Archive for December, 2009

The Bones of an Idol

December 16, 2009

Health care reform is starting to look as sickly as the health care system it is supposed to fix. First, the public option vanished quietly a week ago. That was supposed to be OK, because Senate Democrats introduced the Medicare expansion which was supposed to cover more previously uninsured people, anyway – and have a greater chance of making it into the law books. Now the Medicare expansion is on the chopping block, too. What, then, is left of health reform?

The exact answer is likely to shift from day to day with the ebb and flow of Congressional politics, but the rough outline is this. First, the individual mandate is alive and well. Americans are required to have minimal health insurance, or else pay a fee. Second, the insurance exchanges are poised to become the biggest change to how consumers buy insurance. In these exchanges, consumers would be able to shop for health insurance much as employers can shop for company-based health insurance today. Third, a number of new regulations for health insurance companies have endured so far in the proposed bills: for example, requiring coverage for pre-existing conditions or capping differences in premiums or coverage by age or by salary. Fourth, as Jamelle writes today, there are “dozens of small measures and experiments aimed at controlling costs while also improving outcomes.”

Substantively, I am afraid, health care reform is falling apart. I have written before on the conflict between expanding health insurance coverage and cutting costs. The problem with health care reform used to be that it tried to do both – aggressively expand coverage while promising to cut costs. The problem with health care reform today is that it will probably do neither. Let’s look at the pieces still standing:

1. The individual mandate. Without further reform, an individual mandate only serves to drive the uninsured into a broken market. Even with generous subsidies, an individual mandate alone props up the status quo by giving insurance companies more customers without giving them incentives to change the way they do business.

2. The insurance exchange. Any insurance exchange. An insurance exchange presumes either that (A) the existing market works fine, or (B) the competitive pressures from the exchange’s creation will be so great as to make the existing market work better. (A) is untenable as a premise for insurance reform. (B) is an odd proposition, because insurance companies already compete to some extent. The exchange-based competition is only a question of degree. While it is a libertarian article of faith that more competition is always more better, actual evidence on competition’s effect on efficiency in the health insurance market is mixed in its implications for the insurance exchange.

3. New “fairness” regulations for the insurance market. These involve highly uncertain tradeoffs between cost containment and increased coverage, as I discussed here.

4. The “small experiments.” These are just that – small experiments, not far-reaching reform. They may well point the way to future improvements in the provision of health insurance and health care, but their place in a reform bill is auxiliary by definition.

To be fair, no reform bill will ever come with the guarantee that costs will be reduced or coverage will be expanded. The modern incarnation of health care reform began as a mishmash of policy proposals, which taken together may well have achieved some improvement over the status quo. Then, the legislative process got to work, axing parts of health care reform when it became politically expedient to do so. The bill that will eventually pass will contain the last policies standing, rather than the best policies to achieve the stated goals.

I consider this a natural outcome of the way we have been talking about health care and health reform. I remember passing a street demonstration this summer where people chanted and held signs to the effect of “Health care reform now!” Well, what kind of reform? Making all doctors wear Mickey Mouse ears on the job would reform health care, but probably not in the way these protesters had in mind. From the very outset, we had committed ourselves to talking about health reform either as all things that are good, or as the worst thing in the whole world. “Health care reform” became a mirror which reflected our personal ideas of what we thought reform should or should not look like. Because the actual bills failed to rally around a single proposal – “insurance exchanges now!” or “Medicare expansion now!” – their details became mere inconveniences in a larger ideological battle between Left and Right.

If this was still a policy debate, I would have suggested that we try to at least agree on a single goal to pursue for now – but pursue doggedly, until it is achieved. Cost control – through regulation, tort reform, or any other possible means – might be one such “compromise goal.” Unfortunately, the struggle over health care reform has ceased to be about achieving either lower costs, increased coverage, or any other substantive policy goal. It has become (or maybe it always was) about flexing political muscle. The credibility of President Obama and Congressional Democrats, and, by extension, electoral success in 2010, are what’s really at stake. So I wouldn’t be surprised, once the administration succeeds in getting a “health care reform” bill through Congress, if the result will bear only faint resemblance to the promises of efficient health care provision and equitable access to health insurance.