The perilous seductiveness of choice

I watched The Morning Meeting on MSNBC today. This is a bit unusual for me: it's pretty obvious to me that the host, Dylan Ratigan, prefers the sound of his own voice over the sound of the voices of others. So I find watching him difficult. I find watching Chris Matthews difficult for a similar reason.

But enough about me. The topic of this morning's program was what the producers called the death of free choice. The Senate Finance Committee has been working on their version of a health insurance reform bill, and Sen. Ron Wyden (D-Oregon) was protesting last night that the reforms he prefers didn't make the cut.

Slate's Jacob Weisberg has written about Wyden's plan. As I undertstand it, in a nutshell, Wyden's proposal is to sever the link between employers and health insurance. Instead, what employers pay for health insurance would be converted into extra salary. Employees would then be able to shop for health insurance on their own, which they would be required to purchase. Insurance companies would compete for their business, but only if the plans they offered met certain conditions. It is claimed that Wyden's plan would reduce health care spending in the United States by $1.5 trillion over 10 years. This figure comes from The Lewin Group, which, as Rachel Maddow has pointed out, is part of the health insurance industry.

Ratigan's argument this morning in support of this sort of reform is this: if consumers are allowed to freely choose their insurance plan, which something like Wyden's plan would allow, insurers would be forced to compete with each other for customers. Such competition would lower health care costs, which most of us want. (One wonders why The Lewin Group would support Wyden's plan if this is its expected effect, but that's another matter.) This should be an argument in its favor that even republicans can embrace, since competition is, of course, important to a capitalist economy for a number of reasons.

Here's the worry. The market works for consumers only if consumers can make rational choices. And in order for consumers to make rational choices, they must be able to accumulate the information they need to make rational choices, and the time and effort required to make a rational choice must be reasonable. As Bob Sullivan has convincingly shown in his book, Gotcha Capitalism, corporations have gone to great lengths to undercut the ability of the consumer to make rational choices. They do this by using a variety of techniques. For example, credit card companies write agreements that most people simply do not have the time to attempt to understand: they are lengthy and written in 15th Grade English. That is because credit card companies do not want consumers to understand them: they can make more money off of a confused consumer than an informed consumer, because confused consumers do not make rational choices. Corporations also use what is known as mouseprint in their marketing. Mouseprint is very small writing that some people can't even read. It's not meant to be read, because companies do not want consumers to understand what they are agreeing to when they enter into a business relationship with them.

Our government is finally taking steps to protect the consumer from such practices. But it allowed these practices to flourish. As attractive as choice is, without government regulation of the market, we have every reason to expect that insurance companies would use the same techniques to confuse consumers shopping for health care insurance. Creating a market in which there is choice does not guarantee that choices made in that market will be free and rational. Government regulation is essential to a free market. Republican deregulation of markets creates an anarchy in which the only rational decision-makers are corporations. Deregulation kills capitalism. While killing Wyden's plan might in some sense represent the death of free choice, there is no guarantee that enacting Wyden's plan would resurrect free choice either.