You Get What You Subsidize

An interesting set of data I read the other day:

In 2011, the Arizona Health Care Cost Containment System, Arizona's Medicaid program, paid for 53 percent of the state's 84,979 births, while private insurance paid for 42 percent, according to state statistics. The remainder were paid for by individuals....

Sen. Sylvia Allen, R-Snowflake, estimated that including pre- and postnatal care, it costs Arizona about $7,500 per birth for a delivery with no complications. Using those estimates, the 2011 deliveries would have cost Arizona taxpayers nearly $338 million....

In 2010, 58 percent [of Arizonans] had private insurance and 18 percent were on Medicaid.

So, 18% of Arizonans are having 53% of all births.  Another way to put this is that the 18% of people who get this procedure from the government for free account for half the demand, despite the fact that these folks are the ones who, if rational, should be the least likely to have a lot of births because they presumably have the most difficulty affording an extra mouth to feed.

God forbid I start sounding like some crotchity Conservative, but I continue to be amazed that pregnancy is treated as an "emergency procedure."  It strikes me that unlike, say, cancer, individuals can choose to avoid this condition fairly easily if they can't afford it.  I certainly know my wife and I put FAR more deliberation into having children than we did any other decision in our lives.  There is a terrible tension here - no one wants to turn away an expectant mother and endanger her child, but freely giving away an expensive procedure without any sort of restrictions nearly begs for a baby boom.  Those who try to argue that Obamacare won't increase health care expenses (in other words, arguing that demand curves don't upward) only have to look at these numbers.

PS-  Apparently, our state legislature is appalled by these numbers.  This is the same legislature that has proposed about a zillion abortion restrictions over the last year.  It will be interesting to see if fiscal issues change anyone's thinking on the abortion issue now that there is suddenly a $7500+ incentive to allow an abortion.

Update -- Thinking about this, I think the 18%/53% comparison is directionally correct but the difference is exaggerated due to Medicare.  I doubt Medicare delivers many babies, but a large part of the AZ population is on Medicare.  If the numbers were reset to show the percentage of Arizonans of child-rearing age on Medicaid, the number would be north of 18% but likely well below 53%.


  1. mark2:

    The real problem is this. Girls who are poor and have a baby get a lot more benefits in regards to housing, food suppliments and welfare. They aren't having the baby because the hospital bill is free, they are having the baby because not only is care for the baby free - but the women gets enough side benefits to take care of herself as well. That is the part that really needs to be stopped.

    I don't think killing the babies is the answer. It costs us $7500 per birth, so lets kill all the babies of the poor, is gross and callus. I wish the abortion folks would think a bit about what they are saying. Even Ron Paul, the libertarian is worried enough about the rights of the unborn to be against abortion.

  2. mark2:

    I forgot to mention this. Girls who have babies where the father can not be found get much more in benefits than girls who don't, because of the reasoning that the boyfriend should pay child support. So the girl puts down a fake name as the father - that way the benefits go up, the father has no responsibility - and both are allowed to continue their wreckless irresponsibility on the government dime.

    You also need to have a new baby every few years, because the benefits drop when the child reaches school age, so at least every five years you need another one.

    In CA we have much the same problem, and it isn't just the PC ninnies that aren't allowing change to this system. A lot of it has to do with federal mandates of how the money should be spent.

    So again, no it isn't the free hospital stay - that is only part of it. It is the freebies from the government that support the single low income motherhood.

  3. mark2:

    So now with these facts in mind you know it isn't Abortion laws that are the problem, even with unfettered abortion, the incentive for the girl strongly favors having a baby to support her lifestyle.

  4. Alexander Scott:

    So, am I reading you correctly that you think abortion (killing a human being) is an okay way to reduce these costs, but keeping illegal immigrants out (who are presumably young and poor since the old and rich are usually doing well wherever) is bad? Or do you think that folks who believe that unborn babies deserve to live would change their minds at $7500?

    I've been reading your blog for a few years and I never got the impression that you thought a "baby boom" would be bad thing, or that there are too many people living in Arizona. So maybe I really am misreading you?

  5. mark2:

    The babies come because government grossly subsidizes single unwed mothers where the father "can't be found" if the abortion laws were totally unfettered in AZ, these babies would keep coming at the same rate, because having the baby gets the mother more money and higher priority on the government welfare train.

    The abortion issue was a red herring.

  6. Alexander Scott:

    In terms of solving the problem, i agree. My question is the thought process: is the claim that abortions > restricting illegal immigration? Or that pro-lifers would drop their principles at $7500 per baby? The abortion issue is such a non sequitur, I'm curious why it was thrown in. Why not just say that side-effect of helping the needy is that you enable the choices that lead to more needy people?

  7. mark2:

    Just as Dems favor groups, and GOP favors groups, Libertarians have their own favored set of groups including the illegal aliens.

    Though I think bringing in side issue of illegal aliens, is also a poor argument technique, I can see your point that the illegals do tend to take more resources then they contribute and yet their unfettered entry into the country is deemed OK by the Libertarian elite.

  8. Matthew Slyfield:

    No, it's the Dems that favor illegal aliens. I think the expectation is that most would vote democrat if they were alowed to vote and there are some Dems supporting giving illegals the right to vote at least at the state and / or local level.
    Libertarians favor much more broadly available legal immegration, but I am not aware of any, even our host arguing that those comming now shouldn't be held to current laws.
    Our host has opposed certain sherrif(s) from his home state who run sweeps for illegals with basically no probably cause but that is not the same thing at all.

  9. LarryG:

    the births are the least of it. After that, there are food stamps, subsidized school lunches, SCHIPS, housing and the earned income tax credit where the mom will get back all of her Federal withholding tax if she works.

    but the Conservatives make it near impossible for a poor woman to have a govt-paid-for abortion or even birth control so choose your poison!

  10. mark2:

    Our host doesn't care about illegal alien laws, and has even said the preposterous, I don't see any problem with illegals in my (sic upper middle class exclusive, possibly gated) neighborhood. Why is everyone complaining.

  11. mark2:

    The women don't want the abortion, because the baby allows the woman to live a comfortable life without working. Even if abortion were unfettered the rate of births amongst the welfare crowd would not go down, because they want to get on the programs. Even not paying for the hospital bill wouldn't cut down on births. They would just have the babies at home. The gravy is particularity good if you have kids under five so every fiver years have another one.

    You're slight against conservatives is ignorant. You should be complaining about the bonuses and extensions given by HUD, WIC, Health and Human services for having illegitimate kids when poor. Blame the Dems for that who think the poor give them more votes.

  12. Arthur Felter:

    Seriously dude... I don't get why pregnancy is a billable thing (I don't bill Progressive when I need an oil change). For those of us who have kids and have insurance, we end up paying for the pregnancy anyways through higher premiums.

    (Complications during child-birth is a different story...)

  13. Jon:

    We use a midwife. ~$2000. It would be nice if AZ would get rid of the licensing requirements too.

  14. irandom:

    What about genetic testing of the kid and checking it against the criminal DNA database?

  15. fredrick.:

    Kinda racist to assume the father is a criminal isn't it?

  16. mishu:

    Kinda racist to assume the mother and father are minorities isn't it?

  17. NL7:

    Doesn't it make sense? People having kids are disproportionately young and less likely to have savings and high compensation like old people who don't have kids. If you didn't have health insurance but were pregnant, you'd sign up for Medicaid.

  18. fredrick.:

    Who said they were minorities? - please cite the reference.