Government Health Insurance and Pseudocertainty
One of the most appealing arguments for government health insurance is the perception that it’s “a sure thing.” No matter how powerful reputational incentives are, a private health insurance might go out of business, or fall into the hands of a myopic CEO. With government health insurance, on the other hand, you know that you’re covered, right?
This is a prime example of what psychologists call a pseudocertainty effect. Tversky and Kahneman originally explained it using two hypotheticals (my paraphrase):
Hypothetical #1: You play a two-stage game. There is a 75% chance that the game ends in stage 1 and you win nothing. However, if you make it to stage 2, you get to choose between $30 with certainty, or an 80% of $45.
Hypothetical #2: You choose between a 25% chance of $30 or a 20% chance of $45.
Most people take the first choice in Hypothetical #1, and the second choice in Hypothetical #2, even though they are mathematically identical. T&K’s explanation: Hypothetical #1 looks better due to a “pseudocertainty effect.” People are misled by the fact that the P(A|B)=1, even though B itself is far from certain.
What does this have to do with health care? Well, government health care is a sure thing conditional on (a) getting high-quality care for (b) a treatable ailment (c) in a timely manner (d) without getting a secondary infection… etc. In other words, like private health care, government health care isn’t a sure thing at all.
Now you could object, “It’s not about a pseudocertainty effect. It’s about a higher likelihood of good health with government health insurance.” If you go down that route, however, you’ve opened yourself up to a barrage of tough questions. What evidence is there that government health insurance raises life expectancy – or any other major measure of health? Even if it does, is the extra cost worth it? As Tversky and Kahneman showed, people will pay a lot to go from near-certainty to perfect certainty. They’re far less eager to pay an arm and a leg to go from a 45.3% chance of living to 80 to a 45.5% chance living to 80.
My point: While “certainty” is of the most appealing arguments for government health insurance, it’s silly. But if proponents stop using it, it’s going to be a lot harder to win over public opinion. It’s a choice between persuasion and honesty. Take your pick.
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