Wednesday, August 26, 2009

Surowiecki on health care and status quo anxiety

In theory, the public overwhelmingly supports health care reform. James Surowiecki has a piece in the current New Yorker that suggests several reasons that they go all wobbly when it actually comes to making fundamental change. First is the "endowment effect" - the mere fact that you have something leads you to overvalue it. If people have insurance, most will value it highly, no matter how flawed the current system. Talk of changing the system accentuates the endowment effect. Last year a poll found that only 29% of likely voters found the US health care system good or excellent. When asked the same question last month 48% rated it highly, and health care delivery hadn't changed that much in the intervening 11 months! Adding to the endowment effect is the status quo bias. Most people are inclined to keep things the way they are. We feel the pain of losses more than we enjoy the pleasures of gain. So, when we think about change we focus more on what we might lose than what we might gain. Most people who don't feel good about the present system still feel anxious about whatever will replace it.

Surowiecki suggests that the key may be to work with, rather than against, people's desire for security. This is why Obama has repeatedly stressed that if people like the health care they have, they can keep it. Also, changing the system so that people can get affordable health care, while banning bad behavior on the part of insurance companies, will make it more likely that people can preserve their current level of coverage. The message should be that if we want to protect the status quo, we need to reform it.

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