Should Libertarians Prefer the Single-Payer Model to the Individual Mandate? A Response to Adler and Burrus

I appreciate the responses of Jonathan Adler and Trevor Burrus to my post questioning whether the mandate challenge would further libertarian ends. To recap, in my post I agreed that in the short run, given prevailing political winds, the mandate challenge would further libertarian preferences. But I questioned whether that would be true in the long run: It seemed to me that given shifting political views, the argument against the mandate might have the ironic effect of ruling out a less bad option (mandates) and thereby resulting in Congress embracing more bad options in the future (traditional 1960s Great Society government benefit programs). Adler and Burrus have both disagreed, and I want to respond here.

1. In his response, Jonathan Adler argues that I have presented a false choice between two lousy options, and that better options are available:

Orin’s post suggests a false dichotomy insofar as it implies that the only relevant options for health-care reform are something like the individual mandate and government monopoly provision. In reality, there are many ways to expand health care coverage or otherwise reform health care. Not only are there less intrusive ways of subsidizing health care for those in need, there are less intrusive (and more effective) ways of enhancing competition within health care markets. So invalidating the mandate does not necessarily mean that we’d eventually get something worse . . .

Just to be clear, I agree that it doesn’t necessarily mean that. I’m only asking about the chances that it would.

I realize that, for us smaller-government types, my framing of the issue is a little like the game “would you rather,” in which someone poses two terrible options and asks you which would you prefer. If someone asks if you would you rather be eaten alive by hungry mountain lions or torn limb from limb by a grizzly bear, it’s natural to say that neither sounds good and you would prefer option C. But it seems to me that although Adler, Burrus and I have preferences that are significantly more market-oriented than either of the options on the table — and significantly more market-oriented than most voters — our being out-of-sync with majority preferences means that having views on the relatively desirability of bad options is an important concern. (It’s not something you hear much in politics, as everyone fears that acknowledging a result is less bad will be misconstrued as saying it is good. But, fortunately, none of us are running for office.)

2. Jonathan Adler argues that a single payer model would actually be preferable to an individual mandate from a libertarian perspective:

Traditional welfare programs, for instance, involve the direct provision of cash or vouchers that the recipients decide how to spend. Even though there are sometimes restrictions placed on how such assistance may be used, this approach remains far more market-oriented — and “libertarian” — than a mandate. Indeed, individual providers of eligible goods and services are compete against each other more in this context than insurance companies will under the individual mandate and the health care reforms other measures.

I think there are two different questions here: First, what a person has to do to get a benefit, and second, what a person can then do with the benefit following receipt. Jonathan focuses on the latter, and notes that in the model of a government-provided benefit program, the recipients may be able to do as they please with the benefit. But I would think the comparison here is the former question, not the latter. Whether the government provides health insurance or a person buys it, once a person has that insurance, they use it in the same way. The relevant distinction is in how a person obtains the benefit, not what they do with it. In the 1960s model, the government just provides it. In the mandate model, individuals buy it with their own money from one of the approved sellers.

Both are bad options from a libertarian perspective, but I would think that the former is at somewhat worse. I’m certainly not an expert in this, so if I am missing the boat I’d be happy to change views. But here’s my perhaps amateurish thinking. First, in general, permitting private companies to compete means choice and competition, which generally lead to more freedom and incentives to improve. That’s the thinking behind school vouchers, for example, and I would think it applies to health insurance, too.

Second, my sense is that a mandate approach is easier to limit and control. In a 1960s benefit system, benefits seem to magically appear, and recipients become deeply invested in seeing those benefits preserved and expanded. People don’t feel like they’re buying something, and thus should expect value for their money: Instead they feel like they’re getting free stuff and they pretty much always want and welcome more. The taxes that are imposed to pay for the program become largely hidden, as they are deducted from employee paychecks before employees ever see the money. That’s why entitlement programs are so hard to keep in check once created.

In contrast, I would think that a mandate approach leads to more accountabililty. When the law forces people to buy something, it forces people to confront what the law is doing. The coercion and the trade-offs are more in the open, as people are forced to repeatedly buy a product and to give up their money for it. They are forced to see what the products are, and to see how much they cost, and they are much more sensitive to those costs and the effect of government regulation on them when they choose which plan to buy. My sense is that that would be preferable to us smaller-government types: The urge to limit government is much sharper when people are regularly confronted with the fact that the government is forcing them to pay for something they may or may not want.

3. I read Trevor Burrus as arguing that a single payer model would be preferable to the mandate because it is politically tougher to enact. The individual mandate is really a tax-and-benefit program, the argument runs, but styling it as something other than a tax lets the Administration pass it more easily — and thus get all the big government Obama wants without having to admit he wants higher taxes. As a result, we may be better off if a mandate approach is off the table and the government has to pitch taxes as taxes.

I can appreciate that argument in the short term, but I’m not sure it works in the long term. While today raising taxes is a political non-starter in today’s GOP, that hasn’t been nearly as much the case in the past. That’s how taxes got to where they are today; why they used to be higher (think of the marginal tax rates of 70% on high income earners in the 1970s); and why even anti-tax President Reagan raised taxes a number of times. Taxes have never been popular, obviously. But I don’t think we can assume that today’s attitudes towards taxes are fixed.