Ezra Klein said something important but, I think, slightly wrong about what kind of health insurance people prefer:

People tend to prefer PPOs to HMOs. PPOs tend to be more expensive than HMOs. But HMOs tend to have a higher actuarial value. The average PPO is in the low 80s, while the average HMO is 93 percent.

The reason is that PPOs make up for their easy access to specialists by building in more copayments and cost-sharing. HMOs offer more first-dollar coverage, and though specialists are more irksome to access, there’s less cost-sharing. But people prefer ease of access to coverage, so the HMO’s actuarial advantage doesn’t translate into a market preference. In other words, actuarial value isn’t everything.

It’s worth observing that Danish people have the reverse set of preferences.

Danes have two insurance options to choose from for outpatient care. Group 1 is an HMO-style system in which all doctors’ visits are free, but in order to see a specialist you need to get cleared by your primary care physician. Group 2 is a PPO-style system in which there’s cost-sharing when you see a doctor (the government still pays most of the tab, but you need to pay some) but you have the right to go see a specialist directly. Group 1 includes a staggering 98.5 percent of the population indicating an overwhelming preference for cheaper over easier access.

I think the strong, but opposite, US and Danish preferences are mostly about status quo bias. In the United States, HMOs were a relatively new innovation and people have proved willing to spend a considerable amount of extra money to avoid them. In Denmark it’s the reverse, and the Group 2 option is an innovation after decades of non-availability, and Danes seem uninterested in giving up their traditional free medicine in order to get more flexibility.

Danish Defense Minister Søren Gade with Robert Gates (Denmark MOD photo)

The news that NATO defense ministers are prepared to back a counterinsurgency strategy for Afghanistan seems a little bit weird given that we’re in the middle of a debate about what to do here in the United States. Something I noticed in Europe was that NATO Secretary General Anders Fogh Rasmussen, former Prime Minister of Denmark, actually seemed considerably more hawkish in his rhetoric on Afghanistan than Barack Obama is.

And it actually turns out that Denmark, which until recently was under his leadership, was, in fact, putting more effort into Afghanistan than the United States was. Denmark only has 700 soldiers in Afghanistan of whom 26 have been killed, but Denmark has about as many people in it as Cook County. Scaled up to America’s population this would be as if we had had about 1,400 soldiers killed out of a 38,000-strong deployment. Of course in a war absolute number count and Denmark is still a small contributor. But part of the context for what happens at these meetings is, I think, the fact that NATO’s civilian chief is a guy who was the architect of what’s been, for his country, a pretty major war.

Pat Buchanan says, of white people, “America was once their country. They sense they are losing it. And they are right.” I affiliate myself with what Adam Serwer has to say about this, but it also seems like a good jumping-off point for something I’ve been meaning to write about since I came home from Europe.

There’s often a kind of conventional idea on the left that the United States is an unusually racist society. And I think there’s also often a kind of image of Europe as a place where more of the progressive agenda has been achieved than in the USA. But I think that you’ll find if you look at Europe through the eyes of the liberal agenda that while the German left has certainly been more successful than the American left at securing universal health care, it’s been much less successful at promoting a tolerant, integrated, multicultural society. And allowing for the errors implicit in making any kind of sweeping generalization, I’d say that’s pretty generally the case across Europe. This Swiss People’s Party campaign poster would, I think, make Jesse Helms blush. And I’m not even sure which of the Northern League posters from Italy is the most egregious.

In the US, in other words, racial problems have been more salient for a long time since we’ve been a racially diverse society for a long time. But by the same token, for all the problems we have with us today, we’ve made enormous progress over the years. Racial and ethnic tensions are a common problem in the world, and the United States manages diversity pretty well in comparison with other places (not just in Europe) even if we fall short in some absolute terms. Just look at Barack Obama. I think we’ll be waiting a while yet before someone of non-European ancestry is elected head of government in a European country. Denmark has some great public policy ideas, but it’s also kind of made itself into the gated community of nations in a way I don’t find particularly appealing.

At any rate, in some sense it’s probably true that white America has “lost” “its” country, but that’s a good thing. It’s everyone’s country!

New Daily Beast column from yours truly takes a look at health care in Sweden and Denmark to put the Obama proposals in perspective and remind the interest groups looking to block reform that they’re actually turning down a very generous offer:

Whether reform passes this year or not, the status quo really is untenable. Something will have to change someday. And what Obama and Baucus are proposing is close to the minimum amount of change conceivable. If insurance-industry groups succeed in killing the bill, the lesson will be that appeasement hasn’t worked. And that may mean that next time around, reformers will start thinking big and try to put health care under democratic control and financed on the basis of solidarity. Industry may vehemently oppose even modest reforms, maybe trying to kill it off entirely. That would be an ugly fight that would mean years of delay in providing help to people who urgently need it. But unless insurers can recognize how much the powers that be are bending over backward to be nice to them, it might be the only way forward in the long run.

