Realist, not conformist analysis of the latest financial, business and political news

Arkansas’ Cindy Gillespie Is Right – Some People, Even Poor People, Don’t Value Health Insurance

This is being treated as just the most awful thing to say but Cindy Gillespie down in Arkansas is entirely right – some people don’t value health care insurance. Certainly, some people don’t value it enough to pay for it which is a reasonable enough definition of not valuing something. Her statement though is being viewed as just appalling:

‘They don’t value the insurance’: Arkansas official on why thousands lost health care coverage
More than 12,000 people lost Medicaid due to work requirements — but don’t actually fault the new policy, says state official.

This is one of those known but not widely understood things about any government program. The recipients of it often enough value it at less than it costs to provide. Certainly, Snap – food stamps – are worth less to their recipients than straight cash money would be. That’s why the going rate for a cash to food stamp conversion appears to be about 50 cents on the dollar. Unlimited spending vouchers are worth more than limited spending vouchers, who knew?

This is true of near all welfare programs which is why it’s a generally agreed point among economists that we can make the poor richer, at no extra expense to ourselves, by just giving them cash instead of things.

That’s not quite what is happening here though:

Of the 69,000 Arkansas residents subjected to Medicaid work requirements, less than one percent (557) reported 80-hours of work or community engagement activities per month, as required by the new Arkansas policy implemented in June. Residents, who qualify for Medicaid because they earn up to 138 percent of the poverty level, are only able to report online and the website shuts down every day at 9 p.m.

If they don’t get the Medicaid coverage they don’t get anything else in its place. So, it’s not that they’d prefer the cash although that obviously would make them richer.

Reporter Catherine Rampell: How would you explain the fact that something like 80 or 90 percent of people who are required to report work hours are not reporting work hours? They’re too unmotivated?

Gillespie: Some are. Some are just not — they don’t value the insurance. They’re not using it. They don’t value it — would be part of it, I do hear from some people.

This is entirely true though. Some people don’t value health care insurance.

No no no no no. You don’t get to say that they should, nor that you value that they have it. They don’t value it. That’s a true statement for some people.

Sure, it will also be true that some find it real difficult to sign up for it. But it’s still going to be true that some don’t value it even at the price of free. And yes, we do absolutely know this. If it were not true why do we have a system that levies a penalty upon you if you don’t have health care insurance? The only reason for such a penalty is because we’re insisting that without the punishment some people wouldn’t buy it. That is, some people don’t value health care insurance so we’ve got to institute a price for not having it in order to encourage people to have it.

Of course, it could be the restrictions leading to some, much, most, of this uninsuredness in Arkansas but that’s all politics. The bare statement “some people don’t value health care insurance” is true that’s why the Obamacare penalty.

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5 years ago

Are you saying that if you convert cash into food stamps (but why) you get 50 cents of stamps for every dollar of cash (but WHY)??

Jonathan Harston
Jonathan Harston
5 years ago
Reply to  Shadeburst

Food stamps can only be spent on, well, food, and often only in state food shops. Real folding money can be spend on anything anywhere. If you’ve organised your life so you only consume (say) 15 dollars of food per week, but the state gives you fifty dollars of food stamps, selling them to somebody else for 25 dollars leaves you 10 dollars up. Going the other way, selling 25 dollars of folding stuff gives you 50 dollars of food stamps, leaving you 25 dollars up on the deal if at that point in time you value purchasing food more… Read more »

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