Default Rule

Krugman acknowledges that critics-from-the-left of the current Democratic consensus in favor of the "regulate, mandate, subsidize" approach to universal health care have a point, but says that given the political undoability of the single-payer approach that this is the best available alternative.

Maybe so, but I'm not sure people have given enough thought to alternatives. One possibility involves the default rule. What if instead of "mandating" that the uninsured go get themselves some insurance (community rated and, for the poor, subsidized insurance, to be sure) and creating a public sector option that they might sign up for you instead automatically signed the uninsured up for the public sector option and allowed them to opt-out of it in favor a private plan if they so desired. That would solve the enforcement problem facing mandate schemes which, as best I can tell, mandate advocates haven't seriously grappled with.

Now, a plan like this would probably be harder to pass since it would more deeply damage the interests of insurance companies. At a minimum, though, I'd like to see a progressive president ask for this default rule in his or her proposal. That would put the onus for constructing an alternative enforcement mechanism for the mandate on the insurance industry lobbyists whose job it will be to eliminate this provision.

Comments

Assume that the working poor are forcibly enrolled in a public-sector plan. Is it possible that private insurance companies will bombard those people with ads, in order to convince them to switch? Assume that occurs, and that the insurance companies are succesful. Will the public sector entity simply downsize, or will it attempt to bring those customers back? Of course, all of the money that these entities would spend on advertisement would be money not spent on health care (adminsitrative costs). If the public entity had a rough start, would conservatives run on a platform of dismantling it? "The public has spoken, and it rejects the public health entity! Let's stop subsidizing it!"

Why is this more politically feasible than straight-forward, single-payer insurance?

Posted by Michigander | October 8, 2007 1:40 PM

Yes, this is a very good point.

Much of public policy analysis simply ignores an absolutely gigantic factor in all human societies, namely that most people are lazy, distracted, and don't really care to get involved in the details of things.

I think there have been lots of studies showing that simply changing the defaults of a social policy can massively shift results, maybe from 90% going into a particular category to 10%.

That's one of the things that makes the whole 401(k)/education voucher/private health care argument so fatally flawed. Only a small fraction of the population really will effectively benefit from such "choice" and (probably) a much larger fraction will actually be injured either through wasted large quantities of time and effort, or through deceptive advertising.

Basically, public school systems, public health care, and ordinary pensions/social security are very simple and robust. Their "choice" rivals are usually extremely complex systems prone to advertising and "gaming" and are highly non-robust against casual human error.

The Linux vs. Windows analogy isn't totally ridiculous...

Posted by RKU | October 8, 2007 1:46 PM

The current political un-do-ability of sensible health care policy is all the more reason to agitate for it. Single payer will never be acceptable if people stop talking about it.

I personally campaign in favor of seizing the assets of insurance companies and trying the executives for crimes against humanity. Makes the single payer people seem more moderate.

Posted by MikeJ | October 8, 2007 1:58 PM

As someone who hates the idea of National Health Care, the only possible problem I see with this scenario is cost (which is a problem with all National Health Initiatives).

Optional, but automatic safety nets are much, much better than sending the FBI door to door to ask if you've had your yearly physical (the Edwards plan).

Posted by Steve | October 8, 2007 2:46 PM

Automatically signing everyone up for a "7% plan", and letting anyone who could show proof of other insurance opt out, would be my preferred plan. ("7% plan"--we'll spend 7% of GDP on health care wherever it does the most good.)

Posted by SamChevre | October 8, 2007 3:17 PM

I like MikeJ's approach, we could use more radicals to make the leftist approaches seem more reasonable. After all, the crazy righties advocate no government at all, we need some balance.
I also like Matt's idea of making it the default option. With some simple advertising regulation, (as in, no false advertising) the private insurance companies would have a hard time competing with the government single-payer structure. Especially if collecting the premiums could be simplified (like part of taxes or some such).
If a Democratic president walked into office, offered single-payer healthcare, and then negotiated down to this Edwards, Obama, Clinton generic plan, I think it would have a good chance of passing.
And some early advice for the campaign in 2009 for healthcare, how about some ads with the quote: "Do you want the government to come between you and your insurance company when making important medical decisions?"

Posted by Tim | October 8, 2007 3:47 PM

letting anyone who could show proof of other insurance opt out

This is where the National Health Care people in particular (and the Democratic party in general) lose me.

