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Subject: qotd: Konczal and Krugman on the policies and politics of
Date: Mon, 28 Oct 2013 11:54:37 -0700
From: Don McCanne <email@example.com>
To: Quote-of-the-Day <firstname.lastname@example.org>
Next New Deal, The blog of the Roosevelt Institute
October 23, 2013
What Kind of Problem is the ACA Rollout for Liberalism?
By Mike Konczal
Healthcare.gov looks to be having a disastrous launch.
Conservatives in particular think this website has broad implications
for liberalism as a philosophical and political project. I think it
does, but for the exact opposite reasons: it highlights the problems
inherent in the move to a neoliberal form of governance and social
insurance, while demonstrating the superiorities in the older, New Deal
form of liberalism.
The general problem is that "More than 30 states refused to set up their
own exchanges, requiring the federal government to vastly expand its
project in unexpected ways."
Category A Social Insurance
1. is heavily means-tested
2. is provided by private agents to individuals
3. leaves open the possibility of adverse selection because of market
4. gives discretion to the states to either help or undermine the process
5. is designed to ensure choice and competition
Category B Social Insurance
1. is a program that is universal to all who qualify for it
2. has the government running the system itself
3. uses compulsion to default people into social insurance to prevent
4. situates the program at the federal level, to avoid states undermining it
5. does all this to ensure better provisioning outcomes, using
government's scale and efficiency
What we often refer to as Category A can be viewed as a "neoliberal"
approach to social insurance, heavy on private provisioning and
means-testing. This term often obscures more than it helps, but think of
it as a plan for reworking the entire logic of government to simply act
as an enabler to market activities, with perhaps some coordinated
charity to individuals most in need.
This contrasts with the Category B grouping, which we associate with the
New Deal and the Great Society. This approach creates a universal floor
so that individuals don't experience basic welfare goods as commodities
to buy and sell themselves. This is a continuum rather than a hard line,
of course, but readers will note that Social Security and Medicare are
more in Category B category rather than Category A. My man Franklin
programming, but he knew a few things about the public provisioning of
social insurance, and he realized the second category, while
conceptually more work for the government, can eliminate a lot of
unnecessary administrative problems.
The choice between Category A and B above will characterize much of the
political debate in the next decade. It's important we get more
sophisticated analysis of what has gone wrong with the ACA rollout to
better appreciate how utilizing "the market" can be far more cumbersome
and inefficient than the government just doing things itself.
The New York Times
October 26, 2013
Why Is Obamacare Complicated?
By Paul Krugman
Mike Konczal says most of what needs to be said about the underlying
sources of Obamacare's complexity, which in turn set the stage for the
current tech problems. Basically, Obamacare isn't complicated because
government social insurance programs have to be complicated: neither
Social Security nor Medicare are complex in structure. It's complicated
because political constraints made a straightforward single-payer system
It's been clear all along that the Affordable Care Act sets up a sort of
Rube Goldberg device, a complicated system that in the end is supposed
to more or less simulate the results of single-payer, but keeping
private insurance companies in the mix and holding down the headline
amount of government outlays through means-testing. This doesn't make it
unworkable: state exchanges are working, and healthcare.gov
<http://healthcare.gov> will probably get fixed before the whole thing
kicks in. But it did make a botched rollout much more likely.
So Konczal is right to say that the implementation problems aren't
revealing problems with the idea of social insurance; they're revealing
the price we pay for insisting on keeping insurance companies in the
mix, when they serve little useful purpose.
So does this mean that liberals should have insisted on single-payer or
nothing? No. Single-payer wasn't going to happen — partly because of the
insurance lobby's power, partly because voters wouldn't have gone for a
system that took away their existing coverage and replaced it with the
unknown. Yes, Obamacare is a somewhat awkward kludge, but if that's what
it took to cover the uninsured, so be it.
Krugman elaborates further on the Obamacare kludge:
The New York Times
June 13, 2005
One Nation Uninsured
By Paul Krugman
The intellectually serious debate is between those who believe that the
government should simply provide basic health insurance for everyone and
those proposing a more complex, indirect approach that preserves a
central role for private health insurance companies.
A system in which the government provides universal health insurance is
often referred to as "single payer," but I like Ted Kennedy's slogan
"Medicare for all." It reminds voters that America already has a highly
successful, popular single-payer program, albeit only for the elderly.
It shows that we're talking about government insurance, not
government-provided health care. And it makes it clear that like
Medicare (but unlike Canada's system), a U.S. national health insurance
system would allow individuals with the means and inclination to buy
their own medical care.
The great advantage of universal, government-provided health insurance
is lower costs. Canada's government-run insurance system has much less
bureaucracy and much lower administrative costs than our largely private
system. Medicare has much lower administrative costs than private
insurance. The reason is that single-payer systems don't devote large
resources to screening out high-risk clients or charging them higher
fees. The savings from a single-payer system would probably exceed $200
billion a year, far more than the cost of covering all of those now
Nonetheless, most reform proposals out there - even proposals from
liberal groups like the Century Foundation and the Center for American
Progress - reject a simple single-payer approach. Instead, they call for
some combination of mandates and subsidies to help everyone buy
insurance from private insurers.
Some people, not all of them right-wingers, fear that a single-payer
system would hurt innovation. But the main reason these proposals give
private insurers a big role is the belief that the insurers must be
That belief is rooted in recent history. Bill Clinton's health care plan
failed in large part because of a dishonest but devastating lobbying and
advertising campaign financed by the health insurance industry -
remember Harry and Louise? And the lesson many people took from that
defeat is that any future health care proposal must buy off the
But I think that's the wrong lesson. The Clinton plan actually preserved
a big role for private insurers; the industry attacked it all the same.
And the plan's complexity, which was largely a result of attempts to
placate interest groups, made it hard to sell to the public. So I would
argue that good economics is also good politics: reformers will do best
with a straightforward single-payer plan, which offers maximum savings
and, unlike the Clinton plan, can easily be explained.
We need to do this one right. If reform fails again, we'll be on the way
to a radically unequal society, in which all but the most affluent
Americans face the constant risk of financial ruin and even premature
death because they can't pay their medical bills.
Comment: Mike Konczal's article makes important distinctions between
social insurance along the lines of private market provisioning
(neoliberal), as with the Affordable Care Act, and social insurance
along the lines of public provisioning (New Deal liberal), as with
single payer, and why "utilizing 'the market' can be far more cumbersome
and inefficient than the government just doing things itself."
Paul Krugman reinforces Konczal's thesis by saying that the
implementation problems are "revealing the price we pay for insisting on
keeping insurance companies in the mix, when they serve little useful
purpose." Yet Krugman says liberals were correct in not insisting on
single payer, because Obamacare, a kludge, was "what it took to cover
the uninsured." He remains silent on the fact that 31 million will still
Krugman's statement is a far cry from what he wrote in 2005. He rejected
the so-called lesson of the Clinton fiasco - that any reform must buy
off the private insurance industry - writing then, "good economics is
also good politics: reformers will do best with a straightforward
Konczal's astute framing of private social insurance versus government
social insurance can be useful in our advocacy work since it makes it
very clear why it is imperative that we first get policy right, and then
conform the politics to match the policy. The great tragedy of Obamacare
is that we strangled the policies in order to protect our terribly