Wednesday, January 29, 2014

ACA Requires Gender Discrimination Without Actuarial Justification

The Affordable Care Act's supporters praise it for adding mandatory coverage to participating plans.  They allege that men who buy plans covering birth control, pregnancy, and endometriosis redress historic price discrimination against women who have bought insurance.  This flawed logic is easy to debunk.  This law enshrines a new form of price discrimination against men by replacing actuarial results with a contrived political argument.

Price differences in the insurance sector are not the result of discrimination against gender, race, or other protected categories.  Pricing for policies of any type is always the result of carefully calculated actuarial solutions that distribute the costs of rare but discrete events across a large pool of the insured.  If a policy covering pregnancy is more expensive than one that does not, its because that service has a cost that must be distributed among a pool of people likely to experience that condition.  Men do not experience pregnancy.  Forcing them to participate in a risk pool for pregnancy is like mandating that someone who does not own a car must purchase automobile collision insurance.

Arguing that men should share the cost of birth control and pregnancy policy coverage because they potentially share in procreation ignores participants' risk profiles.  A sixty-year old man is at far less risk of impregnating a woman than a twenty-year old man.  Women also have the option of pursuing pregnancy trough artificial insemination, and anonymous male donors typically do not incur paternal obligations in the eyes of the law.  Some emerging case law has begun to establish such paternal obligations for male donors who did not fulfill legal requirements that would have shielded them from parental liability for child support, but that is a minor issue with little relationship to insurance risk pools.

Requiring men to pay for coverage of endometriosis is even more ludicrous; that is a medical condition specific to women.  Taking this logic further would require women plan subscribers to pay for erectile dysfunction and prostate cancer treatments, which of course disproportionately affect men.  I have yet to see those arguments appear in public media.  Perhaps I haven't looked hard enough for those arguments or for plans' coverage requirements.  Requiring men to join a risk pool that covers women's specific conditions, without requiring the reverse commitment from women to cover male risks, is exactly the kind of gender discrimination the ACA's defenders should oppose if they are intellectually honest.

The ACA's authors in the health care sector knew that the appeal of cheaper coverage for female-specific conditions would help sell the law to women voters.  The price that health care providers can extract on the back end - higher deductibles, suppression of innovation through a device tax, and no real cost controls - was easy to hide with rhetoric.  The bait and switch worked and the health care sector maintains its ability to extract surplus rents in the manner of a rentier regime.  ACA plan pricing sets a precedent for politically determined investment outcomes.  This precedent suborns fiduciary duties and actuarial results to the will of a political majority.  This revelation is lost on many Americans.

The US Supreme Court upheld the legality of the ACA mandate as a tax, establishing a firm legal precedent for politics to determine investment outcomes with little regard for links between cost and consequences.  I expect further legal developments under the cover of fairness to redistribute wealth according to the wishes of a donor base.  The challenge for economic actors who want to safeguard wealth in this environment is to become an effective donor constituency.