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Solidarity, Subsidiarity, and the Problem of Good Customer Relations

The more we learn about the implementation of the Affordable Care Act (called “Obamacare” by the popular press), the more we realize that the act ignores the core principles of solidarity and subsidiarity that make organizations and systems function effectively.  Initiatives that reject these principles are rarely successful.  Consequently, I don’t hold much hope that Obamacare will ultimately accomplish its goals of improving access and reducing costs.
 

Brian Engelland, Ph.D. (Solidarity, Subsidiarity, and the Problem of Healthcare)

Professor Engelland’s criticism of Obamacare is more interesting than the run of the mill despite the fact that he so completely mischaracterizes Obamacare that one is hard put to believe he is acting in good faith.  (No, Obamacare is not a system of price and cost controls and no it does not reorganize the entire health care system and no the government is not reasoning that it can dictate what medical procedures are covered  and how much reimbursement is paid out.)  Still, his argument is such that his own substantive criticisms of Obamacare are basically irrelevant.  All that really matters to him in terms of his main argument is that Obamacare is a government program.

As Catholics we need to take seriously any accusation that a major social program violates the principles of solidarity and subsidiarity.  Our first question should be how does Engelland define these?  He gives us a hint in the first few sentences quoted above when he says that Obamacare “ignores the core principles of solidarity and subsidiarity that make organizations and systems function effectively”.  To him, the principles are functions that promote efficacy.  He is in dangerous territory, because stated this way, the “principles” become part of the group of functions of the system or organization and the goal of the organization becomes the primary thing to which the functions are subordinated.  Let’s see if this is what Engelland really means.

His definition of solidarity starts out well enough:

Solidarity is the principle that recognizes that individuals are happiest when they develop lasting personal relationships with other humans.  We develop the bond of brother hood (sic) when we recognize that another needs help and we sacrifice our talents, time and treasure to assist that brother in need through a personal connection.  Solidarity is not simply a feeling of compassion or concern towards those in distress.  Rather, solidarity is a call to action and a personal commitment to provide assistance.

But his example of solidarity is:

Think about the greeter who welcomes you to Wal-Mart… (The greeter and the customer) are edified through the practice of solidarity: the receiver obtains needed assistance; the giver obtains the merits of Christian charity.  Both come away with greater respect and love for the other.  When these individual bonds are multiplied by the millions of such solidarity interactions, society as a whole becomes better connected and the common good is served.

How do we know that solidarity (thus defined) improves the efficacy of the transaction?

Research by marketing scholars has long demonstrated the power of this personal connection.  Companies have prospered by developing good customer relationship strategies that put an individual face on customer contact.

Solidarity, then, has nothing to do with the actual condition of the two parties involved.  Rather, the appearance of solidarity which in this case is the product of a corporate script is an actual manifestation of solidarity.  Since solidarity is something that arises out of a simple (if ersatz) face to face interaction, Obamacare is doomed to fail because:

…a government entity stands in the middle of the exchange, breaking the connection between the giver and the receiver.  The giver never receives the merits of charity and the receiver never gets to know the benefactor.  Without this connection, society is broken into distrusting factions.

It’s interesting that Engelland should choose a company like Wal-Mart as his example.  Wal-Mart is the largest company in the United States and dwarfs in size many governments.  It is a bureaucracy engaged in the selling of merchandise.  But since it creates a front-end “relationship” between the greeter and the customer, a relationship that incidentally breaks the connection between the producer of the goods it sells and the customer, it becomes a model of solidarity (and profitability).

Now it could be that Engelland is simply using the case of Wal-Mart as an example and that he doesn’t mean to say that solidarity is a means to support the efficacy of commercial transactions.  Let’s see what he says about subsidiarity:
 

Subsidiarity is the principle that respects individual freedom, initiative and control of one’s own sphere of responsibility.  The principle recognizes that humans to not react well to conditions in which individual and local autonomy is replaced by higher level mandates.

What is a good example of this?  Once again, we look to the commercial sector:

Years of management research, for instance, has shown that individual workers are happier and produce more effectively in situation where higher-level management provides the necessary production resources and cedes responsibilities to local-level control.  Under these conditions, the individual worker is respected as an intelligent, decision-making partner in the enterprise, not as a faceless cog in the production machinery.

Once again, he is talking about the illusion of control, since actual control would be something very much like socialism or syndicalism.  The requirements of Catholic subsidiarity are therefore met by a (relatively) decentralized management style.  Obamacare fails this test too, because:
 

…individuals are much happier when they can make (their health care) decision(s) in conjunction with their own selected physician rather than have the decision forced on them by some distant insurance company, assigned medical provider, or government bureaucrat.

