Here’s why health insurance is not like broccoli

By Ezekiel Emanuel
March 29, 2012

The fate of universal healthcare coverage that the United States has been trying to achieve for over 100 years may boil down to broccoli.

The broccoli argument is simple and was frequently referred to in the recent Supreme Court arguments: If the government can require people to buy health insurance, why couldn’t it require people to buy broccoli, which also enhances people’s health? This question, at the heart of the conservative objection to the individual mandate to buy health insurance, illustrates the so-called limiting principle the Supreme Court must rule on: Under the Commerce Clause, does Congress have the constitutional power to compel people to act, in ways they might object to, when their inaction can harm others?

The High Court never got clear on why health insurance is not like broccoli and can thus be constitutionally regulated. There are two important differences that inform the principle for limiting congressional power to compel people to purchase goods and services.

First, as George H.W. Bush made quite clear, you need never eat broccoli. But unless you are a hermit in Alaska, you will use healthcare at some point in your life. Today, it is estimated that the uninsured use more than $116 billion in healthcare services each year. When they will need healthcare is unpredictable. If they are lucky – only at the end of their life. If they are unlucky, an accident, unplanned pregnancy or  cancer diagnosis may compel an earlier need for a physician, hospital services, or both. What happens if they don’t have health insurance? Thankfully, doctors and hospitals don’t turn them away when they most need care. They give them the tests and treatments they need – at least to get over the emergency or acute episode. Thus, while it is feasible that you may never be engaged in the broccoli market, at some point, everyone – including the uninsured – will be engaged in the healthcare market.

Why couldn’t we let people voluntarily decide whether they want health insurance or not, instead of compelling them to buy the insurance with the mandate?

Unlike broccoli, when some people don’t participate in the health insurance market – 50 million people in 2009 – there are direct consequences for the insured who are participating. The costs of caring for the uninsured are shoved onto the rest of us through higher insurance premiums or taxes that hospitals, insurers and doctors must charge to recoup the costs of uncompensated care.

Voluntary health insurance exchanges piloted in several states without mandates all failed because healthy people opted out. Those who are relatively healthy figure the cost of insurance is too high, that they are subsidizing insurance premiums for sicker people and they probably (it is a risk) won’t need the insurance because they are healthy. When some healthy people stop buying coverage, the premium goes up for the remaining slightly sicker people. Then, as premiums go up, more and more healthy people drop out, creating an inevitable downward spiral. This is cost-shifting from the uninsured to the insured, and it is true not just in theory, but in practice. We have tried many such exchanges, and they have all failed. Only the Massachusetts exchange has worked because of its mandate requiring healthy, as well as sicker, people to buy insurance.

The broccoli situation is entirely different. At the supermarket, you cannot get the person behind you to pay for your broccoli. If you don’t pay for broccoli, you don’t get it. Unless you steal the broccoli, you are not influencing the market by not buying it. And unlike healthcare, there is no cost-shifting in the broccoli market. If you don’t buy any broccoli, the price of broccoli for me is the same. Indeed you might lower my price, because demand for the product is lower.

Non-participation in the healthcare market has additional, more far-reaching effects. The market for health insurance is both complex and very fragile. If people only bought health insurance when they were sick, there would be no market. There would be no reason for insurance – you would just pay the doctor and hospital bills on an as-needed basis. The only way we can have a health insurance market, where we pay a set amount but get covered when we need services – is to have a diverse risk pool that includes healthy people, as well as sick people. It is important to notice that in this case, opting out of the market for insurance – inaction – has a profound effect on the market. It is not neutral. It leads to collapse of the market.

Thus, Congress decided to create a broad risk pool by requiring people who did not get their insurance through their employer – or through Medicare or Medicaid – to buy coverage through the exchange. Large employers understand the efficiency of this and basically create these broad risk pools by combining all their employees and insuring them together. That is why they get insurance at lower rates, typically, than small businesses or single individuals.

Again, broccoli is very different. The voluntary broccoli market works just fine today. If people voluntarily do not participate in the broccoli market, it will not collapse. Congress does not need to require people to buy it for the broccoli market to function. More important, unlike healthcare, no one needs broccoli. We all can live just fine without it, as if it never existed. There is a need for a health insurance market – we would all be worse off without it.

Justices Scalia and Alito seemed not to appreciate this crucial difference between health insurance and broccoli. Justice Scalia said: “If I don’t buy a Volt, I raise the price of Volts.” Wrong. The market for cars works fine even if there is no mandate to buy American-made cars like the Volt. There will be no collapse of the entire car market if people do not buy U.S. cars, including the Volt. There may be closure of American car manufacturers, but that does not mean the collapse of the American car market. We would still be able to buy cars. Hence Congress cannot compel purchase of American cars.

