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The Liberal Demand-Side Solution to Public Healthcare December 20, 2006

Posted by federalist in Healthcare, Regulation, Social Politics.

We should thank Mayor Bloomberg for begging the question: “Can we reduce demand for public healthcare by making people more healthy?”

I truly commend one of Bloomberg’s first nanny laws: Forbidding smoking in public workplaces.  I don’t think anyone should have the right to smoke in public — anymore than they should have the right to walk into a public place with a burning teargas canister.  (Hey, nobody ever died from a little second-hand teargas!)  There are plenty of ways to consume tobacco and nicotine that don’t leave third parties gagging, coughing, or stinking just from walking by.

This month we got a more controversial rule banning the use of trans fat in New York City restaurants.  The N.Y.C. Board of Health justifies this rule saying, “Scientific evidence demonstrates a clear association between increased trans fat intake and the risk of coronary heart disease.”

So why is the Bloomberg administration pursuing such half-assed measures to increase public health?  I understand that these nanny laws are justified on the basis that they do NOT infringe upon the rights of citizens to engage in unhealthy behavior.  Rather, their goal is to protect citizens (e.g., bartenders who don’t want to smoke, or restaurant patrons who don’t want to inadvertently eat a lot of trans fat) in situations where they cannot easily make healthy choices most would prefer.  In that sense I suppose such rules are similar to those against using lead in paint or carcinogens in pesticides.  After all, if you really want to make a personal choice to consume lead, there’s no rule stopping you.  We just would hate for you to be munching on a windowsill one day without realizing that it was painted with lead!

But there probably should be rules against unhealthy behavior.  Because the government has made a commitment to provide you with a great deal of healthcare, and at present that service is not contingent on the choices you make regarding your health.  So I, the taxpayer, am not only providing mandatory health insurance for myself and other conscientious citizens like me, but I am also compelled to subsidize the chain-smoking, overweight, alcoholic sunbather no matter how long he chooses to go without exercise.  And that’s just not right.

There are two fair ways to administer healthcare, which I will categorize using familiar antitheses:

Supply-Side: Under this paradigm, the individual is fundamentally responsible for his own healthcare.  There may be some baseline public insurance provided to every citizen, but there is no “public supply” of healthcare.  Thus, individuals can make bad health decisions without the public getting stuck with the bill.

Demand-Side: This paradigm allows for the public provision of healthcare, but couples it with public initiatives to reduce the “demand” for healthcare by increasing public health.  In particular, every citizen in this paradigm should be forbidden from any consumption, practice, or negligence that is known to reduce health.  Therefore, every citizen would be required to engage in regular exercise, abstain from tobacco, consume alcohol in moderation if at all, and not be allowed to attain an unhealthy weight.

What do we have right now?  Public healthcare without any significant public proscriptions on unhealthy behavior.  Not a good recipe.


1. federalist - January 7, 2007
2. federalist - June 4, 2007

From an amusing NYTimes article on 2-Dec-2006 we learn that obesity costs are assessed to be “about $80 billion a year and steadily growing. The government or insurers pay about 85 percent of that. In other words, the fit and the fat pay for it indirectly through taxes or higher health insurance premiums.”

3. federalist - January 23, 2009
4. federalist - February 2, 2009
5. federalist - February 19, 2009
6. federalist - June 12, 2009

Highlighting the impact of discretionary behavior to individual health, Safeway CEO Steven Burd describes his success with an insurance program that charges reduced premiums for individuals with healthy behavior.

Safeway’s plan capitalizes on two key insights gained in 2005. The first is that 70% of all health-care costs are the direct result of behavior. The second insight, which is well understood by the providers of health care, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.

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