The Complications Of Pro-Market Populism Part II

Reihan Salam wondered how Luis Zingales’s proposals for a “pro-market populist” politics that defends “defends freedom of entry in all cases” translates into policy proposals.  As I said yesterday , a major political problem with any “pro-market populist” politics is that there are a lot more stakeholders in the status quo than just Big Business and Big Government.  There are a log of risk averse people who might be better off under a different system, but are scared to take the plunge into the unknown.

That doesn’t mean that there is nothing to be done.  One obvious thing that could be done would be to increase the number of stakeholders in a reformist politics and begin the process of institutional change while limiting the direct threat of change to the mass of people who aren’t ready for change just yet.  There are policy proposals that can accomplish some of this.  Yuval Levin and Ramesh Ponnuru have suggested adopting a flat health insurance tax credit for those who do not have access to employer-provided care.  This would (along with other changes - including the repeal of the coverage mandates in Obamacare) allow many of the uninsured to purchase consumer-driven health insurance without directly threatening the insurance arrangements of those who are happy with their employer-provided policies. Another thing Republicans can do as a group (this to include the party at all levels of government) would be to push for more states and municipalities to adopt the Indiana state government model of Health Savings Accounts and catastrophic coverage for government employees.  This approach has saved Indiana money, increased the take home pay of the employees, and maintained secure health care for those employees.  As more state and municipal government budgets are stressed by employee health care costs, a move toward the Indiana model could eventually find significant support from state and local elected Democrats.  What the tax credit and the Indiana model have in common is that they can both plausibly increase the number of people on consumer-driven policies without threatening very many of those who don’t want those policies just yet.  There would also be follow on effects.  Since you would have a larger number of people who would be more cost conscious consumers of routine health care, there would be a larger constituency for government policies that allow for more routine care to be handled by nurse practitioners and physicians assistants.  There would be a larger constituency for mandating greater price transparency in health care and for allowing more open access for new, higher productivity health care providers.  And, as more of the public sees that people on consumer-driven policies are doing okay, resistance to larger reforms will tend to shrink somewhat.