Friday, June 25, 2010

Another Crazy Idea on Health Insurance

At first I liked this post from Reinhardt at Economix. It was a nice historical reminder for anyone still not convinced that it's the Republicans that have moved right, not the Democrats that have moved left on health insurance.

However, the idea that a mandate should be dropped in favor of opt-out insurance just seems silly to me.

In his “Patients’ Choice Act” (S.1099), introduced in May 2009, Senator Tom Coburn, Republican of Oklahoma, advocated strictures on health insurers that appear quite similar to those in the health overhaul law. He coupled them not with an outright mandate to be insured but with what he called “auto-enrollment” of individuals in an insurance plan.

Under that arrangement, individuals without health insurance presumably would be automatically assigned to a health plan, but they could either change to another plan or opt out of insurance altogether by explicitly requesting to do so. It is an application of what has come to be called libertarian paternalism or simply “nudging.”

In this case, the nudging preserves the individual’s freedom not be insured and merely changes the default option from “remaining uninsured” to “purchasing health insurance.” The idea is to preserve people’s freedom to choose but also to influence their choices by the way they are structured – that is, to nudge them in the direction of being insured.

My big problem with this is that it preserves the illusion of choice while largely taking away its reality. It is solely focused on optics, which, while it may make it easier to accept in the short term, sidesteps the main issues causing problems in reforming health care. At some point we're going to have to engage with the fact that the libertarian philosophy doesn't seem to explain health care at all. Virtually all of the comparative data points in the direction that some form of enforced standardization is necessary in health care. The government is the only entity that can enforce this nationwide.

Trying to preserve an illusion of individual choice in this system simply delays us having to confront the real issues driving health care costs to appease the people most opposed to accepting the need to change. If this had been a necessary concession to passing health care reform at all, I would have accepted it as a necessary evil. At this point though, there is no reason to try to move in this direction simply to appease a reactionary mob. They'll get over it.

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