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Insurers are furious that Senate majority leader Harry Reid's health-care-reform bill will include a public option —
even though it lets states opt out if they don't want the government-run insurance alternative.
Liberals are ecstatic with Reid over that same public option —
even though opt-out states would be able to keep their markets completely private, which would limit the public plan's power to negotiate volume-based discounts in other states.
It's an impressive bipartisan consensus regarding the power of inertia. For all the disagreements over the public option, almost everyone agrees that making it the default is a big deal, and that the compromise allowing opt-outs is a pretty modest compromise. That's because reams of studies have shown that default settings really, really matter.
If Reid's legislation had omitted a default public option but allowed states to opt in if they wanted one, insurers would be ecstatic and liberals would be furious....
These insights are at the core of the challenge to traditional neoclassicism posed by
behavioral economics, which has burst into prominence in the Obama Administration. Budget director Peter Orszag is so obsessed with defaults that he used to bring a copy of that 401(k) study to all his meetings;
chief regulator Cass Sunstein co-authored a book called Nudge that's all about defaults and other noncoercive policies that can promote desired behaviors.
The Administration has pushed one nudge after another, from simplified financial-aid forms after studies showed they could increase college-attendance rates to automatic savings plans for small businesses. It even doled out our payroll-tax cuts in the stimulus bill by decreasing our weekly withholding rather than cutting us big lump-sum checks, because the research suggested we'd be less likely to notice it and more likely to spend it...."
http://www.time.com/time/politics/article/0,8599,1932789,00.html
