Using Medicaid to Produce Homo Economicus

I am increasingly convinced that any Foucauldian effort to understand neoliberalism needs to focus on it as a strategy of subjectification (more specifically, it’s the strategy of subjectification specific to contemporary biopower, and it says that the truth of the human being is as homo economicus).  One reason I think this is that one finds repeated examples of where policy or governmental prescriptions specific to neoliberalism conflict with neoliberalism as a strategy of subjectification; in such cases, the strategy of subjectification generally seems to win.  Let me explain with an example which will hopefully serve as proof of concept of the admittedly very big thesis I’ve just announced.

Two pillars of neoliberal thinking are:

1. Efficiency.  At least since Hayek’s Road to Serfdom, this has been a key component of neoliberal economic theory.  One of the main advantages markets have over other systems is allocative efficiency, as it works through the price mechanism.  If the object of economics is to allocate resources to those who value them most, then prices allow for the decentralized signaling of value with minimal expenditure of resources at the system level.  When Hayek sets up two alternatives – the Soviet state and free markets, it is hard to disagree that Soviet central planning doesn’t waste a lot of resources collecting information (it also helps Hayek’s case if you know in hindsight that the Soviet planners were forced to work with completely inaccurate data, because the failure to report unrealistic economic progress was grounds for being sent to the gulag, or worse).  As Foucault emphasizes, smart neoliberals know perfectly well that markets don’t occur spontaneously, and often require considerable effort on the part of the state (so the idea that the Chicago futures market is unregulated is complete hokum), but the claim will still be that they are more allocatively efficient than any alternatives. Along with a general faith in market efficiency comes policies designed to ensure that efficiency, and to reduce the “transaction costs” in getting there.
2. The individualization of risk, and understanding of individuals as entrepreneurial investors in their own future.   Key here is that individuals are to understand themselves in this way: this is the truth of what it means to be human.  This is the point about subjectification, and it’s evident in a lot of areas, from parables about Rich Dad/Poor Dad  to the shift away from basic research funding in the sciences to the "financialized girl."

With that in mind, consider Michigan’s recent acceptance of increased Medicaid funding under the Affordable Care Act.  The state went out of its way to avoid socializing the Medicaid expansion with some familiar tricks – adherence to lifestyle norms enables individuals to pay less for access to the system, for example – but this part stood out to me:

“In an effort to give Medicaid recipients more "skin in the game," as proponents call it, most newly eligible Michigan recipients will face copays -- typically from $1 to $3 for most outpatient health services. Those with incomes between 100 percent ($11,670) and 138 percent ($16,105) of the federal poverty level will also pay a premium of 2% of their income. While many states impose similar cost-sharing, Michigan will be the first to ask enrollees to make those payments -- either copays or premiums or both -- through a health savings account. Indiana Gov. Mike Pence, a Republican, has also recently proposed health savings accounts as part of his Medicaid expansion plan. Both the state of Michigan and individuals and potentially, their employers, will be asked to deposit money into those accounts based on enrollees' copays in the prior six months. If funds are left at the end of the year, they will be rolled over. If a beneficiary becomes ineligible for Medicaid, the balance will be put into a voucher they can use to buy private insurance.”

The strategy of copays of course is itself a pushback against any sort of socialization of medicine, even for the poor, since it basically is an attempt to communicate that medicine is a commodity that can be consumed. Rational subjects decide whether the $3 should buy a bus fare or a doctor’s visit.  It’s very hard to have any other interpretation of the copay, since I would be absolutely sure that it costs the system more than $1 to process it, and the premium probably won’t fare much better.

But leave all of that aside and consider for a moment the idea that all of this is to be managed through health savings accounts.  If you wanted to extract $1-$3 from everybody who visited your office, presumably the most efficient way to do that would be to ask them to pay it while they were there.  You could even request it in cash, to avoid spending money on swipe fees.  Since almost all non-Medicaid patients are going to be making a copay, you don’t even have to add much in the way of administrative resources.

But health savings accounts?  There is absolutely no way that requiring health savings accounts will not cost far more than the amount of premiums they enable.  Indeed, it’s hard to imagine how the HSA strategy isn’t about the least efficient imaginable, given the sums of money involved.  So on neoliberal grounds, this is a terrible policy decision.  Unless efficiency just got trumped by the demand that all individuals always understand themselves as investors in their own human capital, in which case it makes perfect sense.  As Ute Tellmann has noted, the idea that the poor have to be trained to think economically dates at least to Malthus.  Here, the system is investing in the production of homo economicus, and is willing to take an efficiency hit in the short term to maximize its return on that investment.