Putting aside the fact that what he is describing here is pretty much our current medical system (that he wants to keep), one wonders what the difference is between an insurance company or a government bureaucracy putting a friendly front-line face on the interaction and a large faceless private company doing the same thing?  One can easily get the impression that to Engelland, 1) laissez faire capitalism is the most efficient bearer of the Catholic principles of solidarity and subsidiarity and 2) the appearance of a personal relationship meets the principles as long as the real underlying relationship is properly hidden.  For Engelland, solidarity and subsidiarity don’t rest on one person’s actual (economic, social, or structural) relationship with another.  Rather, it’s a feel good transaction.  Obamacare fails because Engelland thinks that it doesn’t have a good Catholic customer service model.
 

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The Acton Institute seems to be enthusiastic about CUA's decision to elevate its business program from a department to a school with its own dean. 

 

Earlier this year, the Catholic University of America announced the creation of a School of Business and Economics that will be “distinctively Catholic.” The new school offers a model based on Catholic social doctrine and the natural law that is unlike theories prevalent at most leading business schools. “Business schools focus on teaching commercial skills and rules of ethics, but they neglect the importance of character,” says Andrew Abela, the school’s dean and Acton’s 2009 Novak Award Recipient. “Our distinctive idea is to bring the rich resources of the Catholic intellectual tradition and the natural law to bear upon business and economics.

http://blog.acton.org/archives/55391-catholic-universitys-virtues-based-...

Since Engelland's article is posted on the school's website, I wonder if that is the 'distinctively Catholic' view of business and economics that CUA has decided to endorse as Catholic teaching. 

I just took on exactly the same article!

http://vox-nova.com/2013/06/20/a-catholic-defense-of-obamacare/

 

unagidon, do you think you could reformat your lengthy post so that it has a jump, and your detailed arguments could be below the jump?  There is limited space now on the first page of the dotCom website, and lengthy posts push other topics off the first page.  Just a friendly request from a reader.

 

Engelland's peculiar take on solidarity blends so nicely with the equally peculiar neo-conservative view of subsidiarity, the two effectively neutralize all traditional criticisms of free market economics posed by Catholic social doctrine.  Which is the point, right?

 

When subsidiarity means the capitalist system supported by natural law, solidarity becomes simply a management problem.

It's not completely clear who his intended audience is for this short and rather informal piece, but I suppose it is for the busy business professional who may not be very well-grounded in Catholic social teaching.  Or possibly for freshman undergraduates; his examples have a bit of the "101 course" lecture about them.  At any rate, I didn't think any of them were patently incorrect.  

I don't think it's far-fetched to suppose that genuine solidarity - that is to say, solidarity that is deeper and richer than the forced jocularity or facade of politeness which is strictly subordinated to profit-making - can exist in the commercial sector.  I'm sure he's right that genuine relationships of friendship and fellowship and even Christian altruism can grow between a vendor and a customer, or between a supervisor and an employee.  It is true that there is always that thread of commercial instrumentality that runs through such friendships, and for some reason, we have a sense that the business aspect of these relationships somehow sullies the purity of true friendship.  And there is no doubt that situations may arise that would force one or both parties to choose between the genuine relationship and the hard requirements of the job.  (I know that one of my employees will be laid off next month, and it will be devastating to her.  Should I tip her off ahead of time?)  But I guess my point is that, because many or even most commercial relationships are subordinated to the profit-making motive, it doesn't mean that genuine solidarity can't develop.  Fwiw, our children's pediatrician is a friend of ours, and so is our life insurance agent.

Now, Engelland's claim seems to be that, with the advent of Obamacare, the healthcare procurement and delivery activities will be less personal than they are now.  I don't know why that should necessarily be so.  For people who need to purchase individual policies, health insurance already can be procured over the Internet.  (Allegedly less expensively than it will be on the new exchanges.)  For people like me who receive group insurance from our employers, many of us (including me) enroll over the Internet.  So I don't see that the insurance exchange transactions will be any less or more personal.   As for health care itself: I presume that doctors will still have offices and patients will still need to see them in person.  My health insurance plan includes a nurse's line which we're encouraged to utilize (although I never have), and a mail-order prescription service (which I don't use), so the mythology of the friendly doctor with his black bag making house calls is already a relic of the distant past.

I think we should cheer attempts to think through the importance of having genuine solidarity and subsidiarity in the business world.  Even more so, genuine attempts to build solidarity and subsidiarity in the commercial sector.  A lot of us spend a huge chunk of our daily lives in it.  

Also, it seems to me that if he seriously mischaracterizes some of the provisions of Obamacare, it would be extremely helpful to spend a bit of time clearing up the mischaracterizations.  I don't know if I've read up on Obamacare more than the average consumer, but it's not easy to digest it all and there is a lot of misinformation floating about out there.

