Differing Definitions of Discrimination
Way back in the early aughts, I took a college sociology class, and in one discussion session we were asked to define the word "discrimination." I went with something along the lines of "recognizing differences between two things and then behaving differently toward them." This was not popular: It's possible to do that without being a bad person, and, according to most of my classmates, only bad people can engage in the practice known as "discrimination."
I was reminded of this when I read John Goodman's critique of the Obamacare rule that insurers can't charge women higher premiums and yet have to cover female-specific services such as pregnancy care. He writes:
Women have substantially longer life expectancy than men. So in an unfettered life insurance market, the actuarially fair premium for women would be lower than it is for men. Is this gender discrimination? I don't think so. If people pay for what they get, I would say everyone is being treated fairly. But suppose we pass a law saying that life insurers have to charge the same premium, regardless of sex. That would cause women to be over-charged and men to be under-charged. I would call that discrimination. Completely unjustified discrimination.
Think about that example. A law that purports to outlaw discrimination would in fact be a law that forces insurers to discriminate. And the victims would all be women. A similar injustice happens under ObamaCare. Except this time, it's the men who lose out.
This goes to the heart of the debate about what "discrimination" -- in the by-definition-bad sense -- is.
The employment laws passed in the 1960s give us a sense of what most people mean when they refer to this concept. Under these laws, certain factors -- most prominently, race and sex -- must simply be taken off the table. To consider these factors in hiring is to discriminate, and over time we've been adding more factors to the list (e.g. most people now support bans on sexual-orientation discrimination).
Importantly, aside from some obvious exceptions -- say, you're hiring an actor to play a character of a certain race or sex -- this applies even when it's completely rational to consider these attributes. For example, when women are legally entitled to take leave when a child is born, it can make sense for employers to discriminate against women who are likely to bear children. Also, Southern businesses in the wake of the civil-rights era often had a lot of racist customers, and could lose profit by hiring blacks. The law prevents discrimination in cases like these anyway, and only a few people (such as Walter Williams) say it shouldn't.
So, the idea here isn't really that these factors are always unrelated to a worker's expected value to a company -- but rather that it's unfair to penalize someone for belonging to one of these categories.
In light of this, the question posed by Obamacare is an interesting one. Before Obamacare, health insurers were allowed to charge women higher rates because they were likely to use more care. In a way this is comparable to the discrimination banned in employment -- gender itself is being used as a reason to treat someone poorly.
But on the other hand, we're not normally bothered when men and women spend different amounts of money on products they use different amounts of. We don't expect men and women to spend the same amount on mascara, for instance, even though CVS doesn't discriminate based on whether a man or a woman brings the product to the counter. Gender-based pricing is needed to produce this result in health insurance only because it's a unique type of product -- where one party collects regular payments in exchange for a promise to pay for certain things later, and thus has to set a price that roughly corresponds to the expected cost of providing coverage. As Goodman notes, to deny insurance companies the ability to charge women more is to force men to subsidize women's health care.
So do we have "discrimination" here? It depends how you define the word.
Perhaps it doesn't make sense to look at the issue through the discrimination lens, though. The idea behind the law may simply be that, because women did not choose to be women, they shouldn't have to pay extra for it -- even if it costs more. These rules could be designed to rectify a cosmic injustice, using insurance premiums as the leveling force, rather than to stamp out unjust behavior on the part of insurance companies themselves.
Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen