The Public Option vs. Public Reason

Here’s my latest column for The Week, in which I try to understand why the health care reform debate has had the same general dynamic since forever. In particular, I want to explain the transparent bullshit surrounding the “public option.” I wanted to be able to explain, for example, why Atrios says things like this:

Hopefully Chuck Schumer isn’t just blowing smoke and there will be a [good] public plan in the final bill. Without it there really isn’t much point to any of this. The public plan is the point. [empasis added.]

And the point of the public plan is what? To put competitive pressure on private plan providers, thereby controlling costs? Sure, because when you listen to left-leaning speakers talk about health-care reform in front of left-leaning audiences, they just won’t shut up about how important it is to make sure consumers have more choices in the health plan market and about all the great ideas for making private-sector health plans more competitive! What’s the point of new health reform if we don’t end up with a better Aetna–one of those “skimmers who provide no useful service”?

For more public plan boredom, here I am puzzling over the point of it all with Ezra Klein.

Below we have a less circumspect Ezra Klein explaining the point of it to a friendly audience. (FYI, Some people might wish to point out that the following was recorded last summer before the elections, and so is really totally irrelevant, since it does not pertain to the strategy of any actual health legislation. So here’s the larger context for Ezra’s remarks, in case you’re interested in evaluating that claim.)

And here’s where the long Jacob Hacker quote in my column comes from:

Finally, here’s my summary of the ruse behind our Social Security system, which I think is helpful in understanding what’s going on now in the health-care reform debate. Here’s my full Cato paper on Social Security, which goes on to make the case for a politics that takes the ideals of public reason and democratic transparency seriously.

Keep an eye out for the following dynamic in the debate. (1) Republicans push hard on the idea that a public option is a “trojan horse” or “back door” to single-payer. (2) Democrats loudly deny with exasperated, eye-rolling annoyance that the public option has anything whatsoever to do with backing into single-payer. (3) Republicans say, Well, okay. Then I guess you won’t mind structuring the public plan in a way that will help ensure that it competes with, but can’t use implicit and explicit government subsidies to crowd out, private plans. (4) Democrats freak out about a “neutered” or “watered-down” public plan. It just so happens, they say, that in order to work–to improve the quality of care and keep costs from rising–a government-run plan has to be set up in exactly the way you’d want to set it up if you were trying to crowd out the rest of the market. But we aren’t trying to do that!!! (5) Republicans: Are too! (6) Democrats: Are not! (7) Republicans: Are too! (8) Democrats: Are not! ….

For the philosophically inclined, here’s the Stanford Encyclopedia of Philosophy entry on publicity.

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26 thoughts on “The Public Option vs. Public Reason

  1. The debate isn't even the worst part. The worst part is when some guy goes out sneaks out of the debate. I don't even know who this guy is but he keeps doing this. When he sneaks back in, he's got a thousand page document and slips it into our hands and says “Oh by the way, nice debate you're been having, but here is something COMPLETELY irrelevant, but rest assured I've been payed a lot of money and respect by a ton of really nice people to get their input on this. Now don't read it, it's mostly what you want, but it's important that you pass it immediately. We're in a crisis after all.”Then he's gone. And everything we just debated is useless.I hate that guy!

  2. I think you're on to something with “health care as a human right” idea. But let's look at an interesting trend.Up until about 50 years ago, the price for life extension was inelastic and infinite. You could pay as much as you wanted for health care and still get nothing more than your three-score-and-ten. Now, however, the price for up to 15 years of life extension is in fact somewhat elastic, but the price goes up steadily as you get older until it becomes infinite yet again.So we already have a situation where health care can't be a human right without bankrupting the system. Maybe it can be a human right for people under 65, but after that there has to be a point where society must stop spending or the whole system will collapse. I see no reason to expect that this trend will resolve itself. Indeed, as medical technology progresses, the marginal cost of that last year of life will just get higher and higher, even as that last year is more and more delayed.But we want a market for that last year to be available to those who can afford it. That market guarantees that the marginal cost for all but the very end of your life continues to drop, and that's good news for all of us. The only solution I can see to this conflict is a free-market health care system, where care is ultimately rationed by your ability to pay, not by your inalienable right to get treated just like everybody else. Health care as a human right is completely antithetical to such a free market and, as such, is likely to cause a lot more misery in the long run than you'd get if you simply acknowledged that the world isn't exactly a fair place.

