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Which Way, Not How Far



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The Ezra Klein post that Stephen Spruiell ably critcizes below raises (by failing to see) an important point. The difference between most conservatives and most liberals on health care is not a difference of degree but a difference of direction — a difference on the question of which we way want to move from our existing highly inefficient system of paying for health insurance.

Both sides agree there are huge problems with the current system, and they even agree on what some of those problems are: there is a shortage of incentives for efficiency, and therefore costs are rising much too quickly, which leaves too many people unable to afford coverage. The system we have is neither a market nor a government program, it’s a private third-party payer system, and so makes very little economic sense. The question is, given that we want to change the existing system, how do we want to change it?

Liberals argue that we should move in the direction of socializing insurance coverage: that the efficiency we lack would be produced by putting as much as possible of the health-care sector into one big “system,” in which the various inefficiencies could be evened and managed out of existence by the rational arrangement of rules and incentives. The problem now, they say, is that the system is chaotic and answers only to the needs of the insurance companies. If it were made more orderly, and answered to the needs of the public as a whole, costs could be controlled more effectively.

Conservatives argue that we should move toward a genuine individual market in insurance coverage: that the efficiency we lack would be produced by allowing for price signals to shape the behavior of both providers and consumers, creating more efficiencies than we could hope to produce on purpose, and allowing competition and informed consumer choices to exercise a downward pressure on prices. The problem now, they say, is that the system is opaque, hiding the cost of everything from everyone and so making real pricing and therefore real economic efficiency impossible. If it were made more transparent and answered to the wishes of consumers, prices could be controlled more effectively.

That means that, beginning from where we are now, liberals and conservatives want to move in roughly opposite directions. And they each tend to think that moving in the other’s direction would be worse than just keeping what we have for now. That’s why the offer of moving in the Left’s direction but not quite as far or quite as fast as the Left would ideally like isn’t really very attractive to conservatives. It’s why the individual pieces of their bills that the Democrats try to point to as incorporating Republican ideas don’t really win any Republicans — because the question is which direction are you moving the system in on the whole?

There are ways of incorporating market mechanisms in an approach that on the whole moves toward a more socialized insurance sector than we have now (like creating insurance exchanges), and those as part of such an approach would still not appeal to conservatives, who tend to think that even the current system, with all its problems, is preferable to the inefficiency of a true third-party payer system in which the government enforces efficiencies. There are ways of using government quite energetically (and expensively) in an approach that on the whole moves toward a true individual insurance market (like large high-risk pools for those with pre-existing conditions), and those as part of such an approach would still not appeal to liberals, who tend to think that even the current system, with all its problems, is preferable to leaving to the market, with its cold vicissitudes, the allocation of so essential a necessity as health coverage.

The difference between the Left and the Right is not a difference of degree, but of direction, and each side tends to think that moving even a little in the wrong direction is worse than doing nothing. That’s why a compromise won’t be so easy.

The larger public, I think, is not so tied to either direction, but is opposed to doing anything huge. That’s a big part of what the Democrats have done wrong this year: They have proposed too much. Whichever side is smart enough to propose some modest and sensible incremental steps in its preferred direction will have far better luck with the public. Conservatives would be wise to do so in a serious and concerted way before liberals realize that it’s time to employ some different means toward their same misguided end.



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