These two differences between broccoli and health insurance translate into the important limiting principle that the justices were seeking: As part of its Commerce Clause powers, Congress can compel people to purchase a good or service when, because of market failure, the market collapses as a result of their refusal to participate and when they themselves will definitely need the good or service and would otherwise transfer the cost of using the service to the rest of us.

The difference between broccoli and health insurance is simple. It leads to a clear limiting principle. Congress can urge people to eat their broccoli, but not compel them to buy it, because the broccoli market will function regardless of what people do. Congress can compel people to buy their health insurance because otherwise there will be no health insurance market.

PHOTO: A farmer holds up a head of broccoli at a greenhouse of the Al Sulaiteen Agricultural and Industrial Complex (SAIC) in Umm Salal Mohammed, north of Doha, December 29, 2011. REUTERS/Fadi Al-Assaad

39 comments

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As a Cdn I would say that American healthcare has extremely high potential but it’s output is really lower than Canada’s. I think the only true way to meet your potential is a single payer system – not because of the usual arguments, but because the uncovered that come in for emergencies end up with substandard care to save the hospitals money. Also, those without insurance don’t have regular check-ups that would (normally*) catch many maladies before they became serious or life-threatening. That is the real savings! The rest of this nonsense is just about insurance companies being nationalized and the profit motive being squelched for the industry. Not every industry should/need be run for profit, unless you’d like to see what electricity costs/service would look like under pure profit motive….

Posted by CDN_Rebel | Report as abusive

Point granted Ezekial.

But, what about smoking or obesity. Could the government force you to quit smoking as it could certainly be considered more of a necessity than is the consumption broccoli…that is a tougher delineation to make.

Posted by jaham | Report as abusive

If someone receives medical care, they are given a bill. They pay it out of pocket, or they pay via health insurance. If collecting money from people who opt to not have health insurance is too difficult, then those costs are put back on to the population of people who have health insurance.. Wait, no that doesn’t make any sense.

So if the problem with health insurance now is that costs/fees keep going up (and have been going up) because more and more people leave the system, if we mandate everyone gets back into the system.. Those same cost/fees are going to plummet because everyone is back in the system? yeah right, i’m still too jaded to believe that.

Posted by RailBended | Report as abusive

While I am for universal healthcare I doubt whether forcing healthy people to opt into the system will lower costs. The problem is that healthcare simply costs too much. Every politician in America knows that he/she cannot promote cost controls on healthcare. That would be an outright attack on Capitalism, which has assumed the role of God in the American society, thus committing political suicide. So, as usual, we shoot for the smaller targets, which may help some but won’t cure the problem. America is doomed to become a third world country, and it’s citizens lack the strength of will and morality to change that.

Posted by lhathaway | Report as abusive

Switzerland, Germany and the Netherlands are three prosperous democracies in which citizens are legally required to purchase private health insurance. The citizens of these countries enjoy long life expectancies, despite easy access to beer, cannabis, brothels, physician-assisted suicide, and deep-fried schnitzel. If the constitutionality of any of the above is in doubt in the United States of America, perhaps constitutional revisions should be considered. With respect to broccoli, we could even propose an amendment specifically requiring each American citizen to buy one serving of per day.

With reminds me of a story. A woman walks into a green grocer and tells a clerk, “I’m looking for a pound of broccoli.” “Sorry ma’am, we’re all out of broccoli today, but we should be getting more in tomorrow,” the clerk tells her. An hour later, the would-be customer returns, sees the clerk, and says, “I’m looking for a pound of broccoli.” “Sorry, but we’re still out of broccoli,” he says. “We won’t have any till tomorrow.” Ten minutes later, she comes back again and tells the same clerk, “I’m looking for a pound of broccoli.” Deciding to change his approach, the clerk asks her, “What does T-O-M spell in tomato?” “That’s simple! Tom,” she replies. “And what,” he then asks, “does P-O-T spell in potato?” To which she answers, “Pot!” “So then,” he continues, “what does C-O-S-T-S-H-I-F-T spell in broccoli?” Briefly taken aback, she finally says, “There’s no cost-shift in broccoli!” “My point exactly,” the clerk responds.

Posted by TobyONottoby | Report as abusive

If my supreme court wise men and women cannot instinctively differentiate broccoli from health insurance, then we are doomed. How can we trust them to make rational decisions about less complicated issues?

Posted by DrHobbit | Report as abusive

@squee

No, I did not miss externalities.
That’s exactly why I put in there
“preventive measures”
The whole argument for the socialists’ pipe dream of single payer system is based on that as well:
“preventing problem or preventing a problem from getting worse”

I know my post is long, so people might miss it. But it is there, please check it.

