It’s bad math, and politics, to take away private health plans

Before embracing Medicare for All and proposing to take away all private health insurance, consider this: The science of behavioral economics, simple math and a crude but true political aphorism all suggest whatever merits the policy may have in theory, in practice it’s bad politics.

First the psychology: Behavioral economics studies how people think, feel and make decisions about uncertain risks and rewards. One of the more robust and well-known findings from this field of research (which ultimately earned its originators the Nobel Prize in economics) is the principle that most people are more averse to losing something they already have than they are motivated to gain the same amount of something that they don’t have. This is known as “loss aversion,” and in various forms it has been demonstrated in experimental situations and many practical applications. (Like other social-science findings, this is subject to nuance and has been refined with more recent studies, but conceptually and empirically it still holds substantial power).

Now for some numbers and very simple math. U.S. Census data from 2018 indicated that roughly 67% of Americans, 218 million, had some form of private insurance while 8.5%, 27 million had no insurance at all. The good news is that thanks to the Affordable Care Act (Obamacare), more than 20 million more Americans have gained access to insurance. The bad news politically is that if you combine the number of uninsured and those with coverage under the ACA, that total comes to just barely more than 1/5th the number of Americans with private coverage.

Now for the crude political aphorism (slightly euphemized): If your opponent puts poop in his own pocket, don’t do him a favor by taking it out and putting it in yours.

When the Republicans and President Donald Trump tried to end the ACA, they threaten the 20 million people who now have insurance but didn’t before. Loss aversion theory says this should be highly upsetting, particularly since the “replace” promise of “repeal and replace” proved to be a cruel hoax. Therein lies the political poop in the GOP policy pocket, and the Democrats had a very real chance to make the most of that.

But now here come the Democratic presidential candidates, riding to the well-intentioned and even needed rescue of the uninsured and underinsured. In that noble attempt, they instead end up afflicting themselves with their own loss aversion risk. But in this case it’s for the 218 million, i.e. five times as many, Americans who are now afraid they’ll lose their private insurance as a result. Now a lot more of that proverbial substance is in the pocket of some of the Democrats, and they put it there themselves.

Flawed though some private insurance may be, behavioral economics says the fear of losing something generally beats out the hope of getting something else of the same value. So, appealing as the “we’ll just give everyone free Medicare” offer may sound to some, it’s an unproven and uncertain promise. Plus, there’s that little problem of the $28 trillion to $32 trillion 10-year price tag.

Yes, the candidates and policy wonks maintain that premiums and, dare I say it, out-of-pocket expenses would end and the number of uninsured could reach zero at last. They also argue that total health-care costs would decline by taking out the middlemen and reducing inefficiencies

Those are worthy goals, and they may even be right. But outside deep blue districts of the coasts, and to the 218 million people (including union members) with private insurance, those arguments simply are not persuasive enough to let go of what they have for something they don’t.

Combine the psychology of loss aversion with the uncertainty of the promised replacement, add in virulent distrust of government and energize that with a few billion dollars of campaign advertising and social media, and you just reelected the very people you were trying to defeat.

What was that other aphorism about the road paved with good intentions?

Actually, it is not the intentions that are at fault here — the intentions are fine. It is the lack of sensitivity to the legitimate psychology of voters and the unnecessary but dogmatic insistence that one and only one option can achieve the desired goal.

That’s the path that leads to political hell and that, sadly, is what will very likely end up ensuring that the next election is lost and even more people are left uninsured. Maybe that’s why it’s called “the damn bill.”