  3. Social Security insures longevity risk. Until about eight years ago there were no inflation-adjusted life annuities on the market. Even now only a few companies offer them, and you can't buy into one until you're already middle-aged.

  4. I love how “public option” has become the euphemism for “single payer” which was once the favored euphemism for various, government-invoking terms, such as “public option.”

  5. AMERICA’S NATIONAL HEALTHCARE EMERGENCY!It’s official. America and the World are now in a GLOBAL PANDEMIC. A World EPIDEMIC with potential catastrophic consequences for ALL of the American people. The first PANDEMIC in 41 years. And WE THE PEOPLE OF THE UNITED STATES will have to face this PANDEMIC with the 37th worst quality of healthcare in the developed World.STAND READY AMERICA TO SEIZE CONTROL OF YOUR NATIONAL HEALTHCARE SYSTEM.We spend over twice as much of our GDP on healthcare as any other country in the World. And Individual American spend about ten times as much out of pocket on healthcare as any other people in the World. All because of GREED! And the PRIVATE FOR PROFIT healthcare system in America. And while all this is going on, some members of congress seem mostly concern about how to protect the corporate PROFITS! of our GREED DRIVEN, PRIVATE FOR PROFIT NATIONAL DISGRACE. A PRIVATE FOR PROFIT DISGRACE that is in fact, totally valueless to the public health. And a detriment to national security, public safety, and the public health.Progressive democrats the Tri-Caucus and others should stand firm in their demand for a robust public option for all Americans, with all of the minimum requirements progressive democrats demanded. If congress can not pass a robust public option with at least 51 votes and all robust minimum requirements, congress should immediately move to scrap healthcare reform and request that President Obama declare a state of NATIONAL HEALTHCARE EMERGENCY! Seizing and replacing all PRIVATE FOR PROFIT health insurance plans with the immediate implementation of National Healthcare for all Americans under the provisions of HR676 (A Single-payer National Healthcare Plan For All).Coverage can begin immediately through our current medicare system. With immediate expansion through recruitment of displaced workers from the canceled private sector insurance industry. Funding can also begin immediately by substitution of payroll deductions for private insurance plans with payroll deductions for the national healthcare plan. This is what the vast majority of the American people want. And this is what all objective experts unanimously agree would be the best, and most cost effective for the American people and our economy.In Mexico on average people who received medical care for A-H1N1 (Swine Flu) with in 3 days survived. People who did not receive medical care until 7 days or more died. This has been the same results in the US. But 50 million Americans don’t even have any healthcare coverage. And at least 200 million of you with insurance could not get in to see your private insurance plans doctors in 2 or 3 days, even if your life depended on it. WHICH IT DOES!If President Obama has to declare a NATIONAL STATE OF EMERGENCY to rescue the American people from our healthcare crisis, he will need all the sustained support you can give him. STICK WITH HIM! He’s doing a brilliant job. THIS IS THE BIG ONE!THE BATTLE OF GOOD Vs EVIL!Join the fight.Contact congress and your representatives NOW! AND SPREAD THE WORD!God Bless YouJacksmith – WORKING CLASS

  6. Paul, Yes. Pretty much everybody is clear when talking to friendly audiences. Has he said this clearly in a column? So many partisans are on the record saying that the public option is a way to get around democratic (small-d) opposition to single payer that it really does just amount to a flat lie when its advocates claim that's not they idea as soon as they appear on a major media outlet.