Posted by trevorh | Report as abusive

I say so what if Congress were to mandate broccoli? No big deal. Scalia’s whole attempt at ridicule is specious.

Posted by peacebrother | Report as abusive

The grand, unsolved problem with forced participation such as with healthcare is that it puts an enormous burden on the individual for a very, very tiny (if any) benefit to society as a whole.

If making everyone participate would cut the cost of health insurance in half, then maybe the author would have point, but it actually produces a benefit to the whole that is so slight it isn’t even measurable.

Economists always seem to miss accounting for the effect on the individual and the end result is that misguided policies from trade to healthcare end up hurting our society instead of helping.

Posted by PapaDisco | Report as abusive

The grand, unsolved problem with forced participation such as with healthcare is that it puts an enormous burden on the individual for a very, very tiny (if any) benefit to society as a whole.

If making everyone participate would cut the cost of health insurance in half, then maybe the author would have point, but it actually produces a benefit to the whole that is so slight it isn’t even measurable.

Economists always seem to miss accounting for the effect on the individual and the end result is that misguided policies from trade to healthcare end up hurting our society instead of helping.

Posted by PapaDisco | Report as abusive

Interesting article and comments. Too bad almost all of it is irrelevant to the matter at hand. The task of the judicial branch, atop which the Supreme Court sits, is to decide on the legal and constitutional merits of the case, not to decide what is most economical. So, the interpretation and applicability of the Commerce Clause is the crux of the matter, not whether a need for health insurance demands that the Court allows this particular law to stand.

Posted by hoosier_gdi | Report as abusive

Why do I have to buy auto insurance? Because the system won’t work if some (many I would think) driver’s don’t have insurance.

The medical system doesn’t work if some (many) people don’t have medical insurance.

Of course, there are many other reasons our medical system doesn’t work, such as the fact that much of the money flows to profits instead of medical care and research, but that is for another article I guess.

Posted by Pendulumswings | Report as abusive

@mewster & hoosier_gdi. In both Lopez and Morrison, the court reasoned that the absence of interstate/commerce connection to the non-economic and criminal nature of the prohibited conducts–gun within school zone and violence against women dictated the limit on congressional commerce power. Further, in Lopez, the court held that Congress’s commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce. While individuals purchase broccoli at supermarkets, such purchases lack that substantial relation to interstate commerce.

Posted by 0okm9ijn | Report as abusive

This argument seems a bit weak on it’s base. If we are looking at supply and demand dictating market forces. If there isn’t a market for brocoli then the market for it would dry up just as if there wasn’t a market for health insurance it would cease to exist. Perhaps it’d be easier to look at the impact of healthcare (provider side) without insurance (payor side) to backstop the costs.

Posted by cbowen | Report as abusive

I can grow my own broccoli. That heart surgery would really be a tough one to perform alone.

Car insurance is so much less expensive than medical insurance because everyone is legally required to buy it. And we pay for uninsured motorists to cover the costs of those who don’t buy it.

You could argue that medical policy costs could be increased for the insured with a “Uninsured Illness/Injury”

The right winged Supreme Court Justices are making a political issue out of this.

Posted by JL4 | Report as abusive

Too many legal cases rest on spurious arguments and tenuous analogies.

Isn’t there a reason why judges are paid so much more than the average person? Aren’t they supposed to THINK and “DELIBERATE”? Personal experience has shown me that they don’t always do this.

Let’s hope these Justices do justice to their office this time… Whichever way the argument falls, let them make the most valid argument…

Posted by matthewslyman | Report as abusive

People who advocate that an exclusively market driven economy is the wave of the future and the only road to the future seem to forget that there are few frontiers open to grass roots exploitation anymore. Unexploited resources are the unmentioned necessary ingredients to capitalist success.

The fault of capitalism is that is not interested in the total welfare of humanity. That is the dirty and unrewarding work that it always leaves to governments and it always resents it. That is very easy to understand. But the rich don’t necessarily have to worry about costs as much as the poor. Big business is not the marvel of cost efficiency they seem to claim they are. They are inclined to puff their success and to bury their embarrassing mistakes and they don’t advertise their hidden secrets and fudge factors. The market itself is obviously not as full of the well-informed and intelligent market analysts that it is claimed to be or all sorts of very dubious and even fraudulent products and services would never see their day in the sun. Mafiosi are always dedicated capitalists. Madoff and other fund wizards like he are illustrations of the get rich quick mentality of the market place. To be fair, the successful ones do not believe in “get rich quick”.

