of the market system.  The prices, however,
>reflect the costs imposed on the rest of us through the health care
>system.

Try again.  How are you going to tax me to force me to eat the right
mix of vegetables?  (Sure, you can try to tax individual items, but
that's not enough.)  How are you going to tax my "no exercise"
lifestyle?  (You can try to tax goods and services, but there are
factors not associated with goods or services that have health care
cost consequences.)

>>The difference will decrease rapidly if the people who believe in the
>>"overhead is excessive" theory are actually correct.  That's what
>>happens when superior producers come on-line; the inferior ones either
>>change or die.
>
>Read my lips.  No single insurer can undertake to wipe out administrative
>costs.

To the extent that that is true, it applies to single payer systems
as well.

-andy
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