As health care reform - finally - reaches its conclusion, I continue to be struck by the number of people who argue that the current bills are "too ambitious" and that Democrats should have scaled back their ambitions to enact something more "moderate," "modest," and "incremental."
So how would one go about constructing such a "modest," "moderate" health care bill? First, we'll set a condition that nobody will lose the health care insurance they currently have. Second, we'll identify two main goals: providing health insurance to everyone and enacting some common-sense regulations of the insurance industry. That should be simple, right? We'll just expand Medicaid, the existing federal-state program for low-income citizens, and pass legislation that will prevent insurance companies from denying or rescinding coverage or charging people more because they have "pre-existing conditions."
Yet the flaws in this limited program quickly become clear. Medicaid expansion alone won't solve the long-term problem of the uninsured. Unless Medicaid is expanded to cover everyone, there will remain a group of people in the middle who don't get insurance through work and aren't eligible for Medicaid. Since skyrocketing health care costs are forcing companies to dump health coverage, this group will only grow. And because insurance on the individual market is even more expensive than employer-based insurance, most people won't be able to afford insurance.
The new regulations won't work either if people can opt out. If insurance companies are now required to cover people with expensive health conditions and healthy people choose not to buy coverage, adverse selection occurs. Because the pool being insured is now sicker and more expensive to cover, premiums will shoot up, making coverage in the individual market unaffordable. So we'll need an individual mandate, both to ensure that everybody is covered and to make sure that the new insurance regulations will work without making care even more expensive.
Now, though, we're forcing people to buy coverage which is still unaffordable to many. Therefore we need to provide subsidies. And to make the rates comparable to the rates enjoyed by large employers, we'll need to pool everybody in the individual market. Thus, we need to create what policymakers call an "insurance exchange": a very large large in which insurers can offer coverage at low rates comparable to what major corporations can negotiate.
This, however, creates a new problem: since the federal government is now helping provide individuals with health insurance, employers may decide that it's cheaper to drop their health benefits. This violates our first condition that states nobody will lose the health insurance they currently have. And it shifts costs to the federal government, which is now on the tab for even more subsidies, sending the price tag for health care reform soaring. So we need to impose an employer mandate, both to prevent people from losing their present coverage and to reduce costs to taxpayers.
Even with all of this, however, we have done little to address skyrocketing health care costs, which will threaten the whole effort. So we'll need to include at least
some pilot programs and demonstration projects that starts to move the medical system - especially Medicare - away from fee-for-service and towards
"bundled" payments that pay doctors for overall care, not just each procedure. We'll need to include constraints on the future growth of Medicare, preferably putting that politically-explosive question out of the hands of elected officials. And we may need to start taxing or capping employer-based coverage in order to put a cap on the growth of premiums and in order to encourage employers to shift their workers to the exchanges or buy cheaper plans.
So having originally set out to simply (1) expand coverage and (2) end insurance company abuses, while preserving the insurance most people already have, we've now had to (3) provide subsidies and create (4) an individual mandate, (5) an employer mandate, (6) insurance exchanges, and (7) some moderate cost-controls just to meet our original objectives. Ditching any one of these elements likely prevents us from achieving either of our original goals.
Stepping back, we find that our moderate, incremental health reform plan has morphed into... the bills currently before Congress. And that ought to make clear how modest this framework really is. It doesn't impose a Canadian-style single-payer system. It doesn't force everyone to change their coverage, as the Clintons' failed 1993 plan did. It doesn't radically change cost incentives for the insurance companies or for doctors and hospitals. At its core, the plan does two things: it expands coverage to the uninsured and prevents insurance company abuses. If you already have health insurance through your employer, nothing will change, except you will now be able to get affordable health insurance if you leave or lose your job. These are hardly the makings of a socialist dystopia.
In fact, many health policy analysts would argue the plan isn't radical enough. A Canadian-style single-payer system would provide cheaper, more integrated care, to everyone. Alternatively, you could expand coverage and far more aggressively lower costs by ending the employer-based system and sending everybody into a regulated private market as Switzerland and The Netherlands do. (A bipartisan Senate bill authored by Oregon Democrat Ron Wyden and Utah Republican Bob Bennett would do just that.) Yet both ideas run into a wall of opposition in Congress and collide with most Americans' desire to keep the health insurance they currently have. The congressional health care bills attempt to fix some of the biggest problems in American health care while recognizing these constraints.
So when you hear people argue that the President should ditch these proposals for a more modest and incremental "compromise," be aware: these proposals are about as modest as can be while still providing reform that is remotely meaningful.