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A Brief Look at Democratic Health Policy

As readers of this blog know by now, I'm a fairly frequent reader of the the Wall Street Journal. Today's opinion video does a great job at briefly explaining the differences in health policies between the two leading democratic candidates [Obama and Clinton]. The conversation also touches on the inadequacy of attention of health policy from the right.

Particularly revealing in this short conversation is the incrementalism approach Sen. Obama is using. As I've described before, incrementalism is a sure way to mitigate the huge pains the U.S. would feel by moving to a universal coverage plan all at once. It would further assuage the economic risks of completely overhauling our country's health insurance model. Should universal coverage turn out to be grossly more expensive than budget forecasts predict, this incremental approach would alleviate those pains.

Another highlight of this video is the focus on the uninsured. I wrote a policy paper in graduate school describing the demographics of the uninsured. Rago's comments in this video confirm my earlier conclusions: the uninsured are not those at the bottom of the economic ladder nor those at the top; they are right in the middle and are choosing not to buy insurance. For most of these individuals it is a question of marginal utility not disparate conditions.

Marginal utility refers to the concept of making a purchase decision. A person can choose to spend a dollar at one store or another. The person will spend the dollar where she recognizes more value. For healthy young males, the case for purchasing health insurance is simply not compelling enough. This is an opportunity for health insurance companies to attract these individuals with competitive rates and plans rather than a dire situation in which these individuals are fenced out of playing the game.

Finally, the question of missed opportunity. Republican candidates are embracing a market based health system but are doing little in terms of education. Largely, Americans do not understand the health insurance market. Universal coverage is easier to understand as a solution though market based strategies may provide fewer pains and more efficiency in the long run. Candidates should focus on this opportunity and begin education campaigns to highlight how insurance companies work, how they compete for business and how this competition incentivizes companies to find efficiencies in operating costs.