Crux of the health-care debate: How we define a ‘civil society’

The battle over health care has moved from the House of Representatives to the communities where politicians who voted for the American Health Care Act (AHCA) live. The town meetings have often been contentious, but out of all the screaming, some very interesting public policy issues have emerged. The question that has come to the forefront is, "What role should government play in making our society better?"

The problem facing health-care reform was crystallized in a town meeting on May 8 in Dubuque, Iowa. U.S. Rep. Rod Blum said he wanted to "get rid of some of these crazy regulations that Obamacare puts in, such as a 62-year-old male having to have pregnancy insurance."

This comment triggered a letter to the editor of the local newspaper, the Telegraph Herald, by an attendee. Here is what she wrote:

"Congressman Rod Blum in a Dubuque town hall [Monday] night asked, 'Why should a 62-year-old man have to pay for maternity care?'

I ask, why should I pay for a bridge I don't cross, a sidewalk I don't walk on, a library book I don't read?

Why should I pay for a flower I won't smell, a park I don't visit, or art I can't appreciate? Why should I pay the salaries of politicians I didn't vote for, a tax cut that doesn't affect me, or a loophole I can't take advantage of?

It's called democracy, a civil society, the greater good. That's what we pay for."

Why do we pay for things that we may never use or might not even want?

When it comes to public spending, we basically have two types of goods. The first, called a public good, requires government provision because the private market cannot produce it profitably.

Consider national defense. Most of us want some form of protection from other nations.

But there is a problem that would arise if a private company tried to provide the military protection. How would they get the public to pay for it?

Once the military is created and put in place, the private defense contractor would bill everyone and many would send in the payment. But some would just say no. People refusing to pay could not be forced to pay. Remember, this is a private company providing a private good.

The problem is that even those who don't pay cannot be stopped from being protected. Defending the nation means defending everyone. Those who don't pay get the defense for free. This is what economists call the "free rider" problem.

Ultimately, everyone would realize they didn't have to pay and the private company would go out of business. Only the government, which can compel payments, can provide national defense or similar goods or services that have free-rider-type issues.

But there is a second type of product or service that the government provides that doesn't necessarily face free-rider problems. These are called public wants.

Consider publicly provided social-welfare programs. They can and often are provided by private-sector companies. But many recipients don't have the funds to pay for things such as food, health care, education, or even parks. If society decides it wants people to have these goods and services, the government pays the costs.

Which brings us to health-care reform. Private-sector companies largely provide the nation's health care, but not everyone can afford it. So the question we face is how much health care should the government be responsible for and how should it provide it?

And that gets us back to the ACA (Obamacare) and the AHCA (Republicancare). Both subsidize health insurance so people who cannot afford health care can receive it. But the two programs make very different assumptions about what should be supported and ultimately how much should be spent.

Under Obamacare, there are 10 "essential benefits" or mandates, including a requirement that people with preexisting conditions and maternity care be covered, as well as pricing restrictions. With the AHCA, many of those mandates are removed, the preexisting conditions coverage guarantee is weakened, and the pricing limitations are increased.

Basically, the ACA guarantees extensive coverage, but costs more. The AHCA limits government costs by reducing coverage, limiting enrollments, and restricting payments.

So, should a 62-year-old man have to pay for maternity care? Should a childless couple pay for schools? It is all about what we consider to be society's responsibility.

Since a majority in Congress will determine what the health-care bill includes, excludes, and costs, the final form will say a lot about what they, and therefore we, believe constitutes a "civil society."