  7. So, does this mean that you believe Ezra Klein is trying to pull one over on you when he talks about the benefits of transparency that the public option would provide? If so, why not call him out on it at the time?

  8. Krugman's standing there, with a camera in his face, living in the era of YouTube.com. He actually looks directly into the camera when he makes his strongest claims. How much more “on the record” do you want? Should we have a clearer, more explicit debate about how we want to fund and allocate resources to health care? Of course we should. The US body politic is going to have to make some serious decisions about things like end of life support, preventative medicine vs health care, drugs as a public health problem vs. a criminal problem blah blah blah. And the more opaque we are about these important decisions, the harder it will be to get 'em right. Seems strange to me that so many of those who complained about Prof. Leon Strauss' opinions about an elite leading an ignorant mass of helots are now taking this approach …. And yet. Look at what Ezra K. said. He's preaching utter political pragmatism. No one is lying about a “public option”. What happens if they're wrong? What happens of the private sector responds to a “public option” with a competitive offering? Not much. They're wrong. Private markets out perform public monopolies. Great! Yet they anticipate that the “unintended consequence” of the “public option” will be widespread migration to publicly funded, single payer health care. What If they're wrong? No worse. And they get to try again. What they're pursuing is useful, smart, “honest” politics. It's NOT honest public policy debate. But the forces they oppose lost the moral high ground on that in 1993, and the intellectual high ground when Kenneth Arrow mumbled up his sleeve in the 1950s.

  9. I'm not sure what you're getting at Paul. The point here is that people advocating for the public option are lying to the public when they discuss what type of advantages such a plan will provide. Public plan advocates are either telling the public that they will be able to keep their current health plans if they are satisfactory when they know very well that the public option as part of reform will utterly destroy every private insurer (in the case of the so-called “strong” public plan), or they are telling the public that the public option will provide benefits like “transparency” and “honest competitiveness” when no sane person expects these benefits to materialize (in the case of the “weak” public option). The strong public option is obviously meant as a first step to single payer, while the weak public option is likely also seen as such a first step, albeit a smaller one. The fact that no Democrats or other public plan advocates say one thing while amongst themselves (namely that their goal is a single-payer system) while insisting in front of the public that they want to keep private health plans that people are satisfied with, is simply dishonest.Shorter Paul- It's OK for my side to engage in bait and switch political tactics if the switch is something worthwhile. I tend to believe honest debate is never OK, even if I do support the eventual goal of universal coverage.

  10. I'm not seeing an inherent hypocrisy here. The liberal attitude espoused by Klein et al can be summarized like this:”I want a public option. My HOPE is that it will outcompete private insurers to the point where they no longer exist; even if it doesn't, it will have some moderate benefits (transparency, etc). I'd LOVE for the public option to be as strong as possible, because I'd LOVE to see a single-payer system; however, depending on other factors (employer mandates, sufficiently large exchanges, etc.), a neutered public plan is still worthwhile.”What's dishonest about that? It's an opinion you disagree with for perfectly defensible reasons, but there's no hypocrisy here that I can see, no sinister mustache-twirling behind the scenes. Many wonks (including Klein) don't even think the public vs. private debate is central to effective reform… why would they bother dissembling about it?

  11. Fredrik, It's obvious. Listen to Hacker, for example, and he'll say the reason Americans rejected Clinton's plan is that they were averse to sudden change. So, in order to get single-payer, you have to begin with something that assures people they don't have to change their doctor/plan. Once in place, you turn the screws built into the policy and slowly push everyone out of their plans. Listen to Obama. He's running the strategy, which is pretty obviously a strategy of deception. He will repeat over and over that nothing will change for you if you don't want it to. He talks about making private plans better through competition, implying that they will not only remain, but will become stronger. There is not even a whiff of a suggestion of the idea that the public plan will crowd out private plans. Because that would contradict the assurance of no change and kneecap public support for the plan.

