JONATHAN COHN APRIL 15, 2011
Generally speaking, conservatives have a lot more faith in choice and competition than liberals do, as David Brooks notes in his column today. But does that mean Republican health care reforms always mean more choice and competition, while Democratic reforms always mean less? No. To see why, take a closer look at Paul Ryan's new plan.
Forget, for the moment, what Ryan proposes for Medicare and Medicaid and focus on his other big change: Repealing the coverage expansions and insurance reforms of the Affordable Care Act. More than 30 million Americans would go without health insurance as a result of that change. But they wouldn't be the only working-age Americans to feel the impact. Individuals and small business that already have insurance would suffer, too.
They would suffer because they'd be stuck buying insurance via the same dysfunctional market they face today. It's a market where the choices of insurance are not just confusing but downright bewildering, particularly for people buying on their own. And it's a market that offers few, if any, choices to people with pre-existing medical conditions. In many parts of the country, if you're an individual cancer survivor or diabetic, you'll be lucky to find just one or two policies that cover you with decent benefits and affordable prices.
The Affordable Care Act addresses this problem by creating special marketplaces called "exchanges," in which individuals and small businesses will have the kinds of choices that large businesses and their employees already enjoy. Insurers that sell through the exchanges won't be able to deny coverage or charge higher premiums based on pre-existing condition. They will have to abide by certain standards, including a minimum benefits package. They will have to collect and provide quality information, which the exchanges will then publish in an easily accessible way.
That may sound like an awful lot of regulation. And it is. But it's the sort of regulation that will allow more people to shop and that will allow people to shop more intelligently. The difference would be particularly stark for people with the most serious medical conditions--who, it so happens, are also the ones that consume the most health care and thus generate the highest costs.
There's a broader lesson here. Some markets work great on their own, but some do not. I don't need government picking my television or brand of corn flakes, but I need some help buying insurance. That's why, at least with respect to the working-age population, it's President Obama's plan that would do the most to increase choice and competition--not Ryan's.
Note: The story with the elderly is a bit more complicated, but the same essential truth holds. Ezra Klein explains why in an item titled, appropriately, "Paul Ryan is not pro-competition, and his critics are not anti-competition."