Good Samaritans and health insurance

Published 3:00 am Thursday, August 10, 2017

The Affordable Care Act (ACA) taxes Americans without health insurance.  The unpopular individual mandate violates personal freedom and was targeted by Congressional Republicans in their recent “Obamacare” repeal efforts.  The health insurance mandate addresses a conundrum known as the Samaritan’s Dilemma, which arises frequently in public policy.  A strong case exists for the individual mandate even though it infringes on personal freedom.

In the Biblical parable, the Good Samaritan stopped to assist a traveler who had been beaten by robbers after several other travelers passed by.  The tale teaches us to treat people, even strangers, with compassion.  Economist James Buchanan first explained the Samaritan’s Dilemma, which concerns an implication of compassion.  Knowledge that a Good Samaritan will be there to assist if needed leads people to take risky actions, like say traveling the road from Jerusalem to Jericho through bandit territory.

Such interactions occur frequently.  For instance, availability of a search and rescue team can induce hikers to try longer, more difficult trails, increasing the number of hikers needing rescue.  The presence of a lifeguard can lead weak swimmers to venture farther out into the water.

Sign up for our daily email newsletter

Get the latest news sent to your inbox

Today we often have government to assist our fellow citizens instead of waiting on a Good Samaritan.  The Samaritan’s Dilemma plagues government as well.  Politicians face enormous pressure to assist persons in distress due to natural disasters or illness.  This assistance undermines the incentive for personal responsibility.

The challenge for Good Samaritans is strategic: How to keep the increased demand for help from overwhelming our resources?  A wealthy Samaritan cannot care for everyone if they all need help.

As individuals, we frequently help friends and relatives whom we know well; we can consequently evaluate if their distress is truly due to circumstances beyond their control.  Government programs typically are designed to help anyone, especially strangers.  We can sometimes manage the dilemma by charging for help, like with ambulance rides or wilderness rescues.  Charges limit the incentive of people to take advantage of compassionate taxpayers, but the inability of some persons needing assistance to pay a charge limits this mechanism’s usefulness.

Governments also manage the Samaritan’s Dilemma by limiting our freedom, as with the ACA’s individual insurance purchase mandate.  Let’s see how this works.  Debates over health care sometimes imply that the uninsured do not receive life-saving emergency care.  This is not true in America; the uninsured get treated in emergency rooms, with costs shifted to patients able to pay their bills.

People can take advantage of our willingness to provide life-saving medical care regardless of whether people can pay.  I think that we can say that everyone who can afford it has a responsibility to purchase health insurance to avoid burdening others.  But we are not going to withhold care when needed.  So this responsibility must be enforced by a law.

Social Security addresses a form of the dilemma arising from people outliving their savings.  If we will have the government support any retiree who runs out of savings, fewer people will save for retirement.  Forcing savings through Social Security or employer-provided pension plans reduces the need for assistance to retirees.

Disaster assistance also faces the Samaritan’s Dilemma since it makes living in flood zones attractive.  We can limit the dilemma by forcing flood zone residents to buy flood insurance.  Or government can restrict freedom even further and prohibit living in flood zones altogether.

Does the Samaritan’s Dilemma justify restricting freedom?  Personally I do not think so.  We should simply accept that helping anyone, regardless of how they wound up in distress, will be really costly.  Restricting freedom, however, is a natural reaction for taxpayers frustrated about paying for others’ possibly irresponsible acts.

Freedom and compassion are virtues, but often conflict in the design of government policy, and quite often this leads to restrictions on freedom, like the ACA’s individual mandate.  A third virtue, namely responsibility, could avoid this conflict, but is also undermined by government compassion.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision.  The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.

About Dan Sutter

I am the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

email author More by Dan