  12. Now just hold yer horses right there, bucko! Shorter Paul- It's OK for my side to engage in bait and switch political tactics if the switch is something worthwhile. I tend to believe honest debate is never OK, even if I do support the eventual goal of universal coverage.I'm not sure who's “side” I'm on. I'm pretty convinced that the market for health care is the kind of market where adverse selection and moral hazard make entrepreneurial approaches inefficient. But I'm also pretty sure that health care is very cultural, and that freedom is maximized by something other than a “one size fits all” universal care system owned and run by the state. I'm comfy with a “public option” for all the reasons its advocates ascribe to it. I'm also comfortable with a robust market for private insurance for all the reasons you might expect. I anticipate we'll end up with a layered system: universal, single payer option for basic and preventative care, a private market for those who can afford one, and the private market specializes in non-basic stuff … cosmetic surgery, private hospital rooms, in-home care.

  13. I'm not sure the plan is you turn the screws built into the policy and slowly push everyone out of their plans. I think this is simply the expectation, given all the problems with private health providers “pushing everyone out of their plans”. If the advocates of the public option are wrong, nothing chances, and the private insurance market might improve. If they're right, the last major market for private health care in the world will go the same way that the last major market for the typewriter or private fire departments went.

  14. Paul, You're just wrong. I've personally heard a number of prominent advocates of the public option explain why they favor it. They IN FACT see it as a cagey move toward single-payer. Of course they do expect it to crowd out private insurance, because they whole idea is to subsidize the public plan so that it undercuts the rest of the market. I don't blame people for believing the president when he says the idea is to increase competition, but he's lying. The idea is government monopoly. Basically nobody thinks a public plan can bring costs down until it can really ration in a way that isn't possible now, and that when it's the last plan standing.

  15. Shorter conservative logic: government run health care would be the worst thing ever; if we have a public option plan its gonna be so awesome that everyone will sign up and all we're gonna have left is a government run single-payer plan, which would be bad, because government is bad I guess.

  16. You're presupposing that Obama's health care strategy is the same as Klein's — that Obama wants to establish single-payer as soon as humanly possible, and that when Obama sounds more conservative than Klein, that he's simply lying. I can't comment as to what Obama actually *thinks*, but to think he's going to create a single-payer system, through a back door or any door, is a misreading of his political incentives.On every front that could potentially trigger backlash over liberal overreach, Obama has been extremely cautious *in terms of appearance*. I'm not contending that his actual policy has been cautious — on many fiscal fronts, it certainly has not. But Obama has been taking great care to avoid any PR jerks to the left. His approach to all politically potent subjects has been heavily incrementalist.A public plan that would inherently force out private insurers would be a violation of this strategy. Why? Because, as you say, Americans are adverse to sudden change. Any public plan that proves inherently superior to private insurance would spur sudden change and open Obama to accusations of overreach. Moreover, any plan that disrupted insurers' business in the near future would have disastrous economic implications, something Obama A) realizes and B) doesn't want to happen. Thus far, Obama has avoided doing anything that he thinks might damage his attempts to create a stable Democratic majority.This isn't to say that some public plan down the road wouldn't crowd out private insurance. It's just to say that *this* one — whatever version comes out of this administration and this Congress, if any — will not. It won't be politically feasible to get a public plan that strong though at this time, and even if it were, Obama wouldn't want to. He's not about jerking the country to the left… he's about inching the country to the left, and convincing the country that that new, slightly more leftward spot is the same comfortable center they've always known. Single-payer health care is fundamentally incompatible with that.Ezra Klein might try to create a Trojan Horse of a public plan if he were currently President, but he's not. Obama is. And Obama has neither the power nor the incentive to create a policy with “screws” that'll push people out of their plans. His goal is to get a public plan up and running, as a viable, if small, portion of the landscape, both so effectiveness research is easier, and so that conservatives can no longer speak as easily of the horrors of government-run health care.I'm not suggesting that you're wrong to be cynical about Obama; I'm just suggesting that your cynicism is misaimed. Any policy that opens the door to single-payer is years and years down the road… liberals have many battles to fight before that one. And the first battle is the one Obama is fighting, and the one he purports to be fighting: the one to get a public plan up and running, one that's strong enough to exist but not so strong that it kills private insurers. I believe Obama is *devious* enough to concoct the conspiracy theory you put forward, but I don't think he is politically tone-deaf enough to go through with it. He moves incrementally. Health care will be no different.

