The Egalitarian U.S. Health Care System?

by Tom Bozzo

Tyler Cowen writes:

Since old, high-bank-account white males have lots of social status and power, [believers in egalitarianism] cannot bring themselves to regard those males as holding very poor overall endowments.

Cowen claims that the poor old rich white guys’ supposedly “poor overall endowments” arise from the impairment of their human capital at the more-or-less imminent end of life. There might be half of an argument here if human capital were the only component of individual wealth. Instead, we have Shorter [*] Tyler Cowen: The rich actually aren’t so rich if you don’t count their money. Whether and to what extent marrying Neutron Jack increased Mrs. Suzy Welch’s human capital as distinct from social and financial capital is left as an exercise for the reader.

So it’s pretty easy to construct an exception to Cowen’s claim that

The “poorest” people are not those with low incomes but rather those with low human capital endowments.”

Take a suitably dimwitted heir to a sufficiently large fortune and I will show you someone not only a lot richer than a comparably bright person who picked his or her parents badly, but in fact just about everyone else.

Now Cowen actually is right to point out that the U.S. health care system provides plenty of care to seniors at the end of life despite what I will agree are often modest endowments of wealth (including, but not necessarily limited to, human capital). The inference that this makes the U.S. health care system more egalitarian than European systems, however, is highly questionable to say the least. First of all, health care for the elderly is the most European part of the U.S. system: more-or-less universal, more-or-less socialized medicine. Second, to the extent European systems spend (relatively) less money on the elderly, they don’t have obviously worse outcomes (shorter lives, etc.) to show for it.

Subject the elderly to the more-or-less private sector part of the U.S. system and those financial endowments are likelier to drive allocations of health care resources. And indeed it tends to be individuals with high human capital endowments who get the jobs with benefits that provide decent health care. Certainly the state of the U.S. health care system isn’t going to make me, whether egalitarian-minded or acting on pure self-interest, more inclined on the margin to switch places with the middle-aged immigrant behind the McDonald’s counter next door to the office. A leveling possibility in the U.S. system is that a bout of unemployment coinciding with an unlucky draw from the distribution of health outcomes can leave a middle-aged economics PhD approximately as screwed as the guy at McDonald’s, but reasonable people can reject race-to-the-bottom egalitarianism. I’ll wager the lower-endowment exceptions with decent health insurance are disproportionately public-sector employees (where a common complaint from conservatives and libertarians is that they have it too good relative to their private-sector counterparts; see e.g. U.S. Postal Service, bargaining-unit employees of) and other unionized workers.

The egalitarian reformer of the U.S. may reasonably conclude that fairness is best served by making the U.S. system more like the Europeans, or by promoting public plans over private ones.

[*] *‘Shorter’ concept created by Daniel Davies and perfected by Elton Beard.