Here’s my earlier post on health care in Denmark and here’s health care in Sweden. The systems are similar, though I’d say Sweden’s is marginally better. The Swedish government’s English-language description of their system also includes my new favorite health policy catchphrase: “Swedish health and medical care is based on the principles that care should be provided on equal terms and according to need, that is should be under democratic control and financed on the basis of solidarity.”

Freshly returned from a great trip to Scandinavia, I can’t help but enjoy the FuckYeahScandinavia tumblr that I was first shown this morning. That said, no fan of northern Europe can avoid observing that several of the countries the tumblr covers aren’t technically “Scandinavian.” Americans often find this a bit confusing but Scandinavia, strictly speaking, only refers to Denmark, Sweden, and Norway. If you want to add in Iceland and Finland and miscellaneous extra territories (Åland, Faeroe Islands, Greenland) the word you’re looking for is “Nordic.”

I don’t totally understand why the distinction has been drawn this way—but roughly the point is that Finnish is a very different language from the others and that Iceland is clearly a geographically distinct phenomenon from the rest.

The larger point, however, is that the giant phone in this Robyn video is totally awesome. I also like that in Sweden health care is “under democratic control and financed on the basis of solidarity.”

Connie Hedegaard (photo by Kate Sheppard)

Kate Sheppard was on the same trip to Denmark as I was, and wrote up this post about our conversation with Connie Hedegaard, Folketing member for the Conservative People’s Party and Minister for Climate and Energy in the current Liberal-CPP coalition government:

“It’s at the core of conservatism to take care of the environment, to protect nature, to use resources responsibly,” said Hedegaard. “I can think of nothing that’s more conservative than that.”

Her priority, she said, is that their policies be vehicles for economic growth. The export of clean tech increased 19 percent last year, triple what it was ten years ago. Just recently it passed pork as the country’s leading export product.

“I have tried to turn this into a growth agenda. It is not an anti-growth agenda,” she said. “Often back in the ’70s for the left, socialists and liberals, it was an anti-growth agenda. In a world where we’re going to become 9 billion people by the middle of this century, we must have growth. The challenge is to make this growth more green, to make it sustainable.”

This is basically a Teddy Roosevelt kind of view that from time to time has been espoused by John McCain here in the United States. Starting in the waning days of the Presidential campaign, and continuing for most of the Obama administration, this strain of green conservatism seems to have largely vanished. It recently got a bit of a boost, however, in the form of a joint op-ed by John Kerry and Lindsay Graham. Still, one strains to come up with an example of a right-of-center American politician whose level of commitment to the climate change issue would be recognizable by a Hedegaard or an Angela Merkel or a Nicholas Sarkozy. In part that reflects interest-group politics—the United States is a significant producer of fossil fuels in a way that only Norway is in Europe. But in large part I do think it reflects a kind of failure of intellect and imagination that American politicians have occasionally flirted with transcending, usually only to return to orthodoxy soon enough.

I got these numbers from the official government of Denmark statistics page but the current unemployment rate seems a bit implausibly low:

At any rate, unless I’m badly misunderstanding what they’re reporting, Denmark seems to be weathering the current global downturn quite well.

As everyone emphasizes, the cheapest form of renewable energy is really energy efficiency—just not wasting as much energy. A cousin of this point, however, is that the truly cheapest thing of all is to just do with less. So for example, American houses actually use slightly less heat energy per square meter than do European houses. But since American houses are much bigger than European houses, we use far more energy in home heating than do Europeans. The Danes are substantially more efficient than the average Europeans, so they use less energy per square meter than we do despite living in a much colder climate. But on top of that, the average Danish house is about half the size of the average American house.

Since home-related energy use is a big deal and housing is a big component of household finances, the large size of American houses is a really important aspect of the American way of life. And it is worth asking how valuable our super-sized homes really are. It’s definitely a good thing that our modern houses are much bigger than houses were circa 1900. That brought about substantial reductions in overcrowding and real benefits in human welfare. It seems to be the case, however, that we’ve crossed over into territory where further increases in house size are driven by positional arms races. People aren’t looking for bigger houses, in other words, they’re looking for houses bigger than their friends’ houses in a way that’s not producing much of any net gains in welfare.

