Thursday, January 19, 2017

What Paternalistic Liberalism looks like

Supplemental Nutrition Assistance Program logo

I recently wrote that progressives need a simple, non-paternalistic economic plan. However, conversations continue about putting even more economic restrictions on certain people, such as SNAP recipients.

From the New York Times:

Dr. Ludwig said other government programs had common-sense restrictions. The Special Supplemental Nutrition Program for Women, Infants and Children, better known as WIC, and the national school lunch program have strict nutrition standards. Medicare pays for necessary medical procedures but does not reimburse for ones it considers harmful, ineffective or unnecessary. SNAP, Dr. Ludwig said, should be structured similarly.

“No one is suggesting poor people can’t choose what they want to eat,” he said. “But we’re saying let’s not use government benefits to pay for foods that are demonstrably going to undermine public health.”

This moving in us the wrong direction. Instead of simplifying things to maximize benefits while reducing overhead, this is a recipe for bureaucracy, inefficiency and confusion. You would need to create a whole apparatus for determining what foods are and are not acceptable, as well as a way to explain what is on the list to all SNAP recipients. This would, no doubt, cause confusion and moments of embarrassment.

Progressives should be about giving people freedom and economic security: The freedom to love who they want, the freedom to pursue an education, and the freedom to leave a job that abuses them.

If liberalism becomes mainly about using government programs to force "unsophisticated" people to behave in certain ways, it will become a losing ideology.  

Tuesday, January 17, 2017

Why basing a “universal program” on means testing is a terrible idea

If you want the government to provide an universal service, there are two very compelling reasons for avoiding complex means-testing. First, it can create resentment, which undermines political support for the program. Substantial income-adjusted benefits can easily be seen as pitting the poor and lower-middle class against the middle class and working professionals. This perception is nearly impossible to avoid, since any means-testing program that will actually save money must exclude some people who consider themselves middle class.

More critically, any system based on complex means-testing will be very hard for regular people to understand. It may also be impossible for government officials to implement correctly and efficiently. As a case in point, a new study in Health Affairs shows how the complex means-testing subsidies in Obamacare have created a dramatic policy failure. The researchers, the report says, “estimate that 31 percent of individual-market enrollees in California who were likely eligible for financial assistance purchased plans that were not silver tier or that were not sold on the state’s exchange and thus missed opportunities to receive premium or cost-sharing assistance or both.”

This study was only looking at California, which makes this figure even more damning. Since California has been under total Democratic control, the state government has worked aggressively to try to make the Affordable Care Act work as intended.

California has arguably engaged in the country's most robust implementation and community outreach efforts in support of the law. Last year, CoveredCA had a budget of $335 million (over $121 million just for marketing/outreach) and employed 1,399 people. The budget required adding a 4% assessment onto the cost of every plan purchased through CoveredCA, simply to fund this government middleman/income verification program. To put this massive administrative budget into perspective, the total insurance overhead for Canada’s single payer system is roughly 1.8%.

Yet even among this highly targeted population, a huge proportion of those who actively sought out coverage were not served as intended. While the number is shockingly high, it is also not surprising to me. Anecdotally, I know people who tried to buy individual coverage in California and were told dramatically different things about their eligibility when they tried to use the program.