The Intractability of What We Have

By Mike Koetting May 22, 2020

I am happy to report I got more comments than usual on my recent post outlining my take on what the virus told us about Federalism. Some people applauded that states provided an alternative source power when their populace didn’t agree with the flavors on offer from the central government. Others noted the need for local components to target appropriately for local circumstances and, sometimes, simply to develop local support necessary for a program to be effective.

Both fair comments. But I was still skeptical states are the best vehicle for either of these. So I decided to think about what alternatives might exist.

Set aside the fact that from a practical perspective, making a major change in the role of states is a non-starter, short of a catastrophe so bad that we don’t want to think about it. People like me can sit around and think of reasons why states don’t work until the cows come home. No matter how impressive the list of problems, change seems well less likely than absolutely no way.

Still, I figured, I might come up with suggestions that would motivate some practical thought on the issue. History has a way of making it seem like what has evolved is the best that can possibly be achieved, even though it rarely is. Since stringing together problems does not dent the tendency to the status quo, maybe some plausible alternatives would.

Well, damn, if that wasn’t hard.

One of the first things I was reminded of is that everything is connected to everything. This is a hardly a unique insight. But we often forget this when we bore down on the problems created by one facet of an issue. Take education. America’s basic educational system has vested a large degree of control in local communities. But there is little evidence this has led to great educational outcomes. The evidence rather suggests it leads to mixed outcomes with enormous variation among communities. Almost as soon as I started thinking about how to balance narrow local interests with larger social interests, I smacked into the reality that thinking about education inevitably puts you in the middle of addressing the overall taxing structure of localities, states and the country. No doubt those are issues that might benefit from reconsideration. Still, that level of consideration throws so much open for discussion that no person with real world responsibilities wants to go there.

It also becomes apparent that social structures have evolved the way they have because it happened, not necessarily because it is optimal. Specifically, if you try to pick a starting place on which to base a reconsideration, you quickly realize that your starting spot is only one dimension of a larger reality. For instance, if you start to rethink how you might conceptualize the U.S. Senate based more an urban-rural distinction, it doesn’t take long before you’re wondering if urban/rural is really the right way to divide. What about concentrations of racial/ethnic groups or various cultural divisions? Do New York City and Los Angeles really have so much in common that it overrides all other axes on which differences might be compared? History doesn’t have to face these questions because it is not intentional and does not have to defend the criteria against which decisions got made. Colonies got created and settled based on the land grants given by the King of England. In the ensuing 400 years, they became states and they, and the other states established subsequently, addressed issue after issue in a way that seemed rational to them at the time, without a lot of thought about the overall effect.

Rube Goldberg, 1932

However ungainly the results, today each state is well-established, with a formidable bureaucracy operating in some form of self-contained equilibrium. It is not possible to change one major thing in any state without setting all kinds of things in motion, much less amending the overall system. Even in the face of a pandemic, we see states shooting off in various directions, the net effect of which is unlikely to be helpful.

All of this may seem obvious. Indeed, the question readers might be asking is why I am writing about it.

The answer is that this dynamic plays itself out in all major social structural issues. We think of problems with the existing structure and propose something to replace it without a full appreciation of the degree to which history—for better and for worse—has narrowed the options. Let me illustrate in the area I know best, healthcare.

A universal health plan along the lines proposed by several Democratic candidates has many things to recommend it. As envisioned, it would expand coverage, reduce costs substantially, and, almost certainly, improve the health of the population. There can be hardly any real argument that it would not be an improvement on the current wasteful, patchwork approach—that in fact is disliked by a substantial portion of the population.

But there is a problem. It’s incredibly hard to get there from here. It’s like trying to imagine how one would re-configure the states—or get the toothpaste back in the tube.

American healthcare made a number of decisions in the first half of in the last century that impelled it along a course of development. Maybe different decisions could or should have been made. But they weren’t. And we have the health system we have now, which consumes more of the economy than in any other developed country and achieves, at best, uneven results. However, each of those decisions created interest groups that, over time, have become extremely entrenched in their interests as defined by the status quo.

When we think of “interest groups”, we like to construct them as repositories of greedy or somehow undeserving people. And while there are certainly some of those in healthcare, substantially cutting healthcare costs means a material reduction in the number of people working in healthcare. Reducing healthcare expenditures from 18% of GDP to 15% of GDP would probably reduce the number of people working in healthcare by 5 to 10%, most of which are relatively good jobs. This could increase the national unemployment by a percent or more. Which is a big deal in an era where maintaining the number of good jobs is a huge problem.

Moreover, people being people, a large portion of the population has become attached to their particular form of receiving healthcare. (It is definitely curious that the American public has a generally lower approval rate of its healthcare system than other developed countries but still has so many people willing to stake their vote on those particular forms that are much less evident in other health systems.)

“Medicare for All” advocates prefer to wave these problems away with recitations of what a mess the current system is. Their diagnoses are mostly correct, but ignore the context in which their changes would have to take place. Achieving a revision as large as “Medicare for All” from where we are now may not be realistic.

To be clear. This doesn’t mean change is not possible. If this is the best healthcare system America can come up, with we should probably just pack it in as a country. There are any number of meaningful steps that a Democratic administration could and should take that would move us closer to a sensible and sustainable healthcare system. Fixing some glaring problems in the Affordable Care Act, including adding a meaningful public option, would take us a long way. While all other developed countries have some form of universal healthcare, the nature of these systems varies wildly and reflects the history of how they got there. That’s the full lesson we should draw from comparisons with other counties.

And that is the moral of today’s post, extending well beyond healthcare. No matter how ugly the problems–indeed, the uglier the problems—fixing them will probably require a gradual approach. So we better get started.