David R. Henderson  

Obama's and Kucinich's Conversation

Explaining our new Health Care... David Balan's Opening Statemen...

I think Bryan has done an admirable job of explaining how the immediate ban on pricing for pre-existing conditions will cause major adverse selection and will break down health insurance as insurance. Arnold says that Tyler Cowen believes the Republicans didn't offer serious ideas or serious criticisms but notice that Tyler didn't actually make a case. Instead he punted to two other bloggers who didn't make much of a case. I'm no fan of Republicans--most of them started to socialize prescription drugs, supported two bad wars, and still support the drug war--but Tyler is simply wrong. Some of his commenters pointed this out by pointing to Republican Congressman Paul Ryan's thoughtful comments at the health care summit.

But I think I understand why Dennis Kucinich, who wanted single-payer, switched from a No vote to a Yes vote. Here's the transcript of a secretly recorded conversation on Air Force One.

Obama: Dennis, I know you want single-payer and so do I. I've made that clear on numerous occasions. We both see the public option as a step to single-payer, but that's a step too far. I can't get it in this bill and still win.
Kucinich: Now you see why I won't vote for it.
Obama: But, Dennis, have you actually read the bill? Don't you see how it will lead to single payer but will just take a little longer?
Kucinich: Er, what do you mean Mr. President?
Obama: Have you heard of adverse selection?
Kucinich: Yeah, but I don't really know what it is.
Obama: Well, here's what Larry Summers explained to me. When insurance companies can't distinguish between healthy and sick people, they have to price to some average of the two. But those high prices discourage the healthy from buying so and the insurance companies know this and so they have to price even higher than otherwise. That's called adverse selection.
Kucinich: And?
Obama: Don't you see, Dennis? The way the insurance companies handle this problem is to get information on people's health and price accordingly. That reduces adverse selection.
Kucinich: And this is supposed to make me feel good about your bill that keeps private health insurance?
Obama: Yes, because our bill doesn't allow the insurance companies to price higher for pre-existing conditions. So lots of people who are relatively healthy will actually game the system--not buy insurance and pay our piddling fines--and then, when they're sick, get insurance then. The insurance companies will know this and will have to price high to account for it. Lots of people's health insurance premiums will rise. I know I said that 32 million more people will get health insurance but I can't know that. No one can. My bill might even cause fewer people to get health insurance as they game the system.
Kucinich: Still waiting for the good news.
Obama: What happens when insurance companies start to raise premiums through the roof? Do you really think people will blame us? Some will, but many will blame insurance companies. How many people blamed Nixon's price controls on gasoline when they had to line up at the pump? Most of them blamed the oil companies. Then I, or my successor, will say, "Much as we've tried to reform health insurance, these titans of industry are unreformable. We must get costs under control. So we need a public option priced at reasonable rates."
Kucinich: Yes, Mr. President.

Update for those "who have rocks in their heads," as William Barghest put it. Of course, I thought it would be clear that I have no such transcript. It apparently wasn't.

Comments and Sharing

COMMENTS (11 to date)
Chris writes:

I may have missed something in the Huffington Post link, but who was the source for this transcript?

Jay Thomas writes:

Here is why I struggle with this imagined conversation. I tend to believe many of the idiots in congress are at least a little sincere in their idiocy. Do you really think it is possible to have a brain that can understand the process by which private insurance will be undermined under the new system yet still be a convinced progressive? It seems to me that if you can reason your way up to this point, you should be able to reason your way to seeing why single payer is a bad idea in the first place. The chain of causality is no more complex.

Rui writes:

Posts on EconLog are incredibly well sourced and verifiable but I do have to agree with Chris on this one about the sourcing of this transcript. If this were the case, then it would help to explain not only Kucinich's but some of the other House members' vote switch; but I reserve to remain skeptical at this point.

William Barghest writes:

Those of us who have rocks in our heads appreciate being told explicitly when something is fiction.

Matt writes:

I tried googleing this and came up short so I have to assume it's fiction, but I agree; try to be more explicit when something isn't true. I this was real and wigged out a little.

Patrick writes:

Just last night Ed Schultz on MSNBC said the bill would inevitably lead to single-payer. I happen to think he's wrong about this (I think we'll end up with something like the Swiss hybrid system), but there can be no doubt Democrats are thinking along these lines.

Guan Yang writes:

You should at least add something about why the individual mandate won’t work (penalty too low, repealed because they’re politically unpopular, etc).

jc writes:

There are undoubtedly some true believers. But some must almost cherish the opportunity to create another problem for which they can demonize somebody else for, where the solution is more (or simply continued) power for them.

Whether single payer is good for the country or not is not necessarily as relevant as what is good for their personal political prospects.

So, yes, I think many progressives have essentially made a bet: that higher premiums will lead to enough people blaming insurance companies for single payer to be politically feasible, as opposed to higher premiums leading to people blaming progressives and punishing them instead.

After all, progressives care about genuinely helping people, while the greedy free market prioritizes profit. And they honestly tried to play nice by passing a bipartisan plan without a public option, and look at how the greedy free market behaved...

The_Orlonater writes:

This is too hard to believe in my opinion. I also agree with Chris and Rui.

David C writes:

Paul Ryan is more an outsider in the vein of Ron Paul than he is a model of the direction Republican leadership wants to head. And though his proposals for health care reform are workable, they're not embraced by the Republican party.

The Republicans had several proposed bills for health care reform, and could never agree on any of them. For instance, Mitch McConnell tried to ban comparative effectiveness research. Michael Steele was opposed to any Medicare cuts. The House Republicans' proposal was scored by the CBO as worse than Obamacare on deficit reduction even before adding the pork that would be necessary to get their alternative passed. Sen. Jim Demint also had a proposal.

If one group of Republicans have good ideas and if another group of Republicans have different ideas and a third group have still other ideas and they can't even agree come up with a proposal that a majority would support, then what are the Democrats supposed to do? A lot of them co-sponsored bills that they wouldn't even go on record as being willing to vote for as is. That doesn't seem very serious to me.

Matt C writes:

I find this incredibly implausible (as fiction) because what we actually did in this bill was give the health insurance companies a lock on the wallets of the public worth hundreds of billions of dollars a year.

This bill was about entrenching the health insurance industry. And one hell of a job it did.

Do you really believe that Obama has a plan to destroy private health insurance companies that begins by legally indenturing everyone in the country to buy their product? You can't be serious.

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