Why would proof of other insurance be necessary? Foregoing all insurance completely (even insurance paid for by others) may put one's self at an illogical risk of financial ruin, but just because something's illogical doesn't mean it should be illegal.

If the State starts enforcing logic (instead of justice and order) with its legislative decrees, then say goodbye to all religions, cliff diving, cave diving, communism, hockey, the platypus, the belief in some all-powerful patriarchy that sits around thinking of ways to harm women, television, hot sauce, hula hoops and the wearing of unmatching socks. Not to mention that most marriages will be dissolved and most employees will summarily be fired.

I happen to enjoy some of the above, so can we please not legislate logic?

Posted by Steve | October 8, 2007 3:57 PM

The reason I would ask for proof of other insurance (and, honestly, I wouldn't really have an opt-out because my plan doesn't have premiums--opt-out would be at point of use) is that the hospital needs to know who to bill.

Posted by SamChevre | October 8, 2007 4:23 PM

My understanding is the Obama healthcare plan doesn't have these mandates. As this ongoing discussion highlights, what health care wonks like Ezra Klein see as a bug in the Obama plan many people see as a feature.

Posted by joejoejoe | October 8, 2007 5:03 PM

Steve, you need to sit back and chill. You introduced 'logic' as a variable, then went all tasmanian devil on it. But that's a conversation you're having with yourself.

As for cost, it really has been shown over and over that nothing is more expensive than what we have now.

If you're saying that these plans wouldn't satisfy many libertarians...well, that's hardly news.

Posted by nolaboyd | October 8, 2007 5:07 PM

Foregoing all insurance completely (even insurance paid for by others) may put one's self at an illogical risk of financial ruin, but just because something's illogical doesn't mean it should be illegal.

I think anyone opting out of health insurance completely should also at the same time be required to opt out of bankruptcy protection for healthcare debts.

Posted by me2i81 | October 8, 2007 5:23 PM

Me2i81, we're still not going to leave them lying in the middle of the street when they get hit by a bus, so someone's going to end up paying for them.

Posted by KCinDC | October 8, 2007 8:53 PM

Why is Medicare for All politically undoable?

Most voters are familiar with Medicare, have seen it working, and like what they see. True, the Republicans have tried to blacken its reputation by gradually letting private insurers in to diddle in the middle. But even these examples can be used to discredit these "managed competition", or "regulate, mandate, subsidize" schemes, or whatever they're calling it these days when we let private insurers in to diddle public money in the middle. Converting the Part D boondoggle to single payer should be the preliminary. Winning that fight should make Medicare for All quite politically doable.

Well, doable with the voters, anyway. When you say "not politically doable", you probably mean that the insurers won't sign on to Medicare for All, and we need to have the insurers and their campaign contributions in the coalition. Well, the insurers will never sign on to eliminating the insurers, which is what single payer is, so if that's the meaning, we will never have single payer.

Just a thought. Maybe political contributions, and the kind of politics that money can buy, are effective only insofar as the voters aren't paying attention, and have no real dog in the hunt. And maybe paying for health care has reached the point that it is so much a problem for so many people that 30-second spots on the subject will actually be counter-productive. Just saying.

Posted by Glen Tomkins | October 8, 2007 9:23 PM

Why not do both? It's not like they're mutually exclusive. They both serve the same purpose, and they'd probably reinforce each other.

Posted by StevenAttewell | October 9, 2007 2:08 AM

Glen,

Problem with Medicare for all is that Medicare is really bad at cost control/directing money where it will do the most good.

Posted by SamChevre | October 9, 2007 10:10 AM

Sam Chevre,

Hasn't the great Managed Care fiasco taught us that you don't want your system of paying for medical care to be allowed in any way to muck with cost control? The single payer should work under the mandate to pay for all services that meet a standard of care that the single payer should have absolutely no role in developing or enforcing.

Costs are most effectively controlled by getting the patients in the effective control of their care that managed care did so much to undermine. Because the cost of medical care varies in direct, and fairly strict, proportion to its invasiveness, patients have a much stronger incentive to hold down costs, by holding down the invasive things done to their persons, to the absolute minimum that they need, than any third party cost accountants.

Patients may not be all that great at "cost control/directing money where it will do the most good", but they are much better placed than anyone else to get the right balance between doing too much and doing too little, because they are the ones both threatened by the disease and under the knife. At least they can't be expected to muck up both quality and cost-effectiveness at the same time nearly as spectacularly as our present non-system.

Posted by Glen Tomkins | October 9, 2007 1:58 PM