The most successful capitalists are not necessarily the risk takers as is often touted. An article in the New Yorker several years ago asserted (with good reasons) that the most successful capitalist don’t tend to be the vanguard of entrepreneurial bravery at all. They are those who have found as close to a sure thing and know how to milk it for all it’s worth. In the economies of the developed places, the most aggressive and well funded raise to the top. Intelligence does not necessarily mean that they somehow possess superior brains -it means that they have more reliable information, far more training and experience, better organization and more leeway to pick those most suitable to advance their interests. Access to and construction of that intelligence is their greatest tool. You don’t necessarily have to be “intelligent” or a person with a high IQ either. They are inclined to cling to their personal resources and try to discard those human resources they can’t use. Ruthlessness can work for a time too. They could in fact be just like those they are inclined to consider wastes of time, space and resources but they have funding and the momentum to compete for more. They have not been eager to kick-start the economy with the enormous cash reserves they have. They want a sure thing whenever they can find it. They have a desire always to be monopolists.

Government is the last resort for the unprofitable labor of governments. They also work best when they can write out the difficult and inconvenient costs associated with keeping the mass of the potential labor pool alive and educated at all. They need unexploited resources.

The capitalist seems always to resent the fact that the world isn’t easier for him to exploit. He also tends to want to overlook his own dependency on government largess by way of lucrative contracts (got by fair means or foul), or at the subsidies to keep businesses, such as airlines and public transportation, alive at all. The capitalist generally likes the government to pick up the slack he does not like to deal with and his own sense of superiority tends to blind him to the fact that he often needs welfare as much as the long term welfare recipient. This has been said many times by many people, in this paper and in other comment threads.

The only thing in this society that is concerned with broader issues of human rights for the mass of those business does not want to use, are the governments of the world. And that is why – I think – many of those on the “right” of the health care debate- don’t trust that the mandate will be a golden or even practical road to the nations welfare. It is very much more likely to be the last desperate “frontier” that big insurance needs to keep it’s own house of cards from collapsing. And they tend to be no more honest than they absolutely must be by law.

I just read in the UN news digest last night that the Arab world alone needs 50 million new jobs just to employ its youth. How on earth is that going to happen now? What are you waiting for capitalists? Megamillions await the exploitation but not even the largest mega businesses are able to deal with such an embarrassment of riches. Unfortunately, those mega-millions are time sensitive and can turn to garbage very quickly if they are not incorporated into the productive industries capitalists claim (erroneously) that only they can provide effectively. And if capitalism proves it’s inadequacies – other inadequate solutions are going to look so much more attractive. Roosevelt knew that during the Great Depression. .

China is the petra scandali of the modern world – but they don’t have a national health care system either; with or without insurance protection (as I understand it). That is not at all encouraging that there will ever be an adequate solution to this problem. It will make it more expensive because so many more will be able to satisfy the cash demands for a perpetually scarce resource. Asking private insurance to lower costs is asking one of the contributors to the escalation and sophistication of the health care system to change its ways. They won’t know how. They will have to act like a branch of government but the worst kind of branch. They will become an arm of the government that must always be concerned with making a profit to satisfy the investors. Those investors will move elsewhere if the proposed solution doesn’t work. That is why I mention insolvency of the big insurance companies as a possibility. Other than the TVA or even the government sponsored mortgage financiers, there are few examples of that kind of partnership in the US.

Posted by paintcan | Report as abusive

Yes, broccoli is a provocative reduction, a way to belittle the importance of the individual mandate to buy health insurance. In fact, I would say that we are required by law to buy food, although we have our choice whether or not to choose that vegetable over another. If you do not buy food and your children suffer, that would be grounds for the state to charge you would neglect or even abuse. If you as an adult individual refused to buy any food for yourself, then you would likely get in trouble. You could go to a food pantry or a soup kitchen and get by on some days, but you could end up in jail (for stealing food) or you for disorderly conduct if you went to a restaurant and insisted on your right to eat without paying.

The individual mandate is the good old American value of taking individual responsibility for your life, contributing your fair share towards your own health care and realizing that you are part of a health care system. It is very much closer to the requirement to buy car insurance — and there has been some cost shifting there as well because we have an uninsured motorist cost on the car insurance bill.

The individual mandate was a conservative Republican idea to begin with in order to counter the Democrats’ idea of an employer mandate, so it is so obvious that Republicans and Tea Party folks are against it now only because Obama adopted this provision in the law that was passed under his watch as President! The individual mandate is part of RomneyCare in Massachusetts. One of the sickest things about this political season is to see Mitt Romney running against a national health care reform law that is modeled after one of his best achievements as Governor or Massachusetts!

Posted by cathystanford | Report as abusive

I’ve talked to a dental implant specialist told me that we should be given the choice of what to pick among the present health insurances cause we will be the one whose going to use it, right? Though I think the government only thinks that this will be the best way to provide equality when it comes to health benefits.

Posted by Gracieee | Report as abusive