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The Most Important Part of Health-Care Reform

Firedog Lake helpfully reminds me to double down on yesterday's post: The public option isn't the most important part of health-care reform. It's not the most important part for covering people, and it's not the most important part for reforming the system. And you know the weirdest part? The public plan isn't even the most important part of the public plan.

If you're interested in covering people, the primary questions are the subsidies, the employer mandate and the individual mandate. If you're interested in reforming the system, the primary question is the strength of the Health Insurance Exchanges. And if you're interested in the public plan? It's the Health Insurance Exchanges. Again.

In all the bills we've seen, the public option is on the exchange. It is only available to those who are able to buy into the exchange. But most Americans can't buy into the exchange. They're not allowed. To make this very clear, imagine that the House and the Senate both pass Henry Waxman's proposal tomorrow. Liberals would celebrate. That's got a good, strong public plan. And I can't use it. Not even if I want to pay for it out-of-pocket. I work at a large employer and thus I am not allowed to buy into the exchange.

A strong public plan on a weak exchange will fail because it won't attain sufficient market share. It's as simple as that. Conversely, even a weak public plan on a strong exchange could thrive, because it would have access to a lot of customers. Focusing on the public plan and ignoring the rules of the exchange is like focusing on engine power but ignoring whether people can buy the car.

Hamsher sells herself as bravely defying the Obama administration by relentlessly advocating for a policy they support. To each their own, I guess. But the thing the administration doesn't want to do, at least publicly, is support policies that would begin to unwind the employer-based market -- policies like an Exchange that anyone and any business can buy into, or capping the employer tax exclusion. That means the employer-based system remains central, and even if we do get a public option, most Americans won't be able to buy into it.

By Ezra Klein  |  July 29, 2009; 3:15 PM ET
Categories:  Health Reform  
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Comments

A single public plan will have more subscribers than the top 25 largest companies in the United States put together. That's leverage, even if it only includes the 10% of the public now unemployed, the 10% that are self-employed, and the 5% who work for shameless employers who do not provide coverage.


Posted by: evietoo | July 29, 2009 3:35 PM | Report abuse

Ezra,

Is there any backdoor mechanism/trojan horse that could be inserted into the final bill that will eventually allow anyone to buy into the public option? I understand that for political reasons, the negotiations are focused on leaving the employer based system untouched ("you get to keep what you have!"), but as someone who believes that we need to ultimately move to single-payer (and there must be some real liberals in Congress who feel the same way), what would be the best way to inch toward such a system? Have you heard of any proposals that would essentially open up a back door to single-payer, or is everyone too afraid to take that political step?

Posted by: drjimcooper | July 29, 2009 3:42 PM | Report abuse

Ezra - If my memory of reading through the tri-committee bill serves me right, those with employer-provided insurance can't buy into the HIEs at inception, but after a few years the Secretary could allow them on. Are you saying that's false?

Posted by: GrandArch | July 29, 2009 3:42 PM | Report abuse

Ezra - please explain how the exchange differs from what we can get online today - a bunch of different plans at different price points?

How will the exchange make it so that the different plans actually cover medical issues at a cost we can afford? You've repeatedly said that the exchange is the most important thing we have for reform, then describe a way to procure insurance that we already have today that doesn't work all that great.

Would love to know the budget for the exchange; how many people will be needed to staff the exchange; how it works from a consumer standpoint (how do I access it? How does it give me info about the policies?)

If what the exchange will do is simply prohibit health insurance company from charging higher rates to those with pre-existing conditions, why does an exchange need to be created to do this?

Posted by: anne3 | July 29, 2009 3:54 PM | Report abuse

Perhaps you (Ezra) are taking the sub-optimal approach to this public option furore. If a viable public option requires an Exchange that is available to create initial and sustained momentum, then argue why that Exchange proposal must provide for it (mechanisms, future options, etc.).

Please don't argue as you are by saying the public option isn't key because the current thinking about the exchange will make it non-viable. You sound like Kent Conrad saying something non-helpful about bipartisanship is necessary to a bill being enacted (as a means of achiving his goal of reform without reform).

Besides, you sound way too much like the expected WaPo toady that searches for quotes that prove that Obama and health reform are doomed to ineffectiveness and failure to pass into law because Joe Lieberman and Jim Inhofe aren't convinced.

