After reading this very well-informed diary addressed to those who favor the public option or Medicare-for-All (my case), it is clear to me that better answers to the following questions would be helpful.
What is the most practical reform of the health care system that will...
- Reduce provider costs in health care
- Reduce insurance costs in health care
- Reduce economic inequality in society generally
I would recommend looking over that diary before reading this.
And yes, I do include #3 although this may be controversial. The United States has had the highest economic inequality in the industrial world since at least the 1980s, and such inequality is associated with poor health outcomes from a number of sources like infant mortality and life expectancy via violent crime (at least in the United States). There's also something to be said for reducing inequality as an inherent social good.
However, even when considering inequality, government provided health insurance is not synonymous: the Netherlands has private insurance but also pretty low inequality as measured by the Gini coefficient.
One thing we can say for a certainty is that the Obama/House bill's public plan is not all that important. A public plan that is projected to insure only 10 million people cannot reduce costs much. The only way this plan could be relevant is if sometime after 2014 the Exchanges are opened to a much, much larger number of people than projected. (Note: Obama said in his speech that this option would only be open to those who lacked health insurance. However, as far as I knew, HR 3200 made its restrictions based on the number of employees of one's employer. Can anyone explain what part of the bill Obama is talking about?)
The Exchanges bring me to my next point. Krugman has claimed that Obama's plan is basically to Swissify American health care. However, I see what may be a very deep flaw with this statement: Swiss health care is not employer based. In point of fact, this wonderful employer based system that Obama is saying must be preserved at all costs does not exist in any other nation, even those that rely on private insurance. These nations basically have a giant Exchange, like the one in HR 3200 except open to all. They also lack the tax breaks that encourage an employer based system here.
It's also well known that insurance being employer based helps to hide its true costs from participants and hence kill the kind of competition that might force down overall health costs. My suspicion is that because the Exchange under HR 3200 is so small, these reforms will fall far short of Swissifying the system.
The ultimate nightmare scenario is that we end up with a Massachusetts-style disaster in which insurance premiums go sky high. Again, the public plan under Obama does not address this in any way because it's only open to those in the Exchanges.
There's also one other glaring issue, in that these reforms do not compensate insurers for taking on high risk individuals. In the Netherlands, the only European country that allows for-profit insurers to provide basic health insurance, insurers are compensated by the government for covering sick people. This removes the nasty incentive to get rid of them.
Glaring issues aside, there may also be one of affordability. If the subsidies for low income people are not high enough then there is a problem. This may or may not be an issue: both HR 3200 and the Senate HELP bill provide subsidies at up to 400% of poverty, compared with 300% in Massachusetts.
In Massachusetts another problem seems to be that because the penalty for not having health insurance is low, people can "game" the system by picking up expensive plans for short periods of time and then dropping them. In HR 3200, the penalty for not having plans is pegged to income, but it's only 2.5%. That sounds like a lot until we realize that paying for health insurance can easily eat up 10-15% of a person's income. What if they just decide "to hell with this"? And as far as I know the Senate versions are even less stringent.
Where does this leave us? It doesn't very look all that encouraging. When the Swiss enforced their mandates, 96% of the population already had health insurance coverage, and mostly individual health insurance coverage at that. These are very different markets. In my mind, the employer vs. individual distinction is probably most important here. That's also echoed by Ezra Klein who said that the Exchange was the most important part of the bill.
In my mind, there's at least as much evidence suggesting this plan is going to "Massachusettsify" our system as "Swissify" it. I hope I'm wrong and would appreciate it if anyone can point out any flaws in my logic.
What all this suggests is that although private health insurance may not be inherently evil, employer based private insurance really needs to be scaled back as much as possible. Obama's plan is not going to do that. It might lessen the issue at least somewhat, or it might worsen it as in Massachusetts. But the basic problem of non-portable employer based coverage will remain.
