Dismantling the Social Safety Net

One of the major complaints of right-wing politicians against the Affordable Care Act (Obamacare) is its imposed mandates that individuals obtain health insurance and that larger businesses offer health insurance to employees.  The professed opposition is to the mandates, per se.  It ignores the mandates that both employers and workers pay taxes for Social Security coverage—old-age, disability, Medicare, and unemployment compensation.  Mandates are not new—nor is “government interference” in private choices about private insurance.

Opposition to the ACA mandates is really just a stalking horse for the eventual dismantling of the American social safety net. If the new mandates were to be dropped (unlikely, thank goodness), I would expect that their opponents would quickly move on to removing mandates for other programs that have been in effect for 70+ years.

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  1. Tom says:

    This seems like a purely political post with no supporting facts.

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    • Joe Carter says:

      Exactly right, Tom. It’s disappointing to read such partisan blather on Freakonomics. What makes this site interesting is that it usually avoids such political posturing and provides empirical support for the claims being made.

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    • James says:

      Agree. And not just a lack of supporting fact, but of any questioning of whether we might actually be better off if said “safety nets” were dismantled.

      Certainly I’d argue that we’d all be better off if the resources now being devoted to yanking part of the exorbitant cost of medical care out of my pocket were spent instead on decreasing the actual cost.

      I’d also argue that such cost decreases are perfectly possible. Consider what my vets charge to treat my dog & horse, versus similar care for me. And my horse vet will drive half an hour (on a holiday) and stitch up a badly-cut horse leg, working in a corral, in the rain.

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      • Eddie says:

        Hidden due to low comment rating. Click here to see.

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      • James says:

        I would be perfectly happy to do so, except that it is illegal for vets to treat humans.

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      • James says:

        Further on the question of medical costs, I happened to run across a telling quote from a CNN article:

        “You know something as simple as a sprained ankle, none of that is covered right now, none of it,” Braun-Gross said. “To add the cost of that to the debt we already have, we’d basically be up a creek.” – http://www.cnn.com/2013/09/26/health/obamacare-open-enrollment/?hpt=he_c1

        The problem here, and at the root of the exorbitant cost of health care, is that there is nothing a doctor can do to treat a normal ankle sprain. So you can spend hundreds of dollars on an office or emergency room visit, where you will get the ankle wrapped, and be told to use RICE (Rest, Ice, Compression, Elevation), or you can spend five bucks or so on an elastic bandage, and do the wrapping yourself. Now with insurance, how many people are going to do the former, because there is no out-of-pocket cost to them personally?

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      • James says:

        Further on the issue of costs, how much is spent on lab tests? How much time is spent waiting for tests to determine appropriate treatment? Yet IBM (among others) managed, back in 2009, to put an entire diagnostic lab on a silicon chip that could be used at point-of-care: http://www-03.ibm.com/press/us/en/pressrelease/28825.wss So where are these chips today?

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  2. Chris says:

    I don’t see any sources for your claims. Are you sure you were finished writing this article? It wasn’t very thought provoking or interesting…

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  3. Lehorn says:

    So, MORE mandates are a GOOD thing??? I think not.

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  4. Sam says:

    Let me get this right, ‘we need more government spending because there’s government spending?’. Got it, no thanks.

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  5. Greg says:

    You grievously mis-understand the objection to the individual mandate advanced before the US Supreme Court and by most libertarians such as Randy Barnett, et. al.

    There is no dispute that Congress can impose mandates on commerce. So people that choose to operate business in the United States must pay Social Security, fund unemployment, etc. The alternative is to go elsewhere and operate a business. That’s fine.

    But the individual mandate in the ACA is not tied in anyway to these choices. By simply existing, you must buy health insurance. It is the government compelling everyone to buy something by virtue of breathing. That’s entirely new and unprecedented.

    You probably happen to like this mandate – because you might favor the particular political position espoused by supporters of the ACA. But my guess is that you might not favor a mandate that everyone purchase a firearm… or everyone must purchase an American car. So you shouldn’t be so callous and, frankly, uninformed on the opposition to the ACA mandate.