Posted by: JimPortlandOR | July 29, 2009 4:00 PM | Report abuse

You miss the point. The exchange can be expand without an act of congress. That obama or the "commisioner" can do almost anytime. Improving the structure of the public plan or creating one in the future would be a battle royal.

Posted by: JonWa | July 29, 2009 5:31 PM | Report abuse

I was having trouble grasping what it was that Scarecrow and Jane Hamsher were specifically disagreeing with - my husband and I read through several postings from the last few days and my husband boiled it down to this: that FDL folks believe Ezra is basically arguing that we need to take what we can get - any improvement is better than the status quo, and that FDL believes that isn't good enough and the Public Option is the lynchpin, and without it, it would be a hollow victory. Is that right?

Posted by: Melinochis | July 29, 2009 6:06 PM | Report abuse

It'd be nice if you could fix the posting for the op-ed piece, as I addressed this issue there. Here's a shorter version.

You're just not right on this one. You either 1) believe that single payer is the only long-term fix for the whole system and therefore want to take advantage of a once-in-a-century political alignment (both Houses plus an extremely popular President) to ensure the public plan is started or 2) don't believe single payer is the solution, and thus the public option is a distraction.

This isn't some small, technical issue. The public option is where political capital is and has been used up already (Obama has defended few specific parts of the proposals and this has been his the main one, albeit halfheartedly), to the detriment of other politically challenging reforms like a strong Exchange, cost control, etc.

Fence-sitting on the public option-- great if we get it, but not a big deal if we don't-- just doesn't make sense. You either think its critical to reform or we should be focusing energies elsewhere.

Posted by: wisewon | July 29, 2009 6:07 PM | Report abuse

You set out to make things "clearer" ... and the info is whether people working at WaPo can buy into the Exchange?

How about swapping "most", which could be anything from 55% to 99%, with a ballpark figure. Is the exchange 100m, 50m, 5m, 500,000?

Indeed, since everyone on employee health care pays for those without health care, in their health insurance premiums, "most" Americans are affected by the success of Exchanges irrespective of whether they themselves initially are eligible to participate in the exchange.

Posted by: BruceMcF | July 29, 2009 6:17 PM | Report abuse

You miss the point. The exchange can be expand without an act of congress. That obama or the "commisioner" can do almost anytime. --

I missed that in the House bill. The way I read it, in 2013, the Exchange is open to those w/o insurance and employers with 10 or fewer employees. In 2014, the Exchange is open to the uninsured and employers with 20 or fewer employees. In January, 2015 (no idea who will be Pres or Commissioner then) a study is due. It will report on the need for the Exhange to be opened to more people. It's a trigger, plan and simple. But I don't see how Obama and/or the Commmissioner can expand the Exchange whenever they want to.

Ezra is right - this isn't optimal. I think it's horrible and I hope it improves as we move along.

Posted by: eRobin1 | July 29, 2009 6:25 PM | Report abuse

Ezra I consider myself a libertarian/small gov't type so let me give you my perspective. Any public plan will eventually become a strong public plan. It doesnt matter what it looks like at the start. When costs are even more out of control 5 or 10 years from now, the public plan will be given more power. Second, any health insurance exchange will eventually be open to everyone. It is inevitable -- more and more small employers will drop coverage. Only mid sized and large employers will choose not to participate because they'll most likely still be able to more efficiently self-insure.

And sadly, neither of these things will work well.

Posted by: mbp3 | July 29, 2009 6:35 PM | Report abuse

Ezra,

The most important part of health care reform is winning - without giving away the store, the farm, the house, the goat, and three of the four children.

We just did it in Connecticut. So it can be done.

On July 20th, our state House and Senate successfully overrode Republican Governor Rell's veto of the SustiNet health care reform plan - one of the most ambitious plans for universal health care anywhere. The SustiNet law mandates the creation of a nine member committee to be known as the SustiNet Board. The board, co-chaired by State comptroller Nancy Wyman and State Healthcare Advocate Kevin Lembo, will lay out the steps for implementing a plan to provide health insurance to the state's 325,000 uninsured and to broaden the range of insurance options available to employers.

The centerpiece of SustiNet involves making the state employees plan self-insured, then opening it up (with quality care and sliding-scale affordable rates) to: the uninsured; Medicaid recipients; small business employees; nonprofit employees; municipalities; and individuals who have unaffordable or inadequate employee –sponsored plans.

