Asymmetrical information

From my comments on whether any bill is acceptable to progressives with a lower price tag:

I had a heated online discussion a few weeks back with a friend who is a liberal Democrat; eventually I realized that he was reacting strangely to my comments because he assumed that the federal government was going to give everyone in the country 100% free health care paid for out of taxes. So I quoted him the relevant passage from the House of Representative summary of their proposal; and then I had to quote him another passage to get him to believe that they actually meant to charge people a penalty for not getting insurance because it cost too much. He was quite shocked, and is now among the liberals who oppose the Democratic Party proposals. And he's an intelligent, educated man with a strong interest in politics. He just had not read the actual proposals, and had assumed that what Congress was delivering was what he had hoped for a year ago. I'm sure he's not the only one.

I think also of the young woman with whom I exchanged comments more recently; when I suggested the possibility of her getting her employee health benefits as an increase in pay to spend on her own health care, she thought I was referring to the $100 a month she has deducted from her pay. She apparently had no idea that her employer was paying out several times as much to her insurance carrier, over and above her pay. That is, she didn't know one of the basic and important facts about American health care policy.

Both of these things are distressingly common, and no, conservatives, not just among Democrats. People don't know what's in various bills, because bills are very complicated, so they just project whatever they think would be neat onto the ones authored by politicians they like--for all the policy heat about mandates during the Democratic primaries, I doubt 1% of the audience understood or cared.

And most people are unaware of how much their benefits cost their employer. That's why when someone points out that their wages aren't growing so fast, they get all angry and outraged, instead of thinking, "Yeah, but I have $3,000 more health care every year!" That's partly because people just don't realize that the stuff costs employers as much as it does . . . and partly because insurance is a lousy consumer good. I remember having a conversation with a coworker within three minutes a) complained that there was no reason that health insurance should cost so much and b) insurance was really important, because a few years ago his wife had had a baby prematurely with massive complications for her, and if they hadn't had insurance it would have cost several hundred thousand dollars. More broadly, as I pointed out a few weeks ago, If you suddenly get organ transplant coverage, this is a big valuable benefit--but you probably only notice if you need an organ transplant, which is pretty rare.

No one should claim that the real problem with the health care debate is that ignorant people are being tricked into disagreeing with you. The ignorant people infest both sides of the debate, and it's not clear to me which pool of ignorance is more powerful.

Presented by

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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