Posted by: Jeff | February 26, 2010

When Republicans Are Ponies-And-Fairies Optimists

So yeah, a lot to blog about after yesterday’s health care summit. One of the themes Republicans hit on consistently was that of individual decision-making versus the intrusive hand of government. Rep. Paul Ryan (R – WI) probably put it best when he said the difference between the Democrats and the Republicans on health care is whether you want government or people to be in control of “all this.”

What’s strange and extraordinarily frustrating about that argument is that it paints liberals and Democrats as inherently opposed to decentralization or individual empowerment. As if the supporters of this health care bill are for government control as an end in itself, which is absurd.

The Democrats’ health care bill expands government’s role in health insurance because they want to protect consumers. Because they believe that individual Americans are at a disadvantage in the market compared to the concentrated business power of insurers and providers and manufacturers. And that such power imbalances lead to exploitation. The Democrats’ goal here is to have a comparatively powerful entity – like, say, the government – intervening on consumers’ behalf to redress that imbalance.

Now, an economic conservative could argue that this misunderstands capitalist free markets. That even if people are acting as individuals, with relatively little power on their own, their collective behavior in the market – who they buy from, who they don’t, etc. – will result in aggregate economic forces that discipline bad behavior amongst the insurers and the like. There is power in numbers, even if those numbers are uncoordinated. (Ryan didn’t actually make this argument. He just engaged in his party’s standard “government = bad, individuals = good” boilerplate, but whatever.)

For a lot of markets, I actually think this is true. It’s why we aren’t talking about a universal government system for groceries or shoes or video games or whatnot. But the health care market is not like most markets. I’m not an economist, but I’d argue that health care involves a lot of unique structural quirks that put consumers at a particular disadvantage vis-a-vis the for-profit entities from which they’re trying to get their coverage and care.

For instance, we never know when we’re going to need health care, and we never know how expensive it will be when we do. And then there’s the information disadvantage – health coverage is an awfully complex product, which most people have neither the time nor the resources to devote to understanding. This is what makes possible things like booting people off their coverage for pre-existing conditions or for technicalities in their contract. This stuff is complicated, and most people simply can’t keep track of all the possible trap doors in the fine print.

On top of all that, there’s little room for mistakes in health care. If something horrible happens to your car, and it turns out you don’t have insurance or your insurance happens to not cover what happened, at worst you lose your car. So you junk it and buy a new one, or you use public transportation for a while. But you can’t junk your body and buy a new one if your health coverage falls through. There are no do-overs in the health care arena.

This is why the Democrats want the insurance exchanges to be regulated by the federal government. Because in the health care market, consumers can’t make effective decisions unless they have good information. And the insurers don’t want to provide good information, because the information disadvantage helps them make money. And consumers need someone to step in and make sure the fine print is up to snuff, and that there aren’t any surprises lurking in their coverage waiting to trip them up when they’re moment of actual need finally arrives. All of that is a job for government. Nor do the proposed regulations “micromanage” insurance plans as some Republicans have claimed. They set broad guidelines which insurers are then free to innovate within.

And yet the Republicans remain dementedly wedded to this idea that regulation by the federal government is just inherently bad. And that consumers will magically muster, all on their own, the knowledge and power and cunning to acquire good and trustworthy coverage in the face of extremely powerful business interests which view them as profit centers to be exploited rather than as people to be helped. In its own way, it’s an extraordinarily pollyannish notion.

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