David Brooks' lazy free market fantasy

Before publishing a disingenuous parable setting up false categories of free-market versus activist government reform, David Brooks should have had a chance to read a cautionary tale of failed health care reform that appeared on the very same Times op-ed page as his own column.

Brooks spins out the reform approaches of "Mr. Bentham" (Obama Democrat) and "Mr. Hume" (free market conservative, vaguely reminiscent of Bush). Presumably these are avatars of nineteenth century reformer Jeremy Bentham and philosopher David Hume, though the affiliations are too tenuous to be worth parsing.

Mr. Bentham is a type AAA superwonk with a solution to everything; Mr. Hume is a lazy skeptic who recognizes his limitations. While Brooks takes a few swipes at "Hume," his sympathies clearly rest with him.

Mr. Bentham comes up with the Baucus bill for health care reform and the Waxman-Markey energy bill; Mr. Hume proposes in both cases to let the market work its magic. Here he is on health care:

“Why don’t we just set up insurance exchanges with, say, 12 different competing policies? We’ll let everybody choose a policy, and we’ll let people keep any money they save. That way they can set off a decentralized cascade of reform, instead of putting all the responsibility on us here.”

Yeah, why don't we just. It's really easy to estblish robust competition benefiting consumers among for-profit health insurers, and every market has twelve competitors ripe for recruitment. That's where column B, an op-ed by the former chairman of the Texas Insurance Purchasing Alliance, Cappy McGarr, offers an appropos reality check.

McGarr chronicles the failure of Texas' effort in the early nineties to establish a health insurance exchange for small businesses--a failure he blames largely on neglect from Governor George W. Bush (the quasi-model, ironically, for Brooks' "Mr. Hume," with imagery borrowed from Maureen Dowd's Boy King columns). The exchange died, according to McGarr, for want of either a public option or strict rules to prevent insurers from cherry-picking small corporate customers outside the exchange:

Most important, though, our exchange failed not because it wasn’t needed, and not because the concept wasn’t sound, but because it never attained a large enough market share to exert significant clout in the Texas insurance market. Private insurance companies, which could offer small-business policies both inside and outside the exchange, cherry-picked relentlessly, signing up all the small businesses with generally healthy employees and offloading the bad risks — companies with older or sicker employees — onto the exchange. For the insurance companies, this made business sense. But as a result, our exchange was overwhelmed with people who had high health care costs, and too few healthy people to share the risk. The premiums we offered rose significantly. Insurance on the exchange was no longer a bargain, and employers began backing away. Insurance companies, too, began leaving the alliance.

The Texas exchange failed, in other words, for want of the very types of provisions that Brooks lampoons in the Baucus bill: "He’d design a set of insurance policy regulations to make sure everybody gets uniform care"( along with various crucial experimental measures to restrict overtreatment and overbilling that Brooks does not criticize in detail).

Brooks recognizes on some level that free market fundamentalism has failed. His Mr. Hume "never could very accurately predict how the market was going to move." But he holds reflexively to his contempt for good-faith efforts to create market conditions in which health insurance competition can flourish. He won't recognize, as Paul Starr has shown, that the Baucus bill -- and indeed, all the Democratic health care bills pending in both chambers -- are comprised entirely of ideas proposed by Republicans over the past four decades. He won't consider, with Jonathan Cohn, whether an exchange minus a public option might work with strict regulation of private insurers. He hasn't engaged the tough questions driving the debate -- for example, whether the Wyden amendment opening the exchanges to all employees might foster real competition, or whether co-ops might work, or how to bend the cost curve if he doesn't like the efforts to do so that he implicitly lampoons in the Baucus bill. He prefers, with his own Mr. Hume, to whine and fantasize easy answers.