Bargaining power, progressive maximalism, and Medicare for All
The HuffPo has reported on a minor dust-up between Bernie Sanders and Alexandria Ocasio-Cortez over the politics of Medicare for All (see here, here, here, also Paul Waldman here). The tl;dr summary is that AOC suggested that it is good politics for Sanders to insist on MFA, because this will give him more leverage in negotiations over a final bill, but that compromising on a public option is an acceptable outcome that would represent real progress. Sanders shot back that his bill is already a compromise. Of course, Sanders’ reply is consistent with AOC’s comments – he may be trying to maximize his bargaining power by pretending to rule out the possibility of further compromise.
My view (here) is that the only significant effect of insisting on MFA will be to make it less likely that the Democratic candidate wins the election. To be clear, I think that a Democrat who insists on short-run implementation of MFA can win in 2020. I just think running on MFA will make winning less likely, and that there is no reason to increase the chances of a second Trump term since a second Trump term would be a catastrophe and MFA will not pass no matter what happens in the election. But AOC suggests one way my theory may be wrong: perhaps electing a candidate who stakes out a maximalist negotiating position on MFA will help get a stronger reform package through Congress.
This is, unfortunately, wishful thinking. The hard truth is that progressives will have essentially no bargaining power on the issues that they care about most strongly. The reason is simple. To have bargaining power in a negotiation, you need to be willing to walk away from the table and settle for the status quo. But on the issues they care about most passionately – health care, climate change, etc. – progressives will be the least willing members of Congress to settle for the status quo. If Congress is trying to decide whether to 1) add a public option to Obamacare or 2) implement full-blown Medicare for All, Sanders and AOC can threaten to oppose the public option all day – but no one will believe them. Instead, legislation on key progressive priorities will be shaped almost entirely by the need to win over centrists and swing district legislators. The votes of progressives will be taken for granted, full stop.
Of course, it is possible to argue that “insisting” on Medicare for All may help a bit at the margins. Perhaps. But in addition to its electoral costs, focusing on maximalist positions has two serious drawbacks. First, the language of progressive maximalism is not persuasive to people who are not already progressive. Second, staking out “tough” positions diverts the attention of progressives from the really critical task of designing policies that can attract support from their more moderate colleagues. In the case of climate legislation, I will argue that these issues are of overwhelming importance.
I suspect that both AOC and Sanders know all this. AOC’s comments suggest she understands the importance of compromise and incremental progress and is willing to provide leadership on this issue. This is a hopeful sign – leadership by elected progressives will be critical to building a more strategic and effective brand of progressive politics in the United States. But – as Sanders’ reaction shows – we have a long way to go.
Eric:
I mostly agree; however if we do not cite a goal and explain why we should strive for it, it will forever be on the sidelines. There will come a time “again” when healthcare will be declared “too expensive again” and people who are not working should be cut from it. The goal is to include all in healthcare by cutting the costs in providing it. Whoever thought of discussing taxes as a way of funding it, was being silly, and played right into Republican’s demagoguery on taxes are evil.
In my discussions with others, this is what came out of it:
One in 5 are experiencing surprise bills. Private equity firms are into this. This a small issue in the scheme of things. The bigger issue is the total cost.
Run65441: I agree . . . the main benefit of MFA will be cost control, which is essential for many reasons. My concern is with separating the long run goal from the short run politics. Achieving MFA will take a decade if we are lucky and will happen through a piecemeal expansion of Obamacare. Meaningful cost control will take another decade, because provider incomes will have to be reined in and this will have to happen slowly and carefully. People need to be prepared for a long fight, and taking maximalist positions in election campaigns is more likely to cost us an election than to accelerate the process.
Eric:
I would leave providers alone. Go after Pharma, Healthcare supplies, private equity running 3rd parties, and hospitals. A big factor is billing multiple insurers for hospitals and any cost saved by insurers needs to be passed along. Start with the costs, and it will transition nicely into Single Payer. Bernie’s plan is not single payer.
I agree that there may be some short run savings on the billing side. I’m not sure I want to reduce payments to Pharma – I’d just like to target them better to achieve more useful innovation. Bringing provider down will be essential to bring our health care costs into alignment with international norms – with potentially a huge improvement in living standards. I agree this can only be done slowly, but I think this is where the big savings are, no?
Even on the billing side, achieving savings will require eliminating a lot insurance company and medical billing jobs. A slower transition will allow more people to retire rather than have to find new occupations. Between health care reform and climate policy progressives are planning to eliminate a large number of existing jobs. Both changes should happen as quickly as possible, but there is no point in exaggerating how quickly this will occur, since it will just galvanize unnecessary opposition.
====I’m not sure I want to reduce payments to Pharma====
Eric,
Can your elaborate on your not wanting to reduce payments to Pharma?
By payments do you mean drug prices or something else?
I do not know how there can be any meaningful healthcare reform without also prioritizing drug prices. Too many people are being crushed by high Pharma prices.
Jerry B: We need to distinguish between how much we pay Pharma, and who pays them. If we reduce the amount we pay drug companies, they will spend less on R and D. But we need new drugs!
Your focus is on consumers. Right now too many consumers are unable to afford drugs. But we can (and should) fix that problem by giving people insurance, without reducing the rewards to drug companies for creating new products.
Interestingly, we can probably expand coverage and make sure everyone has the drugs they need at a small cost, because the marginal cost of producing more drugs is very low. The problem is that the way we pay today gives drug companies an incentive to ratchet up prices, which probably is at least somewhat inefficient and leaves uninsured consumers at risk, and possibly unable to afford drugs they need.
Thanks Eric.
===without reducing the rewards to drug companies for creating new products===
I am out of my depth in having a debate on Big Pharma. However, a few years ago the former head of Goldman Sachs, Jim O’Neill, was on the Charlie Rose Show. His new focus was on pharmaceutical drugs and the overprescription of drugs AND the reluctance of drug companies to develop new drugs. The sense I got from listening to O’Neill was it was less about having the money for R & D and just simply being more interested in profits and shareholder dividends than inventing new drugs.
I would like to see the drug companies open up their books and show how much of their profit goes to R&D and how much goes to upper management salaries and CEO pay.
The EpiPen controversy a few years ago is an example. There was absolutely no need for Mylan and their CEO to jack up the price. It was just greed.
https://en.wikipedia.org/wiki/Epinephrine_autoinjector
If you scroll down the above link there is a section about the US and the Epipen price spike controversy.
Also what about the recent insulin pricing controversy?
http://www.natap.org/2019/HIV/052819_02.htm
https://www.statnews.com/2020/01/28/insulin-pricing-becomes-top-issue-for-democrats/
Do you know how the rest of the world does pharmaceuticals especially in regards to R&D, costs of development, regulatory requirements? I believe drugs in other countries are much, much cheaper and it can’t all be due to govts subsides or better health insurance that lowers prices. From what I have read, other countries just negotiate prices with the drug companies.
Jerry:
This, http://angrybearblog.com/2020/01/sales-income-for-drugs-have-exceeded-r-d-costs.html from the World Health Organization may help your argument.
Katharina Pistor
@KatharinaPistor
As one of my students commented recently after we read Dopesick: the pharmaceutical market at times operates like the illicit drug market with the significant difference that it is deemed legal.
Great discussion, lots of moving parts here.
I have several editors on my butt so suffice it to say there is plenty to discuss here and I will chime in down the road.
Tom:
That would be nice if you joined us.