 

Btw, here is Jonah Goldberg on Obamacare's practical application of the principle of solidarity: the requirement (fervent prayer?  wild hope?) that the young and healthy will pay a substantial amount for health inbsurance.

http://www.realclearpolitics.com/articles/2013/06/21/a_challenge_to_young_obama_supporters.html

 

I am not permitted to discuss this subject, as presented, under rules of our house, where one of the examples is never mentioned and can only be alluded to as "the Unmentionable." But I am disasappointed that others, who can speak of the Unmentionable, have not yet brought up either a) the subsidarity engendered by the eight persons equal to the 45 percent or b) the solidarity shown by a greeter getting less than 30 hours a week of employment but making herself available for 40 or more hours (thereby precluding working a second, similar job) so she does not drain her employer of the cost of fringe benefits.

You may accuse me of class warfare.

 

Jim said:

But I guess my point is that, because many or even most commercial relationships are subordinated to the profit-making motive, it doesn't mean that genuine solidarity can't develop.

Solidarity can develop and one can argue that this is because solidarity is independent of and not a function of commercial transactions, no matter how nice and attentive the stewardess is.  But Engellund is doing a sort of sleight of hand here.  He introduces solidarity when he really wants to support his argument of subsidiarity.  There, he wants to say that the free market is the best support of the principles of subsidiarity and if this is the case, then solidarity in smoothing the transactions acts as a support to this.  In fact, I can't see how solidarity can be other than independent of any social or economic system, at least in its Catholic sense.

Regarding Obamacare, Engellund's description of what's wrong with healthcare is facile (it's too expensive) and the solutions for him all center around "free market solutions" like tort reform and the government promoting tax credits for medical establishments and things that will increase the overall supply of doctors.  While he does put insurance companies in the same bucket as big government, he doesn't go so far as to say that they should be eliminated.  But since they exist all over the place in capitalist society as a means of spreading risk and since capitalism as we know it could not exist without these risk spreading entities, he does appear like he doesn't really know how insurance (or capitalism for that matter) actually works.

It's hard to correct his characterization of Obamacare because for him, Obamacare is something that is going to tell you what doctor you have to go to, what treatments you are allowed to receive, and what payment the doctor will receive.  This is flat out Tea Party nonsense and I don't even know where to begin.

I did think that it was ironic that Engellund said that one of the benefits of being a Wal--Mart greeter is the benefits of the charity given.  Some might argue that this is virtually all that they get.

Jim said

Btw, here is Jonah Goldberg on Obamacare's practical application of the principle of solidarity: the requirement (fervent prayer?  wild hope?) that the young and healthy will pay a substantial amount for health inbsurance

The nature of insurance is the spreading of risk and don't fool yourself that you with your perfect driving record are not subsidizing some texting drunks and their car wrecks.  Of course the healthy pay for the sick.  The safe pay for the careless too.  This isn't news.  But in that it is being presented as news, we are seeing attempts at political manipulation.

The nature of insurance is the spreading of risk and don't fool yourself that you with your perfect driving record are not subsidizing some texting drunks and their car wrecks.  Of course the healthy pay for the sick.  The safe pay for the careless too.  This isn't news.  But in that it is being presented as news, we are seeing attempts at political manipulation. 

Sure, all that's true.  I'm just pointing out that the requirement that these healthy twenty-somethings fork over what will be, in many/most cases, a substantial chunk of cash, over and over again, is almost a laboratory experiment to determine how well we've taught the virtue of solidarity to the young generation.  

Expressing empathy to those in need is undemanding; taking an hour out of one's day every couple of years to vote for a candidate who promises to help those in need is slightly more demanding (an act of virtue that President Obama's political operation has proven that it excels at motivating); paying out $200, month after month, when one is not accustomed to doing so, for a service that one reasonably expects not to need, and when one has comparatively little disposable income, is a great deal more demanding.  In effect, we'll be taking the virtue temperature of this generation.

Of course, there is also the factor of legal compulsion - that buying insurance will now be a legal requirement - which, depending on one's point of view, helps these individuals to embrace the virtue of solidarity, or mitigates the virtuous nature of the act because what it compelled isn't freely chosen.  (I incline to a bit of both).  It's not yet known how effective the compulsion will be, but I believe the fines for non-compliance are less than (in many cases) the premiums are expected to be, so the necessity of the virtue of solidarity will still be a factor.

Btw, it occurs to me that one of the secrets of success of employer group insurance is the payroll deduction.  If my contribution to my family's insurance plan is not part of my paycheck - never actually reaches the bank account to which my check is directly deposited - then it creates the illusion that I'm not really paying for health insurance.  To the extent that the insurance exchanges are able to replicate this arrangement, I'd think would be a key to their success.  For example, if they are able to have an automatic monthly withdrawal of the premium from the customer's bank account, that would come close.  If employers or their payroll providers could do a pre-paycheck deduction, as happens with employer group insurance today, that would be even better.  Whether any of these provisions are actually planned, I don't know.