According to health economists Jonathan Gruber of MIT and Stan Dorn of the Urban Institute, SustiNet will return $2.80 to employers and employees for every dollar invested by the state.

In the insurance capital of the country, with a Republican Governor, a broad-based coalition of small business owners, providers, faith leaders, union leaders, health care advocates and other stake holders beat the odds.

If we can do it here, you can do it there.

More about SustiNet is at: www.healthcare4every1.org.

Posted by: iBlog | July 29, 2009 7:28 PM | Report abuse

As a single-payer universal care advocate I reluctantly moved to being a "public option" supporter in communicating with my elected representatives. But that's not enough! Now I need to give up on the public option and support "exchanges", and the next thing you know, those won't matter either, and all that will be left is to support public subsidies for the insurance companies.

When things turn out badly I try to learn from the experience, and what I'm learning from this experience is that I've spent far too much time trying to understand the current health care debate by reading Ezra Klein. It is of some interest to me that, coincident with his employment at the WaPo, he has become something of a brain scrambling transmitter, able to make us more confused by providing more information, all of which is undoubtedly "true".

However, life goes on outside Washington DC, and an alternative to extending life is always to live it more fully. There are plenty of people with health problems who could use some help, if you want to work on improving America's health care, and at this point I'm enjoying that part of my day a lot more than the time I spend trying to understand what's happening in Congress.

Posted by: serialcatowner | July 29, 2009 7:36 PM | Report abuse

So what's the difference between a strong exchange and a weak exchange? Are you saying the House bill has a weak one in that it limits enrollment to uninsured, self-employed, etc and that a strong exchange is embodied in Wyden? Or is a strong exchange possibly able to emerge from the details that have yet to be worked out in the mainstream legislation? Because it's not looking like Wyden is going to be the last-minute change of plan to me.

Posted by: michaeljamesdrew | July 30, 2009 4:38 AM | Report abuse

While this whole thing is complicated and messy the public ought not rush into making hasty decisions. Yet be mindful of the people in charge of writing legislation are making decisions on our behalf, are not necessarily in our best interests due to outside influences. Changing that dynamic even slightly necessitates knowing what we are talking about. When in doubt ask questions.

Ezra's explanation regarding the reasons the WH wants to avoid supporting certain policies makes sense from their point of view, but it also raises more questions than answers.

It has been my understanding that the public option would incentivize competition which in-turn would keep costs down and the insurance companies "honest." So Iam a little confused or perhaps mistaken, since under the current guidelines given the number of people eligible would be significantly less it seems logical to assume HIE would have limited bargaining power. Without that leverage how or what will invigorate competition, keep costs down and ensure quality care for those of us insured by private insurers ?



We are told co-ops alongside a public plan is a good idea, but co-ops have never been tested on a large scale not to mention co-ops take a decade or more to set-up and operate?

With questions lingering yet to be answered, blanks waiting to be filled in, legislation yet to be voted on muchless completed and pros and cons not fully debated, known or understood -- unless one's repertoire' includes divining the future -- reaching a decision now on whether to support or oppose health care reform would be premature and ill-advised. Nevertheless some, presumably swayed by misinformation campaigns, false claims, scare tactics and out-right lies, did prematurely decide, despite the unknowns and lack of evidence, to firmly oppose health care reform. If that doesn't give one pause I don't know what will.

It is unthinkable and unacceptable to keep decision-making powers in the hands of those working against our better interests ... unless, of course, putting profit over people's lives, health and welfare is acceptable; leveling the playing field is unnecessary; helping others less fortunate is not a moral responsibility are things you are comfortable with ... Just saying ....

Whatever decisions are made they are made on our behalf. If we want to have a say in that process I believe it is necessary to be familiar with both the pros and cons.

So keep an open mind and wait until all facts and pertinent information are available. Ask questions and keep asking until they are answered.

Who knows the outcome might be more to our liking.

Posted by: serena1313 | July 31, 2009 6:24 AM | Report abuse

it is just wrong to require insurance, force people to buy private policies and NOT limit premium.
that is something the insurance companies will pay big bucks to get–a much bigger market with no price controls. this will be the biggest wealth transfer in the history of the country.

Posted by: pmwarren | July 31, 2009 11:37 AM | Report abuse

Medicare goes broke in 2017 - expanding it? How does one even keep what we have?

Posted by: DougHuffman | August 4, 2009 6:47 AM | Report abuse

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