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    • Dan says:

      Hidden due to low comment rating. Click here to see.

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      • Dan says:

        In response to Greg below (can’t reply to that comment, oddly)… “go elsewhere” is Greg’s term, which I was using to illustrate his inconsistent acceptance of mandates on businesses/employees vs health care consumers. To be clear, I don’t think one’s ability to “go elsewhere” is not a relevant point here.

        I agree with Terry and “Enter your name…” that it’s not fair for the uninsured to impose externalities on society, due to providers’ being unable to turn you away. I believe it’s unacceptable to let the uninsured die untreated, and thus I think “existing” (if you’re going to use that term) inevitably brings with it commerce.

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    • Terry says:

      I don’t support or disagree with the mandate, but I find the target of “existing” or “breathing” to be misplaced. It’s not breathing that makes you participate in the healthcare market, it’s healthcare providers’ inability to turn you away from getting emergency healthcare even if you don’t have the insurance or means to pay. If you shouldn’t have to buy healthcare, you shouldn’t expect to get healthcare when you need it.

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      • Greg says:

        The ACA requires people to buy health insurance. And the insurance market is NOT a market everyone participates in.

        A portion, albeit a sizable one (>2mm), of people who don’t have health insurance are in their 20’s & 30’s, in good health, and have little risk of injury. For these people, not buying health insurance might be rational. The decision becomes even more rational when the ACA (and many states) impose regulations on insurance companies that require “mandatory coverage” for certain maladies and health needs (pregnancy, alcohol abuse, etc). Since the govt requires this coverage to be bundled universally in all plans, it offers even less value because many people are no threat to use the benefits it covers.

        These people are Obamacare’s golden geese. By forcing these people to buy insurance (at an inflated price given their actuarial risk), you’re subsidizing everyone else. What it winds up being is a tax on young, generally middle-class kids.

        Dan doesn’t seem to think these people exist – or if they do, he thinks they should “Go elsewhere.” Leave the country. And while he’s more than willing to say that now, I’m not sure why “Go elsewhere” isn’t a reasonable argument against the lack of a social safety net in the US. After all, numerous other countries already have the utopian healthcare system we so obviously lack. And if the ACA is ever repealed, I’m sure Dan will simply remind people that it’s time to “Go elsewhere” for their safety net coverage.

        “Go elsewhere” does force governments to compete… but it’s a pretty wretched policy argument for liberals or conservatives. It’s not easy to move 1000s of miles… and, of course, Dan doesn’t really believe everyone that wants universal health coverage should flee the US.

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      • Enter your name... says:

        It might be “rational” not to buy health insurance while you’re healthy, but it is not “fair”, unless you’re willing to refuse treatment that you can’t pay cash for, if your health changes before you buy health insurance.

        What happens is that uninsured people produce externalities: They get hit by cars just like everyone else, they fall off of ladders just like everyone else, they get complications of influenza just like everyone else — and then they turn up at the hospital and say, “Treat me for free, or almost free! I spent all my money on clothes and cars and entertainment and a nicer apartment instead of on health insurance or savings, but it’d be inhumane to just let me die because I chose to pay for immediate, tangible lifestyle improvements instead of abstract risk management!”

        And then everyone else has to decide: do the responsible people, the ones with savings and/or health insurance, pay extra to cover the costs of this foolish “I’m young and won’t need insurance” person, or do we let the hospital close, which could hurt (even kill) us?

        If these uninsured people aren’t willing to live with the consequences of their actions, and if we aren’t prepared to make them, or even allow them to (and we’re not), then we need to make them reduce the externalities that their choices impose on us—which means making them either buy insurance or post a bond that can cover a moderate-sized health disaster.

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      • James says:

        But suppose that I CAN pay cash for whatever health care I might need? Why then should I have to pay the additional cost of insurance company overheads? Should I also have to buy the extra-cost extended warranties on things I buy, or carry collision & comprehensive insurance on my paid-for cars?