  17. Advocates of the 'public option' might well IN FACT see it as a cagey move toward single-payer, while at the same time believing that the way incentives work will provide the mechanism. I mean – all the things opponents of state run health care claim about state run health care are true. There will be fixed menu of treatment choices. There will be rationing. There will be a disincentives towards making healthy personal choices because you'll be paying the same amount of money regardless of your lifestyle. Do advocates of a private insurance option have so little faith in their own case that they fear such competition?Also – I'm a little surprised at your psychic powers. How can you know Obama is lying? There are lots of examples of mixed system for public health. Australia (first example that springs to mind) mixes a public option with very profitable companies that provide private 'gap' insurance. Social Security didn't destroy private savings companies. Last time I checked, the existence of a 'public option' police force hadn't crowded out Brinks, private detectives, or mall rent-a-cops. In fact, you can depend on these private providers precisely because there are cops there that will keep 'em honest / provide 'em with highly subsidized competition. It seems to me Obama is completely sincere and I tend to agree with folk on his side who point out that the nature of economic incentives involved seems to undermine the utility of private markets in this case. It seems to me that the opposition is equally sincere and I tend to agree with some of it too. A draconian, The Only Option Is The Public Option scheme would be really, really anti-liberty. But people … disagree about things. That's good.

  18. I went and re-read your Freeman piece on the insurance deception in Social Security and must say it was brilliantly written. And I agree with every point you've made above. I've done a fair amount of reading about FDR and the Great Depression lately and find myself greatly depressed by the fact that we appear to be reliving it in minute detail. What the hell did Social Security have to do with ameliorating the economic crisis of it's day, raising taxes on employment at a time of 20+% unemployment? Why, nothing of course except to make a bad situation worse and fulfull the socialist dreams of the geniuses that foisted it on us. The same cynicism and duplicity appears to pervade the Obama administration top to bottom.

  19. Do advocates of a private insurance option have so little faith in their own case that they fear such competition?I think we'll end up with a two tier health care system similar to the two tier education system. If you want private insurance, you will have to pay twice: once, forcibly, for the government subsidized insurance, and again for the private insurance. Most people won't be willing/able to pay twice, so most people will be stuck with the public option, and only the people willing/able to pay twice will be able to escape to private healthcare. And I expect that the public healthcare system will be about as innovative, efficient, and well-run as the public schools.

  20. Democrats are liars.They want socialism and they will lie to get it.What I don't understand is why they don't just move? They can move to socialist France or Canada and have their socialism and eat it too. Instead, they stay here and try to shove it down my throat by force.Well guess what? There is nowhere for freedom-loving people to go. We will make our stand here. I suggest you leave and leave soon.

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  22. Will,Coming back to this topic, the democratic proposals for a public option all seem to quite explicitly state that the public option must be totally self-sufficient (that is, cover its expenses via the premiums that it charges). Do you still think that it is a trojan horse to put private insurers out of business and institute single payer care? If so, how would that be likely to happen, assuming that the democrats aren't flatly lying that the public option won't be subsidized.

  23. Will,Coming back to this topic, the democratic proposals for a public option all seem to quite explicitly state that the public option must be totally self-sufficient (that is, cover its expenses via the premiums that it charges). Do you still think that it is a trojan horse to put private insurers out of business and institute single payer care? If so, how would that be likely to happen, assuming that the democrats aren't flatly lying that the public option won't be subsidized.

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