THE PLANK NOVEMBER 20, 2008
-
Read Later
READ LATERAvailable only to subscribers. SUBSCRIBE TODAY
-
Listen
ARTICLE AUDIO
- Font Size
Could the health insurance industry support universal health insurance? For a few months, industry representatives have been telling reformers both on and off Capitol Hill that they'd consider it, subject to certain conditions. On Wednesday, they said it publicly.
Their position is pretty simple. They would be willing to change their business practices--and stop discriminating against people with pre-existing medical conditions--as long as the government required everybody to obtain health insurance. To put it in wonky terms, they'd offer community rating (charging everybody the same rate) and (see update below) they would practice guaranteed issue (selling a policy to anybody willing to buy one) as long as there is an individual mandate (a legal requirement that everybody get coverage). The idea would be to do all of this through some kind of purchasing pool, modeled on the system federal employees use.
Without a requirement that everybody buy coverage, the insurers say, people could just wait until they got sick before getting their policies. Insurance pools would lose a lot of their healthy members, driving up premiums for those who remain, and insurance would become more and more unaffordable--much as it has in states that currently have community rating and guaranteed issue rules. (The exception is Massachusetts, which is the one state with an individual mandate.)
As readers of this space know, I happen to agree with the insurers on this position, as do Paul Krugman, Jonathan Gruber, Ezra Klein, Len Nichols, and most of the health care policy community.
Obama, regrettably, has proposed a health care plan that lacks such a mandate--a subject of no small controversy during the presidential primaries. But it would be a mistake to see this announcement as a worrisome political development.
Congress, not Obama, will end up writing the actual plan. Senator Max Baucus, who will (along with Ted Kennedy) lead his chamber's reform effort, has already indicated he supports an individual mandate. Senator Wyden's biaprtisan bill for universal coverage has an individual mandate, as well. The insurance industry's positioning, therefore, is perfectly in line with these efforts. And it sets up a scenario under which Obama could, as a final compromise, "reluctantly" agree to an individual mandate in order to get a package passed.
If anything, this announcement is the latest sign that health care reform has serious political momentum heading into 2009. The insurance industry wouldn't be taking this position if its representatives didn't believe that the odds of universal health care passing are pretty good--and that they are better off trying to shape the plan from the inside than fight it, unsuccessfully, from the outside.
Of course, they could change their minds. In 1993 and 1994, many lobbying groups indicated they would support President Clinton's bid to create universal health insurance. But once it became clear the plan was losing political momentum, most of them backed off. Still, every day that the insurance industry is saying charitable things about reform is a day it's not using its resources to knock it down. And that has to help the overall effort.
Going forward, the real question is what other positions the industry will take--and how hard it intends to fight. Will insurers tolerate regulation of their marketing practices, pricing, and benefits packages? Will they allow for a decent "risk stabilization scheme"--a scheme that transfers money from companies enrolling lots of healtlhy people to companies enrolling lots of sick people? And will they accept the creation of a public insurance plan designed to compete with them for business?
The latter, at least, seems unlikely, as they've made it pretty clear that--at the moment--they consider that a dealbreaker. Yet it's a feature of both Baucus's and Obama's bill--and something liberal reform groups (rightly) consider important.
Update: Ezra had the good sense that I didn't: He contacted America's Health Insurance Plans, the lobbying group for insurers, and confirmed a very important wrinkle in their position. They are not endorsing community rating, only guaranteed issue. That's not to say they wouldn't embrace community rating at some point down the road; people close to the industry have hinted as much. But they're not doing it now. And that's a big deal. If the only policy you're willing to offer somebody costs three times the normal policy, because that person has diabetes, then you're not really offering them affordable coverage.
--Jonathan Cohn
9 comments
Hey, Frank Foer/Can West Overlords, remember the halcyon days of 2006 when reasoned conversation reigned on TNR Talkback and threads after controversial feature articles ran to 100-150 posts? Take a look at Talkback now. Pretty f---ing anemic. Interest in the election kept Talkback alive on Plank/Stump even after the web revamp/coup d'etat of Oct 2007, but it's apparent that interest has fallen off post November 4.
So, why don't you take your cue and do the following:
Make comments after magazine articles subscriber only as they used to be.
