HEALTH CARE/Joan Retsinas

The Fiscal Upside of Compassion

Take this quiz on do-good liberalism. Imagine that you work in an OK job. Your income, combined with your spouse’s, puts you above the median. Your employer subsidizes your family’s health insurance. You don’t enjoy your job, but leaving it would leave your children without insurance.

Enter Uncle Sam as a deus ex machina. He offers your children more affordable, maybe more comprehensive coverage if you leave your job and your income drops.

What do you do?

a) Stay at the humdrum job, rejecting Uncle Sam’s cushion

b) Quit your job, accepting Uncle Sam’s largesse as you laze

c) Quit your job and accept Uncle Sam’s largesse. At the same time, you do something productive. Maybe you join a startup, invest in a food truck, market a web-based gizmo – whatever. You move from a wage-drone to an entrepreneur.

The surprising answer is c.

The Supplemental Children’s Health Insurance Program CHIP, pushed by Sens.Ted Kennedy (D-Mass.) and Orrin Hatch (R-Utah), won bipartisan support in 1997. The intent was clear: to ensure children in working families that couldn’t get health insurance through their workplaces. Either their employer didn’t offer it, or the premiums were too high. As a nation, we have been able to let adults go uninsured (as well as poorly housed, poorly fed), but two decades ago we felt a collective responsibility toward children.

CHIP worked. (Indeed, some large-scale employers tried to dump their low-wage employees onto CHIP — a move states fought.) The number of uninsured children dropped. In 1997, 14% of children under age 18 had no health insurance; in 2012, the number fell to 7%. At the same time, the number of adults without insurance rose.

CHIP was good for our nation’s collective soul. We no longer had to confront the specter of so many sick children, unable to get the medical care they needed. A plus for compassion.

But while “do-good liberalism” has always ranked high on the “compassion” index, it has ranked low on the fiscal good sense index. A conservative riff laments: We are spending money with no return. Moreover, this cushion may turn into a pillow, sapping recipients’ drive to work. If people don’t need to work, they won’t. They will laze. Proponents of CHIP argued for it on the basis of compassion. Children should not suffer. Proponents foresaw no startling economic benefit.

Yet CHIP spurred entrepreneurship. An economist, Gareth Olds from the Harvard Business School, analyzed data post-CHIP. (He also has analyzed the economic benefits of the Food Stamp program, where he found a similar boost). When he looked at families who were eligible for CHIP, he found an increase in the rate of entrepreneurship. Post-CHIP, 12% of families were more likely to start a business, 36% more likely to own an incorporated business.

CHIP was a cushion, not a pillow. In fact, some eligible families didn’t enroll in CHIP — simply having it as a fall-back gave them the confidence to venture into the risky terrain of entrepreneurship. New businesses fail, at what may seem alarming rates. Inventors, idealists, investors – all have murky crystal balls. But we need those risk-takers. Without them, the economy won’t thrive. Yet would-be entrepreneurs understandably hesitate to risk their children’s health. CHIP stood behind them, absorbing that risk.

Without CHIP, some would-be entrepreneurs wouldn’t have entered the marketplace. CHIP let them. Indeed, research on universal threshold incomes – an idea once promoted by President Richard Nixon – suggests that an income threshold might do the same. Dire poverty does not propel people to be creative as much as the Darwinists believe; instead, it leaves most people trapped in desperate straits. A basic income leaves people free to develop their abilities, go to school, train for a different job, and, perhaps, become an entrepreneur.

Today, many are arguing for “Medicare for All,” or, as a next-best recourse, an expanded Obamacare, with a public option, as well as the chance for younger Americans to enroll (which would add healthier enrollees to the Medicare pool). Critics charge that any expansion might tip the scales of compassion, but would sink our nation into a deeper deficit.

The evidence from CHIP is clear: expanding health insurance tips both scales — compassion and fiscal good-sense.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email

From The Progressive Populist, September 15, 2016

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