Do Government Subsidies for Health Care Justify Paternalistic Soda Pop Regulations?

NYU law professor Rick Hills argues that New York Mayor Michael Bloomberg’s ban on large soda pop servings is justified by the existence of government subsidies for health care:

I am inclined to think that denouncing Bloomberg’s proposal as Orwellian is like ridiculing the Food, Drug, & Cosmetic Act as a Stalinist plot or attacking “no smoking” signs in public buildings as a Maoist re-education campaign. Such hyper-ventilated rhetoric against ordinary regulation is making us Republicans look absurd. So long as government subsidizes healthcare costs, regulations to discourage obesity are society’s self-protection, not nosy paternalism. Principled conservative will argue that these subsidies should be reduced so that insurance premiums will reflect the risk of the insured’s behavior. Fair enough…

But no one believes that such subsidies will be eliminated entirely….

Discouraging obesity either through insurance premiums or taxes on sodas (and forcing the purchase of two 16 oz. cups is essentially just a soft-drink tax) is not creating a nanny state: It is avoiding moral hazard by forcing those who undertake risky behavior to pay part of the price of their risk-taking. Despite empty libertarian rhetoric about letting people pay for all of the consequences of their actions, we know that…, the healthcare-subsidized we will always have with us. We will inevitably end up paying for at least some substantial part of at least some folks’ healthcare. So long as such subsidies exist, doing nothing about the effects of soda consumption on obesity is just letting soda drinkers slurp dollars out of their fellow citizens’ wallets.

The problem of externalities created by government subsidies for risky behavior is a real one. But I think that Rick too easily dismisses the far preferable option of dealing with the problem by ending the subsidy. Even if people who are obese because of bad diets can’t be removed from government health insurance subsidies entirely, the state can at least reduce their subsidies relative to those offered to more responsible people. I see no reason to believe that such a policy is inherently politically infeasible. It’s certainly likely to be at least as popular as intrusive paternalistic regulations.

In addition, it’s worth noting that Rick’s logic would justify a lot more than Bloomberg’s soda pop “tax.” It just as easily proves the need for a ban on any behavior that increases one’s chance of getting sick and needing health care. So long as there are government subsidies for health care, anyone who has a suboptimal diet, doesn’t exercise enough, or takes any other risks with their health is potentially “slurp[ing] dollars out of their fellow citizens’ wallets.” A soda restriction is unlikely to solve that problem by itself, or even come close to it. The soda-drinkers could just gorge on pizza and cheeseburgers instead. The only way to deal with the problem of obesity externalities through paternalistic regulation is to have a comprehensive diet and exercise code that all citizens must follow or else pay a fine. Much better to cut back on health care subsidies than to go down that route.

Even if we can’t eliminate the subsidies entirely, there is a strong case that modestly higher taxes to pay for inefficient health care subsidies are a much lesser intrusion on liberty than large-scale government micromanagement of our diet and exercise regimes.

UPDATE: I should perhaps emphasize again that I’m not suggesting we can completely eliminate the government spending externalities that Rick Hills complains about by cutting subsidies. But I do think we can make substantial progress in that direction, and that it is a more promising and less oppressive approach than trying to deal with the problem by regulating dietary and exercise choices.