Disability: the other person’s problem

By Jack Frisch

This article was published in Living Ethics: issue 82 summer 2010

Every able-bodied thirty-year-old earning $60,000 per year can acquire a disability, have a child born with a disability or have their best friend acquire a disability, writes Jack Frisch, yet we continue to see those with a disability as ‘the other’.

Disability is generally seen as the other person’s problem even though it can become your problem in less time than it takes to make a bad tackle, for your doctor to make a faulty diagnosis or for you to slip on a banana skin. It takes only moments for society to change its perception of you as a confident productive citizen to seeing you as an unproductive burden worthy of pity - for your emotional and financial world to change forever.

National disability insurance scheme

Arguably, little can be done about one’s emotional world, but the significant financial and lifestyle implications of disability can be offset by an insurance scheme - much as the financial cost of having a house destroyed by fire or flood can be offset by insurance. Some private insurance against the costs associated with disability already exists, but it is very tightly constrained by relatively low maximum time and dollars caps and therefore woefully inadequate for the sort of long-term permanent disabilities which turn a person’s world upside down.

Why won’t insurance companies insure against catastrophic accidents?

Economic theorists of ‘asymmetric information’ have shown that an adequate private insurance market can’t exist because neither of the two conditions necessary for a sustainable private insurance market is met. The ‘no adverse selection’ condition requires buyers of insurance to be from the population at large, ie. to not be biased towards those with a greater risk of loss. The ‘no moral hazard’ condition requires that the assessment of loss be objectively verifiable and beyond influence of the buyer. Neither condition is satisfied for long-term permanent disability. This is because couch potatoes and theatre goers have no incentive to buy because they face a lower risk of disability than amateur footballers and weekend skiers who would form the bulk of the market (hence adverse selection). And after acquiring a permanent disability, people tend to exaggerate their needs and losses to get as much as possible from their insurer (moral hazard). The premium increases to cover these two effects would both shrink the market and lead to long-term losses and eventually collapse the market. Hence, no private insurer can be expected to enter the market.

A social insurance model, such as Medicare, would overcome the adverse selection problem because the whole population would be obliged to pay a premium and be entitled to benefits, thereby overcoming the adverse selection problem. It would not however overcome the moral hazard problem. But this could be mitigated with a well-designed mix of eligibility criteria, prior authorisations, co-payments, deductibles and exclusions - along the lines of the Pharmaceutical Benefits Scheme (PBS). This implies that it would be impossible to fully offset the financial consequences of disability and this further implies that people with expensive disability-related needs will continue to be significantly out-of-pocket and impoverished. To lessen the financial hardship from these ‘solutions’, maximum caps according to means could be placed on out-of-pocket expenses in much the same was as is done with Medicare and the PBS.

A National Disability Insurance Scheme is currently before the Productivity Commission and its recommendations will naturally be debated. Will it be debated with a focus on the contestable details such as how to minimise moral hazard and financial hardship ie. in good faith as ‘social insurance’ to complement Medicare, the PBS system and Social Security? Or will it be argued in terms of moribund narratives and slogans such as ‘big government’ versus ‘small government’ or ‘a big new tax’ versus a ‘no person with a disability will be in poverty by 2020’? Will it become law or will it be put to rest for another generation or two?

No scheme can fully offset the financial consequences of disability, but the alternative is the status quo under which people with disability bear all of the financial and emotional cost of disability and people without disability bear none of it - until they themselves acquire a disability!

Political failure and the bias against people with disabilities

Although the 20% of the population with disability suggests a significant core of voters and therefore power, these numbers don’t translate into an influential voting bloc because their interests are diffused, they are geographically dispersed, their needs are often expensive, and they do not have the network and financial resources to be politically influential. Concretely:

• The 20% are diffused among people with a wide range of mobility, intellectual, sight, hearing and emotional impairments and support needs which differ considerably in terms of both nature and cost. The 20% are also diffused in terms of life-style and potential capability and therefore in terms of need because of differences in age, family structure and support, employment affiliation and health. These differences diffuse and complicate the disability voice where both politicians and the media prefer a simple single policy prescription and sound bite.
• Because people with disabilities are dispersed geographically through every electorate, they are less able to ‘capture’ an electorate which could be marginal in a close election. This is in contrast to geographically-based ethnic and cultural groups that politicians are obliged to listen to because the group might be significant in a particular electorate.
• Policies often impose costs on a single or small number of suppliers (eg. a single builder, transport operator, school or employer) and thereby make it worthwhile for them to spend financial and political resources to lobby politicians to thwart policy. By contrast, where benefits are diffused and dispersed and therefore relatively expensive for any single individual with a disability, there will be little incentive to spend resources lobbying politicians to initiate policy - particularly when income is scarce and access is limited.
• People with disability often do not have the financial, physical, emotional and network resources to engage in political advocacy. This is reinforced by many political leaders and adversaries who are unable to engage with people with disability without prejudice, guilt and arrogance. Furthermore, our ‘log-of-claims’ political culture means that lobbyists on both sides of the disability policy debate exaggerate costs, benefits, demands and capabilities - leading as often to a breakdown in communications as it does to negotiated compromise.

The bias can perhaps be mitigated with institutional reforms which amplify the voice of people with disabilities and other groups whose participation as citizens is only marginal. Reserving seats in parliament, consequential resourced citizen’s assemblies, electoral reform and campaign financing reform might not seem to be disability issues, but without reforms like these, the many voices of the many people with disability will continue to be weak and their interests will continue to be unmet.