Alright, so last night I said I was still working out where I stand on the Senate health bill. After a lot of though, I think I’m settling into a position. This whole picking sides thing is like Marvel's Civil War. Are you with Krugman and Yglesias or Dean and Kos? I don’t like it. The plan makes me very uneasy. But I believe that it’s better than nothing.
First, let’s talk about why it sucks. The various parts of the health care plan have always been very tightly intertwined. We want to stop people getting rejected for preexisting conditions, so we regulate that. But then we have a free rider problem where it makes no sense to buy insurance before you get sick. So we impose the individual mandate. But then you’re saddling lower income Americans with another expense they can’t afford. So we establish subsidies. Of course having the government pay excess costs for everyone’s health care when insurance premiums are constantly sliding upward is a sure path to national bankruptcy. So we plan for cost control. Cost control, mainly, is where the ball has been dropped in the Senate’s compromise plans. And it’s a big ball.
The exchanges, which make comparison shopping among plans easier, are pretty much all that’s left of cost control. But the experience of Massachusetts, where health care costs have continued to rise, has shown that exchanges alone can’t be counted on to bring costs down. Also still standing are the excise tax on expensive insurance plans and a direct tax on insurers, both of which seem likely to pass the cost on to consumers at some point. There is also an argument that the mandate itself, by bringing lower-risk individuals into the insurance pool, will lower premiums. Again, observation of Massachusetts makes this point look a little sketchy.
The best proposal for cost control was the public option, where a not-for-profit government run plan would compete with private plans on the exchanges. With low overhead and strong bargaining power (or Medicare-based rates) it could provide competition that would force private insurers to offer more efficient and affordable plans. It also provides choice for those uncomfortable with the government legally mandating them to pay money to the wildly unpopular insurance companies. The public option was consistently favored by a majority of Americans, so clearly it had to go. Another alternative, the option for allowing some people under 65 to buy into Medicare, was also jettisoned.
The last gasp of the public option was the Snowe trigger. Private insurance companies would have been required to sell non-profit basic coverage plans on the exchanges. If, after a few years, they had not made such plans available, a public plan would be instituted on a state-by-state basis. At Co-President Lieberman’s request, this was removed. So now if no affordable plans are made available… they just aren’t.
Another strong cost control element, the Medicare Review Board, has also been gutted. The MRB would establish a group of independent experts to identify inefficiencies and waste in the program and set rates based on effectiveness, moving Congress from determining to simply approving reimbursement rates. Fox News and the House Republicans impressively managed to avoid obvious self-satire while stirring up a movement to “keep government out of Medicare,” despite the fact that that’s manifestly impossible and the MRB would actually be the closest one could come to doing so. So the Board was neutered.
And finally there was a really great provision which, like those superheavy man-made elements at the bottom of the periodic table, could barely be said to have existed before it was eliminated. This would have required insurance companies to spend 90 cents of every premium dollar on health care costs. Would have been nice, right?
So what we have now is a bill where people will be required to buy coverage from insurance corporations, some of which are effectively monopolies in their markets, without strong cost controls. Subsidies should keep the price to the consumer down, but it’s effectively just moving the overall cost around.
Then why vote for it?
Because it’s the best we’re likely to get. Thousands of people are dying right now because they can’t afford insurance coverage. Every time health care reform has been defeated in the past, it hasn’t come up again for years. And every time the new plan has been weaker. Public opinion is souring, largely due to fatigue. To start the process all over again would be a political nonstarter, and to let it die would probably mean another decade of inaction. This plan is very flawed, and most likely expensive. But while it increases absolute cost, it also increases efficiency by extending coverage to millions who previously couldn’t have it because of cost or preexisting conditions. Most of the plan’s provisions don’t even take effect for a few years. Tweaking around the edges over that time might be able to fix some of the problems.
And from a political, rather than policy, angle, losing on healthcare would be a huge blow to the President and the party, especially since I’ve got pretty much no hope that he’s going to get anything out of the Copenhagen conference. Better health care outcomes in the future won’t happen with Republicans in office. Remember President Bush’s plan to turn Social Security into private stock accounts… right before the stock market went into free fall? At this point it’s pretty much a toss-up, but I think the Democrats do worse in 2010 by not passing a bill than by passing an unpopular bill. People remember defeat.
Last point: lots of people are saying we need to force a better bill through reconciliation, so we only need 50 votes and Biden. Reconciliation is super-risky, because the Senate Parliamentarian gets to go through the bill and cut out anything he doesn’t think is budget related. And then the bill comes up for another vote in five years, anyway. Plus, there’s no guarantee that playing procedural hardball like that wouldn’t drive off enough swing votes to put us under 50. Sure, it went fine when Bush did it, but tax cuts for the rich are always going to be easier to pass than health care for the poor. If a reconciliation vote on a good plan fails, I don’t see us getting a deal as reasonable as we have now if we shift back to regular process for a third go at the bill.
I say pass the thing and patch it up before the effective date.
