Thursday, March 18, 2010

Health care reform policy issues

Congress is reportedly getting very close now to a vote on health care reform.

Policy and politics are closely related in this process. But they are two separate things. Here's how I see the current policy situation. The health care bill is still a moving target. But I'm basing these comments on what I understand of the bill just evaluated by the Congressional Budget Office (CBO). The public option isn't dead yet. But with Dennis Kucinich's capitulation to Obama, agreeing to vote for the bill with apparently no commitment to keeping the public option that was in the House bill, along with other House progressives lining up to support the bill without agreement to include a public option, it looks like it's all over for the public option but the funeral.

Ryan Grim in CBO Score On Health Care Bill Released: Boosts Democrats' Hopes Of Passing Reform Huffington Post 03/18/10 gives a good summary of some of the bill's positive features, based on the version the Congressional Budget Office just scored:

Subsidies for the uninsured to purchase insurance are increased and more funding is dedicated to community health centers. The excise tax on insurance premiums is scaled back so that it hits few families. The bill also demands a higher commitment from drugmakers, aiming to close the so-called "doughnut hole" -- the time that seniors must pay full price for medication. The pharmaceutical lobby has signed off on the increased commitment and will be running ads in Democratic districts in support of reform. [my emphasis]
The reform also bans insurance companies from refusing coverage due to pre-existing conditions and requires most people to buy insurance.

The Democrats also claim that the reform would provide coverage for some 30 million people currently without health insurance. It includes incentives for businesses to provide health coverage to their employees and requires most individuals to buy insurance, the latter knows as the individual mandate.

Coverage for abortion services are not eligible for the federal subsidies to consumers, continuing a bad practice started in the Carter administration of making it more difficult for poor women and girls to get abortion by banning Medicaid coverage of the procedure. Anti-choice members of Congress are still working to get tougher anti-abortion provisions included in the bill.

So these are all good features of the bill, except for the abortion coverage. But there are some big concerns - legitimate concerns, not the Republicans' mythical "death panels" or their ludicrous charge that it's a "takeover of one-sixth of the American economy by the government."

Paul Krugman wrote in An Incoherent Truth New York Times 07/26/2009

Reform, if it happens, will rest on four main pillars: regulation, mandates, subsidies and competition.

By regulation I mean the nationwide imposition of rules that would prevent insurance companies from denying coverage based on your medical history, or dropping your coverage when you get sick. This would stop insurers from gaming the system by covering only healthy people.

On the other side, individuals would also be prevented from gaming the system: Americans would be required to buy insurance even if they’re currently healthy, rather than signing up only when they need care. And all but the smallest businesses would be required either to provide their employees with insurance, or to pay fees that help cover the cost of subsidies — subsidies that would make insurance affordable for lower-income American families.

Finally, there would be a public option: a government-run insurance plan competing with private insurers, which would help hold down costs.
Krugman now supports the passage of a bill without the public argument, making the case that many progressive Democrats do, that the bill without the public option would be better than having the bill killed, both on policy and partisan-political grounds. So his perspective has changed somewhat since that column, where he concluded:

Now, however, [the Blue Dog Democrats] face their moment of truth. For they can’t extract major concessions on the shape of health care reform without dooming the whole project: knock away any of the four main pillars of reform, and the whole thing will collapse — and probably take the Obama presidency down with it.
But that basic analysis is still true in the longer run.

That's my biggest policy concern with a reform without a robust public option. A public option would provide meaningful competition to the private insurance monopolies, both in terms of service quality and cost. In theory, the new, stricter legal requirements could also accomplish that.

But that would require that the next Republican administration not try to weaken those regulations and also that they actually enforce them. There is no reason at all to have confidence in today's Republican Party on that issue. It also depends on both regulations and company practices on deductibles and pricing. If the only affordable policy for individual has thousands of dollars of deductibles, that will mean in practice that people are not effectively covered for most of their medical needs in an average year, especially younger consumers. In other words, they will have insurance but in practice they still will have very limited access to health care.

Insurance companies will use legal means to duck the non-pre-existing-conditions requirement, like targeting their marketing to minimize applications by older and sicker people. They will also push the boundaries to see how much they can legally get away with. And then there are court challenges, and the heavily Republican federal judiciary is likely to be sympathetic to their complaints.

In practice, it is highly likely that a private-insurance-based system like the one Congress is on the verge of enacting will not achieve what should be the two keys goals of health care reform: universal access and cost reduction.

That's not to say no good will come of it. But the lack of a public option is major problem, not a minor deficiency.


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