Taken from the comments.
Their main voting constituency is middle class (or higher) white families in the suburbs, particularly the husbands and fathers in that constituency. They don't face the raft of problems that others do in our society. But one big problem that they do face is that something beyond their control happens to someone in their family. Medical catastrophes have to rank high on that list...
Voters grossly underestimate the risk that any calamity will happen to them. (As fully documented by market surveys regarding the great under-purchasing of private long term care insurance.)
And do not believe that any party's politicians would fix this private-sector insurance gap until you look at Medicare: It provides first-dollar coverage for all kinds of routine procedures -- but not for catastrophically expensive long-term nursing home care, so if you need that in your old age your life savings, home, everything can go *poof* gone.
I went through this personally with my father, who suffered a series of strokes in his Medicare years. If he'd lingered as the doctors expected, everything he'd saved during a successful career would've been wiped out and my mother would've been left with nothing for the rest of her life (absent a major amount of costly legal maneuvering).
Imagine auto insurance working this way, paid for by the govt: It pays entirely for gas, oil, tires, all normal repairs (maybe even buys your car for you) all "free" to you -- but if you have a head-on and go through the windshield with the car destroyed, you get nothing.
What would the result be? Well, over-demand for all kinds of routine auto services, destruction of free market provision of routine items, government-set pricing for them, "gate keepers" administratively trying to restrict ever-rising consumption costs, pending rationing ... all while auto calamities go completely uncovered! ... Sound familiar?
Economically that would be ludicrous, make no sense at all. And it is every bit as ludicrous and senseless for Medicare care as for "Autocare" - only more so, for so much more is at stake.
But politically this arrangement makes perfect sense.
Voters know that after they retire they are going to have all kind of routine medical costs, exams, prescription drugs, and everything else. They don'tbelieve that they will spend years in a nursing home. So they want their out-of-pocket bills covered, "give us that!" And that's what the politicians give them.
This is the problem with politician-designed health care. It doesn't provide what efficient health care requires, it provides what gets politicians votes even if it is destructive to their health care system. Politicians enacting health insurance rules aren't any more responsive to sound health care economics than politicians enacting rent control rules are responsive to sound housing policy or politicians enacting tariffs and protectionist quotas are responsive to sound trade economics. They are responsive to votes . That is all.
If Krugman really is so concerned about lack of catastrophic care, why doesn't he complain about Medicare -- which is already 100% run by the govt (and mostly designed and run by his party too)?
At "the summit" Obama was incredulous when some Republican said he wanted catastrophic care instead of routine costs covered. Obama's reply basically was: "Well you're rich, so routine costs don't matter to you.". Nowthat was a politician thinking! "Hey, millions of voters want their routine costs covered! What's wrong with you?"
Yet it is exactly because my father wasn't rich that he and my motherneeded catastrophic care insurance -- instead of first-dollar coverage, which they could easily have afforded out-of-pocket.
But the politicians weren't going to give him what he needed, they were going to give only what gets them votes.
You succeed as a political party when you craft policy that serves your constituents.
No. You succeed as a political party by getting votes. Have the politicians of NYC served their constituents well via 65 years of rent control rules? (See: market rents, new housing construction, South Bronx). But renewing those rules always gets them re-elected! Is that not political success?
So, why would politicians be any more concerned about catastrophic care in the private market than in Medicare -- which has been the politician's own responsibility for 40 years?
Look, for anyone for whom "pre-existing conditions" is the big issue there is an easy fix: make health insurance portable so once you have it you can keep it if you leave your employer. That would cover 90% of cases, once a person has insurance pre-existing conditions are never a problem again. The US is the only nation that doesn't have portable health insurance. You keep your auto insurance if you change employers. It would require some changes, but nothing radical -- compared to restructuring one-sixth of the entire economy it would be as nothing. Simple and sensible enough so that in the polls all the masses would understand it and support it (so different from today).
Why didn't they propose that? Guess.
Health care politics is just like rent control politics, about getting votes, not sound policy.
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