September 23 2009
Carrie L. Lukas
They've tried citing exploding health-care costs, the millions of uninsured, and the harm to business competitiveness. Now Michelle Obama has a new explanation of why we need to radically remake our health-care system: The current one is unfair to the fairer sex. Or, as the First Lady put it in a speech last week, women are being "crushed" by America's health-care system. It's just another example of the administration's doublespeak scare tactics aren't supposed to be a part of the debate . . . except, of course, when the administration chooses to employ them. This time, at least, the claim has some connection to reality: Women do face unique challenges in the current system, and policymakers should consider reforms that would make things better. But Mrs. Obama ignores the more sensible ways to address health-care challenges while hawking the radical restructuring her husband and his allies propose.
Our current system's greatest peculiarity the tying of employment status to insurance access is indeed especially hard on women. As we know, women's work-life tends to be less stable and more varied over time than men's. Women frequently take breaks from the workforce to care for children. They are more likely to seek part-time employment, which may not include health-care benefits. And, yes, on average women make less money than men. (Obama misleadingly refers to this as making "78 cents on the dollar," as if that statistic compared men and women doing the same job. In fact, when the many factors affecting compensation education, years of experience, hours worked, specialty, etc. are accounted for, most of the so-called wage gap disappears.) Regardless of why women make less money, it means they have a tougher time paying health-care costs on their own.
Yet this doesn't mean women should join the charge for Washington to seize control of America's health care. In fact, many of the current system's biggest failures are the outcome of ill-conceived government meddling. Ask yourself: Why do most Americans depend on employers to purchase health insurance, when we buy all other forms of insurance car, home, renters, life insurance, etc. on our own? It's because employers get a tax break, unlike individuals buying the same health policy. As a result, those with employer-provided health insurance are shielded from the full costs of their coverage. This encourages the over-consumption of medical treatment and drives up costs for everyone.
There are ways to fix this and make insurance more available and affordable. For starters, policymakers should change tax laws to put individual and employer-provided health insurance on a level playing field and to help decouple health insurance from employment status. Policymakers should also cut regulations blocking women (and men) from buying insurance policies in whatever state they choose. Tort reform to end jackpot lawsuits should be a central component of any serious reform. If the primary goal is to reduce the number of uninsured, the government could even create tax credits to offset the cost of buying health insurance for those who can't afford it or for those with pre-existing conditions.
Even the specific problem Michelle Obama identifies of women paying more than men for the same insurance policy could be solved through regulation tweaks rather than through handing the whole kit and caboodle over to the same folks who run the post office and Amtrak. It is worth noting, however, that we gladly accept this kind of "discrimination" with other forms of insurance. The elderly and smokers pay more for life insurance; teenage girls pay less for car insurance than boys; and renters insurance will likely cost more in a crime-ridden area than in a relatively safe suburb. Instead of using the loaded term "discriminate," we should recognize that such price differentials are more properly understood as risk adjustment: Insurers recognize that their policies are more valuable for some who likely will incur more costs. Outlawing sex-based discrimination may lower insurance costs for women, but it will raise costs for men. As a result, many twentysomething men may make the calculation that insurance isn't worth the cost and opt out altogether. This happens today, and will happen more often if we drive up prices by outlawing risk adjustment and piling on regulations dictating what an insurance policy must cover.
Our current half-socialized health-care system is far from perfect. Yet Michelle Obama is applying the same logic that would recommend tearing down the house to fix the broken front door. Policymakers can make health care better for women, but adding new government mandates to fix problems largely caused by government mandates isn't the way to do it.