Healthcare reform without risk

Economists have an answer for why Americans are skittish about change, and it could help Obama's sales pitch.
Economists have an answer for why Americans are skittish about change, and it could help Obama's sales pitch.

Coming off of a terrible August for health care reform, one thing is clear: the effort needs to be re-branded. Recently, Washington's savvy Democratic House Speaker Frank Chopp shared some advice with Crosscut on the subject of branding liberal initiatives, including the importance of dumping alphabet soup and finding works that resonate with Mom and apple pie. An example: Forget SCHIP and call it Apple Health for Kids.

Breaking down the behavior of the American people can be helpful in explaining why things are getting off track on health care. Why, if so many people think our system is broken and needs fixing, are so many also balking at serious reform?

James Surowiecki writing in the Aug. 31 issue of The New Yorker has some explanations from the world of economic behavior studies. People are inclined to resist change for two reasons. One is the so-called "endowment effect," which means that people routinely undervalue what belongs to other people, and over-value what they have simply because they have it (something I've routinely observed at garage sales). Second is what economists call "status quo bias." Surowiecki explains:

Behavioral economists have established that we feel the pain of losses more than we enjoy the pleasure of gains. So when we think about change we focus more on what we might lose rather than on what we might gain.

What this suggests, Surowiecki concludes, is that the way to sell health care reform is to convince people that it is needed to protect the status quo. In other words, that reform is the only way to ensure you can keep what you have and prevent insurance companies from taking it away (if you lose your job, for example). Don't emphasize covering the uninsured, focus on protecting the insured.

Medicare is popular even among those who claim to hate socialized medicine. Partly, it's in the name: care. Social Security is also popular (and has also been reform resistant) in part because it promises security for the elderly, and therefore society at large. So maybe the Medi-Security Act of 2009 will reassure folks. In any case, I think Surowiecki is on to something important, which is the power of branding change as no change at all.


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About the Authors & Contributors

Knute Berger

Knute Berger

Knute “Mossback” Berger is Crosscut's Editor-at-Large.