Policy: getting there from here

I was having a discussion today with a friend about McCain's health plan, and its purported goal of breaking the link between employers and health care provision. This is a good thing to do, but I'm not sure it will happen. I suspect that if the McCain plan passed (a damn slim chance), what you'd see is a benefit going to some of the more affluent self-employed, while most people continue to purchase health insurance from their employer with their now-individualized tax subsidy.

The problem is, because of the subsidies, the market for individual insurance is very thin, and the market for employer insurance is extremely well established. There's also a very strong social expectation of getting insurance from your employer. Removing the subsidy might eventually create a more robust individual market, but at the very least, I expect it will take a really long time.

Ignoring institutional inertia is a general problem with policy theorizing. It's certainly not limited to libertarians--all the liberals I hear talking about national health care seem to imagine it being implemented in a magic fairyland where the AMA and the AHA have not developed gigantic lobbying arms in order to more effectively siphon cash from Medicare. This enables them to design a perfect system based on cherry picking their favorite features from each European country, rather than working on the assumption that whatever we get in the future is probably going to look very much like what we already have.

It is good to develop ideal frameworks--I certainly have a lot of my own. But the problem with shiny, perfect framework is that it's easy to become so dazzled with it that you ignore the actual political landscape in front of you. It takes a hell of a scorched earth battle to get that space clear enough to build from scratch.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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