Health Care/Joan Retsinas

The Poor as Artful Dodgers

The baffling poor! It’s time to revisit the Hemingway versus Fitzgerald spat. Hemingway argued that the poor were like everybody else — they just had less money. Fitzgerald demurred, insisting that the poor were naturally different.

More optimistic scientists hued to the Fitzgerald line, but looked for nurture as the root of the difference. Bad parents, bad schools, bad neighborhoods, bad air — of course children raised in deficient surroundings would grow up deficient, never climbing the ladder to prosperity that Horatio Alger vaulted. The solution: legions of social workers and “programs.”

Hemingway’s argument, though, has shaped modern public policy, particularly in Western Europe. The poor, quite simply, lack money. So the pragmatic solution has been to give them subsidies. Indeed, Richard Nixon once upon a long-ago time proposed a “negative income tax” to boost the poor out of poverty.

In 1998 Congress elected to subsidize health insurance for children of the “working poor,” recognizing that many people worked for employers who did not offer health insurance — or those employees couldn’t afford their workplace policies’ premiums. Under the State Children’s Health Insurance Program (SCHIP), states used federal money, and some of their own (roughly 30% of the costs), to fund a panoply of intriguingly-acronymed programs: HAWK-I (Iowa), Husky (Connecticut), PeachCare (Georgia), TennCare. Today SCHIP covers more than 6 million children.

Ten years later, the data show SCHIP a success: it reduced “uninsurance rates.” At the start, 22.5% of families of 3 earning 100-200% of poverty ($17,170 to $34,340) had no insurance. Today the rate is 16.9% — an acceptably or unacceptably high rate, depending upon your political bent. Researchers credit SCHIP for the plummet.

Ten years later, the data also resolve the Hemingway-Fitzgerald debate: the poor, at least the working poor, are just as rational as the rich. From 25 to 50% of new enrollees had been covered by their private insurance: they dropped their workplace policies for their state’s SCHIP.

The decision is eminently rational. Poor people, just like the middle-class, can do the math. When they calculate the costs, often exorbitant, of their workplace policies, against the cheaper costs of SCHIP, they move their families to the cheaper, generally better, insurance. If they didn’t, it would be prima facie evidence that Fitzgerald was right: only somebody who was “math-impaired” would stay with the more expensive policy.

Tennessee Gov. Phil Bredesen even credits the poor with a cunning craftiness: he sees SCHIP enrollees as gaming the system, by expressly choosing jobs that will get them onto SCHIP. In an interview with Alan Weil, executive director of the National Academy for State Health Policy [cited in Health Affairs], Bredesen explained: “[those enrollees] were perfectly capable of working someplace that does offer health insurance. This world is full of people who make choices about where they’re working based on things like availability of pension plans and health insurance.” The people who stock the shelves at WalMart, bag groceries at the supermarket, or iron shirts for a living probably don’t see themselves as crafty. If they were truly crafty, they should be earning more than poverty-level wages.

In fact, their employers are the crafty ones, gaming the system. Large employers, like WalMart, Home Depot, Target, et al. have used SCHIP to foist their low-wage workers onto the public rolls. Although the companies offer insurance, many employees can’t afford the premiums. Not surprisingly, an influx of those employees have signed up for publicly-subsidized insurance. A few states have tried to force large employers to cover all their employees, but those bills have hit judicial roadblocks.

SCHIP expires Sept. 30, unless Congress renews it. Solons, particularly Republicans, point to the 25-50% “crowd-out” as evidence that Uncle Sam is paying too much, covering people who might otherwise be covered under their expensive, often bare-bones, employers’ policies. It is easy to blame the working poor for gaming the system.

Yet bureaucrats are blaming the working poor for being rational — just as rational as their very wealthy employers. Hemingway was right.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email

From The Progressive Populist, July 1-15, 2007

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