Health Care as a Positional Good

February 23, 2017
Posted by Jay Livingston

Which job would you prefer.

Job A: your risk of serious injury is 10%; everyone else’s risk is 15%
Job B: your risk of serious injury is 5%; everyone else’s risk is 2%.

You’d probably take Job B, even though your risk relative to others is greater. With income, relative position carries more weight – $100,000 in a world where everyone else makes $85,000 might be more attractive that $125,000 in a world where everyone else makes $200,000.

Income is positional; safety is not.  (See the previous post for more on positional and non-positional goods.)

Health care too should be non-positional – more is better, and less is worse.  But then why would people whose healthcare had been substantially improved under Obamacare vote for the candidates and party who promised to eliminate it? That’s the question Vox’s Sarah Kliff took to Kentucky. The state had done a very good job of implementing the Affordable Care Act – expanding Medicaid and getting people to sign up on the exchanges.

But Kentuckians voted overwhelmingly for Trump and the Republicans – the people who had promised to end Obamacare. Kliff had to go back to Kentucky to find out why.

Kliff had gone there in 2016 and talked to people who, thanks to Obamacare, now go to the doctor when they are sick or injured. She talked to enrollment workers – people whose job it was to sell the program to Kentuckians, advising them of its benefits. They all voted for Trump, and after the election Kliff went back to find out why?

Some said that they didn’t think Trump really meant what he said.  Others thought that the Republicans would replace it with something better. Many had been soured by the increases in the cost of their health plans, especially high deductibles.

But many people seemed to see their own health and healthcare as a positional good. Its value depended on what others had.  “Part of their anger was wrapped up in the idea that other people were getting even better, even cheaper benefits — and those other people did not deserve the help.”

[A 59-year old woman] sees other people signing up for Medicaid, the health program for the poor that is arguably better coverage than she receives and almost free for enrolees. “They can go to the emergency room for a headache,” she says. “They’re going to the doctor for pills, and that’s what they’re on.”         She felt like this happened a lot to her: that she and her husband have worked most their lives but don’t seem to get nearly as much help as the poorer people she knows.

She has changed the terms of the discussion. It’s no longer about health, even one’s own health, it’s about morality. And apparently many people are willing to sacrifice their own health to punish the undeserving poor. 

Oller, the enrollment worker, expressed similar ideas the day we met.         “I really think Medicaid is good, but I’m really having a problem with the people that don’t want to work,” she said. “Us middle-class people are really, really upset about having to work constantly, and then these people are not responsible.”

This one really puzzled me. Medicare had helped her in a time of need, and she felt that she deserved the help it offered. Still she was willing to have it repealed because “those people” were getting a better deal.

“It’s made it affordable,” Mills says of Healthcare.gov. This year, she received generous tax credits and paid a $115 monthly premium for a plan that covered herself, her husband, and her 19-year-old son. Earlier this year, Mills’s husband was diagnosed with non-alcoholic cirrhosis of the liver. He is now on the waiting list for a liver transplant. Obamacare’s promise of health coverage, she says, has become absolutely vital in their lives. [She asked me] a few questions about what might change and whether the coverage she would sign up for in a few minutes would still be valid. I didn’t know what would happen. Our interview began to make her a bit nervous. “You’re scaring me now on the insurance part,” she said. “I’m afraid now that the insurance is going to go away and we’re going to be up a creek.”

That righteous vote to punish the undeserving poor may have seemed like a good idea at the time. But the protests at town meetings this week suggest that she might not be alone in her buyer’s remorse. In the abstract, health care may be a positional good. But when you really need medical treatment, you might not be so concerned about what other people are getting.