Allow for immediate posting after magazine articles to allow for give and take between posters and save people the trouble of making the identical point that fifty other posters have already made.
While you're at it, re-enable some of the html functionality that used to permit us things like italics, carriage returns, boldface, and embedded links.
Yeah, I know, you make more of your money from advertising than from subscriptions, so why mollycoddle subscribers and alienate casual non-subscribers who, after all, are as of just as much interest to advertisers as us paying customers? Well, because the high-quality discourse that once was found at Talkback as a matter of routine added value to the website.
- aeromonas
November 20, 2008 at 6:49am
Over the past year, TNR has published numerous articles and comments about the relative merits of Clinton's and Obama's health care plans, the former including a mandate and the latter not. And each time I posted a comment that there was no real distinction between the plans, because both plans included community rating and that, with community rating, the insurers would be insisting on a mandate. And so guess what? The insurers are insisting on a mandate. Duh!
- raylward
November 20, 2008 at 7:40am
The lesson here is that Obama was the candidate committed to health care reform (i.e., universal coverage). He refused to adopt the mandate because he knew, politically, it would be a wedge in the general election. You could hear McCain and Palin, saying how Obama would require (mandate) everybody to enroll in a national health care plan, reducing "choice" and giving big government control over health care decisions. As it was, the issue of health care reform was almost ignored by McCain and Palin. Obama outsmarted Clinton, he outsmarted the Republicans, and he outsmarted the experts (including the experts, other than Mr. Cohn, who write for TNR) who insisted that a mandate was essential for universal coverage.
- raylward
November 20, 2008 at 7:55am
BRINGING ALL THE HEALTHCARE PIECES TOGETHER.... Following up on Hilzoy's overnight item, momentum for major healthcare reform in the next Congress got a little stronger yesterday, when the health insurance industry said it would support extending coverage
- Anonymous
November 20, 2008 at 8:52am
Finally, some sanity to the conversation. The facts are pretty simple when it comes to "adverse selection"; and nobody can effectively issue coverage (without going broke), including the government without "getting everyone into the pool" at the same time.
It now becomes time for those who want universal coverage to put up or shut up. You must be willing to participate and pay if you want the benefits - even if it means that you will have to stop spending your dollars for other stuff.
- rob3liss
November 20, 2008 at 9:38am
Almost every state legally mandates insurance for automobiles yet we never call it "socialized" auto insurance. The level of competition between providers seems to be relatively high, at least in my state where we have the insurance mandate. Why does this model not work for health insurance, too?
If you give a young, relatively healthy person the option to purchase health insurance or buy a new car, which option do you honestly think he'll choose? He/she ends up in a catastrophic accident, suddenly gets an unforseen rare illness or his/her kids all of a sudden need medical treatment. The only option now becomes the emergency room or as a charity case at a hospital, which we all end up paying for in the end and usually at much higher cost.
- desertdog
November 20, 2008 at 10:09am
raylward, I agree. I think mandates are a bad idea because they are unenforceable. Will we have a health care police? I think it makes far more sense to have a small payroll tax to cover the uninsured, and those that have policies will be given a rebate at the end of the year. Essentially people will be taxed for it if they don't have it so it makes more sense for them to buy it as not, but if they still refuse to, there will be money available to provide emergency service for when some of them will need it. I am in far more favor of the Japanese model when the moment you are employed, you are enrolled in a health care plan. I don't care how it is financed. Automatic enrollment is much easier than mandates.
We have a public insurance plan already, lets keep it as it is, for the poor and unemployed. Why fight the insurance beast?
- blackton
November 20, 2008 at 10:20am
As long as for profit insurance companies are the major provider of coverage, the profit motive will continue, as it does now, to override the provision of essential and quality health care. People's health and lives should not be sacrificed for the middle man to make money. A government sponsored, but not government run, not-for-profit system with lower overhead must be available as an alternative. I don't know why it has not been better described this way to avoid the criticisms of "socialized medicine."
- kcrossin
November 20, 2008 at 1:02pm
Maybe I'm missing something, but their position sounds worse for people with pre-existing conditions: they'll be forced to buy insurance that they can't afford. Never mind a new car, how's a young person starting out with an 8-10$ an hour job going to afford the 4-500$ a month for health insurance?
- strabka
November 20, 2008 at 10:58pm