        Indeed, why should I have to pay actual cash? I took out a mortgage instead of coming up with the full purchase price of my house; I could (if I were a spendthrift) buy a new car with no money down, &c. If people can afford several hundred dollars a month in car payments, why can’t they pay for received medical care the same way?

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      • Phil Persinger says:


        Maybe I’m missing the point of your comment, but it seems to me if one has enough money to cover health-care expenses out-of-pocket, then we’re looking at a very rich person indeed who can afford full freight for cancer treatment or open-heart surgery. The vast majority of folks don’t have that kind of dough; that is precisely why they pay into an insurance pool– just in case. And if you have enough money to pay full freight, then an insurance policy with its relatively small overhead (compared w/ the expense of cancer treatment) shouldn’t be an issue.

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    • Asim says:

      ” That’s entirely new and unprecedented. ”

      Whats wrong with new? Why not try new ideas?

      I guess supreme court didn’t buy this argument. BTW, because you are “breathing”, you are a consumer of health care.

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  6. J1 says:

    Does acceptance of mandates A and B automatically conflict with opposition to mandate C? Is opposition to all those toll roads in Austin inconsistent with acceptance of requirements that your car be insured and have working headlights? I guess opposition to toll roads is just a stalking horse for dismantling the highway system and going back to dirt roads.

    Next time run this stuff by somebody outside the faculty lounge before you post it.

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    • Cody says:

      I think the biggest problem with equating liability insurance to the mandate in the ACA is people do not see the difference between the two. When I buy a car, and I am mandated to buy liability insurance, I’m required to protect OTHERS from my potental irresponsible driving. I’m required to buy full coverage when the bank owns my car, because I’m protecting the bank from my irresponsible driving.

      There is a difference between having to buy insurance to protect others from my driving, and being forced to buy insurance to protect myself….. from myself.

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      • brazzy says:

        Being forced to buy insurance protects others from having to shoulder the cost of treating you when you do have a major health issue.

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  7. Nate says:

    From a purely statistical standpoint, isn’t work a more effective socioeconomic boost than the plethora of social assistance programs? So wouldn’t dismantling (or at least drastically shrinking) such programs have a positive impact on the country, as a whole?

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  8. JamieR says:

    It’s already part of the GOP platform to voucherize Medicare and divert Social Security to private accounts.

    Apparently a “mandate” to enter a business relationship with a health insurer is bad, but a “mandate” to entrust your retirement savings to the financial industry is not.

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    • J1 says:

      No, it’s part of the GOP platform to permit taxpayers to divert their social security accounts to the financial industry if they wish to. Participants aren’t required to do anything; it just gives them a choice.

      Likewise, the GOP platform to “voucherize” Medicare permits people to receive “vouchers” to subsidize private insurance, or remain in the existing Medicare program. Again, participants are not required to do anything; they just get a choice. Do you have a problem with letting people decide for themselves?

      A mandate to enter a business relationship with a health insurer is bad, as is a mandate to entrust your retirement savings to the financial industry. Letting people decide for themselves to do either is not.

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      • Enter your name... says:

        It is a mandate: you are required to save for retirement, and you are required to pay Medicare taxes.

        “Do you have a problem with letting people decide for themselves?”

        Am I going to have to pick up the pieces if they make bad choices? If so, then yes.

        Keep in mind that one of my relatives is such a bright person that he sent all of his rent and food money to a very nice person in Nigeria who wanted to make him a millionaire through a Legitimate Business Opportunity that was Guaranteed. Don’t ask yourself whether *you* should get to direct the investment of *your* government-mandated retirement savings. Ask yourself whether *he* should get to direct *his* government-mandated retirement savings (the only kind he had, because did you know that 401(k) money from your employer can be withdrawn, with only a 10% penalty?), knowing that when he screws up, you’re going to be paying (via state welfare taxes) to take care of him in his old age.

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