Loss Remorse

The story of three polls, and the peril for Democrats who think "Medicare for All" will be easy.

Yard Sign

People don't want to lose anything.

The pain of loss is greater than joy of gain. I learned this lesson as a financial advisor for thirty years. Psychologists have tested it in experiments, and I saw it in real life. In formal studies, psychologists observed that once someone has something in-hand, they want more money to part with it than they would have paid for it in the first place.  

I learned that a person whose portfolio in successive months went from $100,000 to $110,000 to $120,000 to $130,000, and then back to $120,000 did not experience this as the joy of having made 20% in 4 months. They experienced it as the anguish of having lost $10,000 in hard earned dollars. Remorse.

Pain of loss is more salient than the joy of gain. There wouldn't be country music without it. 

"Medicare for All" is a powerful and popular message because it is simple and understandable. It isn't fixing a patchwork of individual and group plans, means-tested subsidies, and the other complications of the current system. 

Reuters: Click

Poll #1: People like Medicare for All: Some 70% of Americans support Medicare for All; 85% of Democrats and 52% of Republicans. 

My Democratic friends cite this statistic and feel confident they have Trump on the run and that, finally, the program that eluded Truman, Kennedy, Johnson, Clinton, and Obama is near at hand. Yet each president discovered that the people rebelled, and in the cases of Bill Clinton and Barrack Obama resulted in an election of a hostile Republican congressional majority.

Poll #2: There are huge problems in the current system, but most people are getting by. In a Gallup Poll 80% of Americans consider their current health care situation good and 69% consider their access to it good. The current system is complicated and flawed, but it works--more or less--for most people.

Gallup: Click

It is expensive. It has gaps. They may be stuck in a job they don't like in order to keep coverage. Still, about 150 million Americans have employer-sponsored health insurance and are glad to have it. The insurance lobby group published a poll, saying 71% of people are happy with their employer provided insurance. 

Employer-subsidized health insurance is an untaxed part of a worker's current income. Employers pay an average of 82% of the premium of $6,900 for an individual, or $5,600 a year. Small employers pay 62% of the cost of family coverage and large employers pay 71%. The average for all private employers is $12,800 a year subsidy toward health insurance. Details: Click

It is real money. It costs the employer, but that is the employer's problem. It is something to fear to lose. There is no guarantee that if it disappeared under a Medicare for All system that wages would go up to compensate for the higher taxes to pay for a public system. There is a risk. 

Poll #3: Only 13% of people favor Medicare for All if it means giving up their private health insurance. Voters agree that they or others should have the ability to get Medicare, but they don't want their own personal situation diminished. This means that a "public option" may be possible, but "single payer"--Medicare for All--in which people lose what they now have is very unpopular when people realize it would change their own private insurance. 

The Hill/Harris: Click

Advocates for Medicare for All could argue that this doesn't make sense, that we will all be better off with a single national program, and that this is is a task for political education. 

My own experience tells me this misunderstands the human psychology of loss remorse. Any program by Democrats that causes employers to cut their health benefits will bring crushing backlash. 

Remember the wave elections of 1994 and 2010.They didn't like change.

We probably cannot just "push reset." We are stuck with evolving away from what we have now. Most people have something to lose.