Megan McArdle: Elizabeth Warren had better hope voters want radical honesty

WASHINGTON — Early in the Democratic presidential debate on Wednesday night, NBC News's Lester Holt asked a key question of the candidates: Would you abolish private insurance in the United States? With the party coalescing around Medicare for all as a rallying cry, that question will decide what Medicare for all means, if indeed it means anything.

The pervasiveness of heavily subsidized employer-sponsored insurance, which covers more than half of all insured Americans, is the source of many of the worst features of U.S. health care. It's also one of the main reasons that the system is so hard to reform.

Americans tend to hate the health care system, with its byzantine billing, fragmented provider networks and persistent risks of ending up uninsured. But somewhat perversely, most people like their own coverage; 70% of those with employer-sponsored insurance say it is excellent or good, and only 6% give it a poor or failing grade.

Supporters of government-run insurance argue that people would be even happier with a single-payer plan. After all, they point out, Medicare beneficiaries are slightly more satisfied with their coverage than the privately insured, so people with employer coverage should be glad to make the switch.

That is fine logic, but poor psychology. Most people are loath to give up something they have and like for something that might be better, but also might not. A survey released in February showed only 13% of respondents supported Medicare for all if it involved abolishing private insurance.

Unfortunately, leaving private insurance in place would make any sort of comprehensive left-wing reforms impossible. You couldn't cut costs down to European levels, for instance, because that involves forcing providers to take lower reimbursements. And as long as a private system exists that's willing to pay higher ones, slashing payments in the public system would just mean providers would migrate toward the private one.

Nor could you save much money on administrative overhead, since provider billing departments and insurer back offices would continue to exist in any hybrid system. You couldn't develop the centralized health records to provide better continuity of care. And most important, you couldn't make central decisions about which treatments to offer and which are too expensive for the benefit they provide.

Piecemeal reforms that don't touch employer insurance, or don't touch it much, may modestly expand coverage. But they won't fix everything else that's broken in the current system — and for that reason, the piecemeal reforms would probably be too expensive to pass.

So if you're serious about creating a European-style health care system, then you have to be serious about abolishing private insurance. The presidential candidates' responses to Holt's question were revealing.

Vox headlined its report on the debate "Why only 2 of 10 Democrats raised their hands to say they'd abolish private insurance," as if that were startlingly low. I was surprised that even two people said yes, and that one of them was Sen. Elizabeth Warren, D-Mass., who has been looking primed to knock Sen. Bernie Sanders, I-Vt., out of second place.

For New York Mayor Bill de Blasio, the other hand-raiser, it was just cheap talk — well, cheap waving — since he's unlikely to make it to the general election, where he'd have to appeal to moderate voters. But for Warren, who very well might win the nomination, the move was extremely bold.

By raising her hand, Warren signaled two things: that she really is the wonky candidate, the one who understands what serious social-democratic reforms actually entail, and that she's left-wing enough to do it. As a primary strategy, it's probably smart. And as health care policy, it's certainly smarter than saying you want Medicare for all except for the "all" part.

But while Warren's path to the nomination lies through the party's left-wing base, her path to the presidency lies through tens of millions of more moderate voters. Those folks aren't health care wonks, and don't want to be. What they want is access to every cutting-edge treatment for approximately the cost of a summer camp first-aid station. They don't want an insurance claims adjuster or civil servant deciding what treatments their doctor can prescribe, or cutting that nice nurse's pay. And they most certainly don't want to listen to someone explain that it is impossible to have all those things at once.

That's why the only way the United States has ever passed a major new health care program is by misleading voters about what was involved. Warren is trying honesty instead, which is admirable, and refreshing. But it's also going to be hard to walk back, so Warren had better hope that next year's general-election voters are in the market for radical honesty.

CREDIT: Megan McArdle, Deseret News