Health Care, Revisited

Posted: September 5th, 2009 | Author: | Filed under: Economics, Politics | Tags: , , , | 2 Comments »

Before the President addresses Congress on Wednesday, I thought it was time to revisit health care reform.

Throughout the town-hall melodrama this summer, I have been struck by the focus, from liberals and conservatives alike, on the politics, rather than the policy merits, of reform. To some degree, that is the legacy of Hillarycare: the Clinton administration went so deep into closed-door policy sessions to actually produce a pretty decent bill, that they forgot to sell their plan politically and alienated all the constituencies they needed to get it passed.

Obama, by contrast, has become so preoccupied by having something—anything—to show for himself by year’s end, that he has tried to float above the policy debate, be all things to all people, and avoid tying himself to any specific proposals. (This is a recurrent problem with Obama’s liberal-tarian decision-making process.)

The result is that the right has been able to destroy all the major bills with surface-level claims about their political or ideological implications rather than engaging with their content. Indeed, the fact that four very different approaches have been collectively tarnished with the same blunt and inaccurate label—socialism—is a testament to how little their content has been scrutinized. Exceptions: Shawn Tully’s excellent series at Fortune shredding the most liberal bill and Megan McArdle’s thorough, though vitriolic, blogging on the subject for the Atlantic.

Now, many liberals are looking at Obama’s performances in the town halls where he talked a lot about “bending the cost curve” as evidence that economic policy arguments are dudders and should be replaced with moral ones: “we should pass health care or poor people will die.” This is silly, because economic arguments are explicitly linked to moral ones: there are economic reasons that the moral problem of poor people without care exists, and economics must be used to determine if a given proposal will solve the moral conundrum.

Obama’s real problem is that he focuses on the wrong economics: he keeps asking what is the most just way to make health care more efficient, instead of asking what is the most efficient way to make health care more just. The result is that the Administration is looking for the fastest bill to pass, even if it doesn’t achieve universal care. As David Brooks of all people points out, that’s not a lot of change.

Moreover, to find the most politically sale-able bill without studying policy, the Administration is actually moving to solutions that the middle-of-the-road folks (myself included) don’t want because they just won’t work.

If the purpose of liberal health care reform is to achieve universal coverage, then there are only a few plans worth having. The best—because it would be most economically sound and result in the highest quality of care—is the Wyden-Bennett bill which pairs an individual mandate with subsidies for the poor and regulatory overhaul to help lower prices—basically, let insurers trade in all states, so there are more insurers competing for your business in each market.

The next best thing, again if the goal is universal care, is actually single-payer or its watered-down cousin, the public option. The merit of the public option is that it fulfills the same function as regulatory overhaul does in the Wyden bill—it creates competition by adding a new player to all markets. This would lower quality for some services and would hamper innovation which is why I’m opposed to it, but it would be universal and relatively cost-effective. An employer mandate without the public option, however, is just stupid, since it would raise costs while failing to expand coverage.

If we’re too cowardly to pass the Wyden-Bennett bill because it breaks the employer-healthcare system (which needs badly to be broken), and too smart to pass the full public option because we care about taxpayer cost and innovation, then we’re stuck. The compromise put forward where the public option goes into force only when the market fails to cover someone is idiotic, because then the public plan would cover only the poorest and sickest (all the people the market doesn’t cover). This would be even more costly than a blanket public plan, and thus even less palatable to centrist legislators.

The only way for Obama to get centrists, ironically, is to argue on policy grounds for one of the two poles—for Wyden-Bennett or a strong public plan. If he doesn’t come out swinging for one of these on Wednesday, health care reform is toast.

2 Comments on “Health Care, Revisited”

  1. 1 The Fast Talker said at 2:50 am on September 6th, 2009:

    Hey Maha, you hint at something like it here but what do you think about Snowe's idea of forcing insurance companies to lower their premiums by dangling the threat to implement a public option after a certain number of years? Do you think they can read that play?

  2. 2 Preppy McPrepperson said at 9:46 am on September 6th, 2009:

    Yes, they absolutely can read that play and it's sort of a meaningless compromise.

    The insurers can't just 'decide' to lower their premiums; we have to provide them with a means to pay for that haircut, which this plan wouldn't do. (See Tully's series–the employer mandate without a public option would actually lead to higher premiums).

    So they insurers would be bound to fail at that plan, and then that compromise would eventually lead to the public option anyway.

Leave a Reply