 

Jim. I live in Massachusetts where we have had Mitt Romney's version of mandatory health insurance for the past 7 years. I really don't hear complaints about it - and 97% of the people in the state now satisfy the mandate.

On the day you earn your first paycheck you start paying into Medicare, which is insurance that isn't going to start paying off until you are 65. The ACA takes the same view that health insurance is something you pay for over your whole working life. By starting to pay when you are 18, you are able to have insurance at affordable rates when you are 60 - and you avoid the possibilkty of not being able to get insurance at all if you are in bad health then. 

In this startup period, it is true that much of the cash younger people pay in is used to subsidize health care for older, sicker, people. However those younger people will get their payback when they are older and pay lower premiums then than they would otherwise.

Jim -- buying auto insurance is a legal requirement in, I believe, all states. Insurance is a condition for getting some kinds of business licenses in most states. Try to get a mortgage without buying homeowner insurance. In that case, it's a bank mandate, but it is every bit as binding as a gummint mandate if you want the mortgage. So let's not go into a full-bore swoon over a health care mandate.

"...don't fool yourself that you with your perfect driving record are not subsidizing..."      I believe this betrays a fundamental lack of the purpose of insurance, and the conditions under which it can function effectively.                 Am I the only one having trouble with the comment box?   It doesn't accept  copy/paste and is temperamental in responding to data entry....unless it's just my account that's having this problem...hmmmmm

On the day you earn your first paycheck you start paying into Medicare, which is insurance that isn't going to start paying off until you are 65.

Right.  Cf my comment about payroll deductions.  I'm speculating that having something similar or identical could be a key to the mandate's success in this regard.

 

buying auto insurance is a legal requirement in, I believe, all states 

Sure.  But we know that not every car is insured.  I just spent a couple of minutes in Google trying to get a sense of the percentages of uninsured vehicles.  It seems to vary; Philadelphia at one time was one out of every four; Texas, one out of every five; Montana, one out of every eight.  

I don't know whether health insurance scofflaw rates would be comparable.  For one thing, unless more companies dump their employees onto the exchanges than the Obama Administration expects and hopes, the exchanges will be serving only a relatively small fraction of Americans.  Would compliance rates of three out of four, or seven out of eight, be the critical mass that's needed to make the scheme financially viable?  Sounds like a question for the actuaries.

John Hayes states that 97% of Massachusetts residents comply.  That sounds more hopeful.  How did it happen?

 

Jim, here's a  one-page FAQ about the MA system. It shows even a bit higher enrollment than I remembered:

https://www.mahealthconnector.org/portal/site/connector/menuitem.ab426e0...

"Massachusetts has by far the lowest rate of uninsured in the nation at 1.9 percent according to the results of the 2010 Massachusetts Health Insurance Survey published by the Massachusetts Division of Health Care Finance and Policy. In comparison, the national average is a rate of 15.5 percent according to the 2010 American Community Survey" [and quite a lot higher than that average in some states]

I think several things contribute to its sccess:

More employers now offer employee health insurance than in the past. 

Employees are still able to refuse employer health insurance but, if they do, they have to fill out a state form acknowledging that it was offered to them and stating whether they have other health insurance or not.

For people who don't get health insurance though an employer, the state health exchange makes it very easy for them to compare and sign up for competitve market rate insurance or, for people who meet income limits, subsidized insurance. 

Paying the annual penalty if you don't have health insurance is integrated with the state income tax. Along with the usual schedules (A, B, C, D, etc.) you have to fill out a Schedule HC identifying your insurance policy and that it meets state standards - or, if not, calculating the penalty and adding it to your income tax due. It's clear that you are going to have to pay it. It's not a question that the state might or might not catch up with you. 

See the state exchange at: https://www.mahealthconnector.org/portal/site/connector

 

 

Jim said: "I don't know whether health insurance scofflaw rates would be comparable.  For one thing, unless more companies dump their employees onto the exchanges than the Obama Administration expects and hopes, the exchanges will be serving only a relatively small fraction of Americans.  Would compliance rates of three out of four, or seven out of eight, be the critical mass that's needed to make the scheme financially viable?  Sounds like a question for the actuaries."

We have taken it into account and of course are only going into exchanges which we believe will prove to be profitable for us (based on many things).  But remember that Obamacare affects off exchange business as well; many of its prescription apply there too. 

A long time ago, someone taught me the fundamental principle of business success: "The secret of success is to be sincere; once you can fake that, you've got it made."