One truth that really shocked me when I read the diary in the introduction is that providers are the main source of inflated health costs in the United States, through inflated doctor's pay and unnecessary procedures. It was the answer to a question that I had been asking myself before: if the expected administrative savings from eliminating private insurance under single payer is only around 10-15% of all health care spending, then where the heck are we drawing the additional savings needed to push our costs into line with other industrialized nations? There's the answer. It's the providers. And the author raises a valid point that needs to be addressed: why insist strongly on single payer if they are the biggest problem?
One reason that seems immediately obvious to me that this author may overlook is that single payer would surely have impacts beyond the obvious reductions in insurance overhead. Because what we are paying for health care would be publicly accountable and the result of annual budgetary decisions in a democratic government, it seems extremely naive to suggest that providers' wastes are going to be as unnoticed as they are today. We'll notice them and they'll be fought, hard: single payer would in some sense be a huge gun aimed at the provider lobbies like the AMA and hospitals, dictating cost reductions by fiat. And as many people note, you can hardly expect to obtain more cost reductions through competition than with a government payer simply forcing everyone to cut them.
Medicare-for-All advocates do need to make this point more. I suspect it may not have been made much in part because a very big part of the single payer movement at present is PNHP, an organization of, you guessed it, providers. And though they are doing very admirable and praiseworthy work on the whole, they may not be so selfless as to make arguments directly criticizing themselves.
But what about the argument that advocating single payer is unnecessary? Well, in principle it's right: you can achieve the same cost reductions and the same reductions in economic inequality through other sources. But the question that is more relevant is, "Are genuine alternatives actually any more feasible?" Any genuine alternative probably cannot rely on employer based coverage. This is the same employer based coverage that Obama is wedded to--and he's the Democratic candidate, never mind the other party. My sense is that any way you look at it we are going to be attacking many of the same interests that make this happen:
Perhaps the main difference between single payer and a transition to a decent private health insurance system is that with single payer the changes would be quicker: in one step you cut the administrative waste out of the insurance side, and immediately there is also a huge gun aimed at the providers that can force reductions in waste. They may hem and haw, but there's no alternative because there is only one payer. On the other hand it would seem that by transitioning to a decent private system you can slow things down somewhat more, take on the lobbies one at a time, and do it piecemeal. You don't have to legislate away the insurance industry, though on the other hand you can't reduce economic inequality by funding health insurance through progressive taxation.
What are the consequences of this if my analysis is correct?
What should we do?
If we want to go the route of "decent private insurance," then in addition to everything now in HR 3200, we need to abolish the employer based system, probably compensate insurance companies for insuring sick people with a government program, and maybe raise penalties for not having insurance. At least that is what my somewhat brief look would suggest. And this would involve taxing employer provided insurance plans, which is currently quite unpopular.
The other route is Medicare-for-All. Based on polling data it's likely that around half to 60% of the population favors Medicare-for-All as a solution, tending to the latter if you omit the term "single payer." Some polls have occasionally dipped below that, though to my knowledge not this year, and again not this year, some polls have been as high as 65%. (Full disclosure: I'm excluding a Rasmussen poll that I think is bogus.)
It doesn't seem that straightforward to me to make a call as to which route is more "pragmatic," because some components like government compensation of insurers have simply not been fielded much in the United States. If the Dutch are any guide then government spending as a percentage of the health care system might still need to rise from the now 47% to 62% of the system. That compares to the 68% in Australia and 71% in Canada under Medicare-for-All.
I would be interested to hear if any constituency is actually advocating ideas that would move us to a Dutch style system. On the left, we have Healthcare-NOW! and PNHP advocating Medicare-for-All. I don't mean people like Krugman who say that HR 3200 is going to Swissify the system, because I don't think it really will. What I mean is: is any group advocating a proposal that would fully move us to a system like this, complete with the requirements outlined above?
I'll conclude with this final thought. Regardless of comparisons, it's clear that none of these complete routes are really "on the table." So unless we move beyond the current elite debate and stake out positions that are "off the table" and not being seriously considered in Washington, then there is no hope for successful change in America. Trying to appease compromised politicians by lining up and cheering when they favor a public option estimated to insure 10 million people is not going to cut it.
That will fail, and we will have only ourselves to blame for being blind and gullible sheep.