The importance of the individual mandate
Markos Moulitsas explains his opposition to the Senate bill, and says it all comes down to the individual mandate. "Strip out the mandate," he says, "and the rest of the bill is palatable. It's not reform, but it's progress in the right direction. And you can still go back and tinker with it at a later time."
I'm sympathetic to his thinking. This was, of course, Barack Obama's position during the 2008 campaign, and it led toarguably the most bitter policy dispute in the race. But after winning the presidency, the Obama administration flipped on it, and they were right to do so. Here's why.
Pick your favorite system. Socialized medicine in Britain. Single-payer in Canada. Multi-payer with a government floor in France. Private plans with heavy public regulation in Sweden, Germany and elsewhere. None of these plans are "voluntary." In some, there's an individual mandate forcing you to pay premiums to insurance companies. In some, there's a system of taxation forcing you to pay premiums to the government. In all of them, at least so far as I know, participation is required except in very limited and uncommon circumstances. And there's a reason for that: No universal system can work without it.
Holding the price of insurance equal, insurance is gamble on both sides. From the insurer's perspective, it's a better deal to insure people who won't need to use their insurance. From the customer's perspective, it's precisely the reverse.
Right now, the insurer sets the rules. It collects background information on applicants and then varies the price and availability of insurance to discriminate against those who are likely to use it. Health-care reform is going to render those practices illegal. An insurer will have to offer insurance at the same price to a diabetic and a triathlete.
But if you remove the individual mandate, you're caught in the reverse of our current problem: The triathlete doesn't buy insurance. Fine, you might say. Let the insurer get gamed. They deserve it.
The insurers, however, are not the ones who will be gamed. The sick are. Imagine the triathlete's expected medical cost for a year is $200 and the diabetic's cost is $20,000. And imagine we have three more people who are normal risks, and their expected cost in $6,000. If they all purchase coverage, the cost of insurance is $7,640. Let the triathlete walk away and the cost is $9,500. Now, one of the younger folks at normal cost just can't afford that. He drops out. Now the average cost is $10,600. This prices out the diabetic, so now she's uninsured. Or maybe it prices out the next normal-cost person, so costs jump to $13,000.
This is called an insurance death spiral. If the people who think they're healthy now decide to wait until they need insurance to purchase it, the cost increases, which means the next healthiest group leaves, which jacks up costs again, and so forth.
Kill the individual mandate and you're probably killing the bill, too. The mandate is what keeps average premium costs low, because it keeps healthy people in the insurance pool. It's why costs have dropped in Massachusetts, not jumped. It's why every other country with a universal health-care system -- be it public or private -- uses either a mandate or the tax code. It's why the Obama administration flip-flopped.
But maybe you're willing to ditch universality. Add some subsidies, leave the mandate, and it's a step forward, right? At least until the project is consumed by an insurance death spiral? And Congress will surely do something to stop that, right? Well, maybe.
Kill the individual mandate and you make it easy for Congress to let the country backslide to its current condition. In a world with an individual mandate, insurance has to be affordable. If it's not, there's a huge political backlash. That gives Congress a direct incentive to focus on cost. Remove the individual mandate and ... eh. If insurance isn't affordable, people simply go uninsured. It's exactly what happens now. Same incentives, or lack thereof, to make the system better.
In his post, Markos says the bill lacks "mechanisms to control costs." I'd disagree with that, pointing to the bundling, MedPAC, the excise tax, the possibilities of a competitive insurance market, and more. The bill doesn't do enough, but it does more than anything we have ever done before. But put that aside for a moment. As Atul Gawande argues, there's no Big Bang of cost control. The public option wouldn't have done it, and nor would Medicare buy-in. It's a process. And this bill, in large part through the individual mandate, creates that process.
The key to cost control is a politics that forces Congress to make the hard decisions that lead to cost control. Right now, the ranks of the uninsured grow, the cost of insurance rises, and Congress can pretty much ignore the whole thing. The individual mandate controls average premium costs, but more than that, it is the political mechanism for cost control. Kill it, and you've killed our best hope of making the next reform better than this one.
click on the link to see the pic. My pb account is tapped out.
Is health care the stimulus redux?
Remember that picture? I pulled it from the Washington Post's archives. It was taken in February, though it feels further back than that. But back then, this picture was all over. It wasn't worth just a 1,000 words, but $100 billion of desperately needed stimulus funding.
Back in June, I predicted that health-care reform would follow the path of the stimulus: A huge accomplishment that nevertheless feels like a defeat to its supporters. "As the legislation winds its way through the Senate, there will be unpleasant compromises, and unconscionable omissions, and the constant knowledge that though this is progress, it is not sufficient, and the people who stand in the way of a better bill are frequently incoherent or disingenuous."
And here we are. The bill is winding its way through Congress. The awful compromises have begun, the unconscionable omissions glare angrily, and some of the participants are both incoherent and disingenuous.
It's hard to step out from the health care discussion and examine it dispassionately. But tempers have cooled on the stimulus. It was too small, most agree, but it has helped. We are better off for its presence. People are better off for its presence.
We are also more likely to get more of it. The likelihood of a third stimulus increases by the week. The White House has released job plans and members of Congress have begun talking up everything 'Cash for Caulkers' to state and local aid.
In part, that's because the recession has been worse than we thought. But it's also because some of the basic argumentation is done. The principle is settled. Government does stimulus. It's part of the job. And does anyone doubt that the total stimulus level will be higher than if the original bill had fallen?
I still believe health care will look more similar than different when the day is done. A good bill will pass, if not a sufficient one. A sum of money will be appropriated, and a basic infrastructure constructed, that will be, in the long-run, understood as a tremendous, even unlikely, political victory. The next steps will be easier, because $80 billion is easier to find than $900 billion, and because the argument over whether America has a universal health-care system and whether government provides some of the funding and scaffolding will be over. The money will be there. The scaffolding, too. The universal structure, built around the mandate and the exchanges and the subsidies, will be firmly in place.
At this point, an odd dynamic has developed, in which most all of the right, and some on the left, believe they'd be better served by the defeat of this bill. It is unlikely that they are both correct. But the right has had substantially more experience than the left opposing government initiatives before they can take root and grow into popular entitlements.
Look at the development of Medicare and Social Security, of Medicaid and S-CHIP, the Swedish and Canadian health-care systems, public education. Social Security was designed to exclude African-Americans. Medicare didn't cover prescription drugs. Medicaid was mainly for pregnant women and their young children. Canada's system was limited to a single province. There was no University of California at Los Angeles.
It's difficult to conclude that these things slip backwards rather than marching forwards. The $900 billion for people who need help, the regulations on insurers and the exchanges that will force them to compete, the structure that will make health care nearly universal and the trends that suggest more people -- and more politically powerful people -- will be entering the new system as employer-based health care erodes -- it all makes this look even more like the sort of program that will take root and be made better, as opposed to the sort of common opportunity people should feel comfortable rejecting. It doesn't feel like that now. But then, it rarely does.
Photo credit: Richard A. Lipski/The Washington Post.
What do you guys think? Has this changed any of your minds on where you stand on Health Care Reform?