Sarah Palin is afraid Obamacare will put a price on human life. But we already do.

How to fix health policy.
Aug. 10 2009 9:51 PM

Cost of Living

Sarah Palin is afraid Obamacare will put a price on human life. But we already do.

Sarah Palin. Click image to expand.
Sarah Palin

Conservatives often accuse liberals of not valuing human life. Rarely do they accuse them of valuing it too precisely.

On Friday, Sarah Palin posted a statement on her Facebook page railing against the presidential "death panel," which she said will decide whether you are "worthy of health care" based on your "productivity in society." As many have pointed out, Palin's concerns are not rooted in fact. The "death panel" she describes is a consultation that's available to the elderly to discuss end-of-life care and treatment, which would be covered under health care reform. It would not be a thumbs-up or thumbs-down on whether your grandmother or disabled sibling lives or dies.

Still, the notion that health care reform would result in insurance companies withholding treatment based on a person's age or health—essentially putting a price on their life—persists. But what this criticism ignores is the fact that the system already puts a price on life. It's just not the government that decides it.

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Take the most obvious example: life insurance. When people buy a plan, they are assessing the economic value of their own life. (Not, mind you, their intrinsic or moral value.) When someone dies, an insurance plan is meant to provide his or her family with roughly the same amount it would have received had that person survived, at least for a while. Or say a person dies in a plane crash and their family sues the airline for damages. Compensation tends to equal the amount of money the person would have made—i.e., his or her productivity—plus reparation for pain and suffering.

That calculation can often be controversial. After 9/11, attorney Kenneth Feinberg had the unenviable job of determining the compensation packages for families of victims based on how much the deceased would have made in their lifetimes. But it's a widely accepted metric for assessing the economic value of a life.

Everyday policy decisions also put a price tag on human life. If a city is deciding whether to install a traffic light at a particular intersection, for example, it will weigh the number of lives saved against the cost of installation. Or take something more controversial: the decision to send American troops to Iraq without fully protective armor. It's not that the armor didn't exist, says Uwe Reinhardt of Princeton University. It's that in a cost-benefit analysis, the increased risk of death did not outweigh the increased cost.

There are other ways to calculate a life's worth: Look at how much people get paid to do dangerous jobs like mining or construction. Examine how much people will pay for live-saving treatments like kidney dialysis—it costs about $70,000 a year—and extrapolate. Or simply survey people: How much would they be willing to spend to extend their life by a year?