Updated by Matthew Yglesias on August 7, 2015,
Donald Trump offered the single best, most original policy idea in the Republican Party debate Thursday night. He also demonstrated by far the greatest understanding of a complicated area of public policy. There, I said it.
People have been avoiding noticing this out of a dual aversion to Trump’s brand of demagogic anti-immigrant politics and an excessive sense that deference is owed to the real professional politicians up on the stage.
But while I wouldn’t rank Trump as one of the great health wonks of all time, his answer to a question challenging him to defend his past praise of single-payer health-care systems demonstrated a decent knowledge of the subject and an innovative and important health-care idea.
Trump’s argument on single-payer
Single-payer health-care systems are ones in which the government acts as the insurance company for everyone. That’s how Medicare works in the United States, and it’s how the Canadian health-care system (conveniently also called Medicare) works for everyone, not just senior citizens.
“It works in Canada,” said Trump, and “it works incredibly well in Scotland.” He even went so far as to say that “it could have worked in a different age” in the United States but is not currently suited to our problems.
What Trump is talking about here is path dependency, and it’s a reasonable point. It’s one thing to set up a National Health Service in the wake of World War II. It’s another thing entirely to come 75 years later and completely upend a system that is working pretty well for most people and that enormous institutions have made deep investments in. It’s easy to dismiss this message when coming from Trump, but Atul Gawande has written brilliantly about path dependency in health-care reform and my colleague Sarah Kliff’s masterful profile of Vermont’s failed effort to build a single-payer system further underscores the concerns about path dependency.
Is the idea that a system could work well in one country but not in the US crazy? Not according to leading health wonk Uwe Reinhardt, who, like Trump, is an admirer of some foreign single-payer systems but skeptical of trying to remake the United States in their image.
Trump’s great idea: a common market in health insurance
Trump then pivoted from this to a constructive suggestion about reforming health insurance in America, proposing a change that, while big enough to make a difference, is sufficiently non-revolutionary to be plausible.
“What I’d like to see,” he said, “is a private system without the artificial lines around every state.”
Right now, you see, health insurance is a heavily regulated industry. And it’s regulated in slightly different ways by each state government. Consequently, while buyers and sellers of most products (breakfast cereal, cars, appliances, clothing) have one gigantic marketplace to participate in, buyers and sellers of health insurance have a handful of midsize markets (California, Texas, New York) and a few dozen small ones.
“I have a big company with thousands and thousands of employees,” Trump observed, but “if I’m negotiating in New York or in New Jersey or in California, I have, like, one bidder. Nobody can bid.”
One bidder is an exaggeration, but it’s true that the number of players in any given state market tends to be small, and the problem is getting worse. The issue is especially severe in smaller states, where the overall size of the market isn’t necessarily big enough to make it worth anyone’s while to enter. But it’s also a logistical hassle for employers who operate in multiple states, especially because states aren’t real economic units. Lots of people live in New Jersey and work in Pennsylvania, or commute from Kansas to Missouri.