If that’s right, then we’re really wasting a disturbing quantity of resources not only building the very large homes but also heating them. Housing spending has the long duration properties of investment goods, but it’s not really productive the way a factory or an office building is. It’s just a very big, very expensive, very durable consumer good. Which is fine, insofar as it’s really leading to satisfied consumers. But it seems that it isn’t and if we all crowded into Danish-sized houses we’d quickly adjust, feel just as good about ourselves, and then go buy more non-housing stuff (or if we actually moved to Denmark, spend the money we’re saving on housing paying very high taxes in exchange for generous public services).

The overwhelming fact about Danish public policy is that taxes in Denmark are really high. There’s a substantial VAT and also a substantial income tax. You pay taxes to buy a car, and you pay higher taxes for heavy cars. Gasoline taxes are high (gas costs almost $7.50 a gallon) as are taxes on electricity, which account for more than half the cost of electricity to consumers. In exchange for all this, the Danes have basically achieved all the stuff progressives say they want. The country is rich, clean, and highly egalitarian. The high taxes finance generous public services, and the high levels of expenditure allow the country to do without a lot of extraneous business regulation which helps keep the place economically dynamic. According to surveys, the people are all very happy, which is exactly what you would expect from a very rich, very egalitarian society. And as this trip has emphasized, they do it all while doing much less polluting than Americans do, despite a higher average material standard of living.

There’s more to that than taxes, of course, but the high taxes really are integral to the whole thing. And that includes the environmental piece. In part because there are directly pro-environment taxes. But also, I would say, in large part because it’s the egalitarian income distribution and robust redistributive state that makes the environmental policies tolerable. Cheap gas and electricity are, in part, what we do in the United States instead of real social policy.

All of which is just to emphasize a point I’ve been making a lot over the past few months: there’s no way to have a progressive renaissance in the United States unless progressives find some politically feasible way of directly making the case that higher taxes for better services can be a good trade. And it’s worth trying to be honest about this. The other American journalists I’m traveling with, all lefty environmentalist types, can’t stop complaining about how expensive basic consumer goods are here. And it’s true, stuff’s expensive! But college and preschool and doctors and hospitals are all free, and the carbon emissions are low. This is, I think, a good trade but it really is a trade. Low taxes plus cheap dirty energy and large numbers of poor people will give you cheaper restaurants.

Was out in the suburbs of Copenhagen today for a bit, and they look, well, a lot like American suburbs except with smaller-than-average houses. But if you go visit an American suburb with smaller-than-average houses—usually an older one—then you’ll very much have the right idea. What was quite different, however, was the transportation from the suburbs into the central city. Copenhagen’s suburbs are organized around the “finger plan” illustrated in the map on the right. Each finger is, as you would do in the United States, built around an arterial road. But the roads have fewer lanes than an American arterial would have. But running alongside them (or at least running alongside the one our bus was driving on) are very nice, very wide bike paths. And roughly parallel to the roadways are the S-Tog commuter rail lines.

Consequently, there are fewer people driving on the road than you would have in the US and there are more people biking and taking the train.

It’s worth noting that this sort of thing leaves overall automobile congestion neither better nor worse than an alternative strategy of fewer options and wider roads would. Insofar as you build road capacity, drivers will fill that capacity up. You get a choice of what level of automobile traffic you want to see the congestion at. But if you actually want uncrowded rush hour roads then you have basically only two choices. One is that you can build “road to nowhere” type projects where the economic rationale for infrastructure development is so poor that people don’t really want to drive on your shiny new highway. The other is that you can do congestion-pricing. But absent congestion-pricing, even the really admirable provision of alternative modes has limited impact. When valuable goods are given away for free, you get shortages. Copenhagen is apparently considering following Stockholm and Oslo and implementing a congestion fee, but they haven’t done it yet.

Still the moral of the story is, I think, pretty clear. When you build infrastructure to facilitate commuting from suburbs to central cities, lots of people will avail themselves of the opportunity to move to the new suburbs. But how they actually get to the central city depends on what kind of infrastructure you build. If you build giant highways, they’ll drive. If you build smaller roads and also some trains, then some people will drive and some will take the train.

For the sake of comparison, note that Copenhagen is a pretty small city. There are 521,000 people in the city proper and 1.8 million in the metro area. That would make it the 30th largest metro area in the United States, slightly bigger than the Las Vegas MSA and slightly smaller than the Kansas City MSA. All told, about 129 million Americans live in metropolitan areas that are bigger than metro Copenhagen. About a third of Danish people live in Greater Copenhagen, whereas over 40 percent of Americans live in metro areas that are bigger than Greater Copenhagen.