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The Structuralist Club

In my chat today, a lot of the questions were some variant of "what compromise could you support?" I could accept a lot of compromises. I could accept pretty much any compromise that makes people's lives better. But to actually merit support, the bar needs to be a bit higher.

Put simply, it's the structure, stupid. The health-care system is like a house. It's easy to add the furnishings later. It's not that hard to upgrade the kitchen, or redo the trim, or re-carpet the floors. Some of that might be expensive, but it's not actually hard. But it's really, really hard to add another room, or rip out all the wiring, or build a bathroom that wasn't previously included.

So too with health care. There's a basic structure that's been present in all of the bills, and for good reason. It's a structure that a lot of good and smart people have put a lot of time and energy into thinking through. It creates a universal system through an individual mandate and an employer mandate, and makes that system affordable and dependable through a mix of subsidies, insurance market reforms, and out-of-pocket protections. It creates health insurance exchanges that individuals and companies can choose to enter if they prove more efficient and consumer-friendly, and that offer an array of different insurance options, some public, some private.

If the cost of the bill has to come down somewhat, there are ways to preserve that structure. For example, you can't have an individual mandate without sufficient subsidies, but if the benefit plan starts out a bit stingy, then the subsidies could be pretty affordable. If that proved insufficient, the basic plan — and the subsidies — could grow over time, as has happened in Medicare. If the public plan isn't strong enough, or present, in the first incarnation of the exchanges, it would be a relatively simple matter to add it into the system at a later date.

But if you begin ripping out parts of that structure, you're doing damage to the bill that you might not be able to repair. If you're not willing to have enough subsidies for the individual mandate to work, then the insurance market regulations won't work either (insurers can't offer everyone the same price — or at least not an affordable price — if healthy, young people hang back from the system). If the exchanges are hobbled or can't grow, then they can never become the alternative we need, and there will be no existing market structure for a public plan even if one is introduced.

Once removed, it's not clear that these pieces can be put back. That's particularly true given that health-care reform that is missing key components isn't likely to work very well, and if it doesn't work very well, there's no reason to believe that voters will give Democrats another shot after a few years of experience.

It's become popular of late to talk about how reform is a process and programs grow. But they grow best, and most easily, upwards, not outward. Adding a prescription drug benefit to Medicare took 40 years. But creating a generous hospital benefit was a steady and dependable process. A good reform plan will take that lesson to heart: It will put the basic structure in place so future improvements are straightforward. A bad plan will sacrifice that structure, and just add some subsidies to the existing system. And that's how I'll be evaluating the administration's proposal: How much of the basic structure does it preserve?

By Ezra Klein  |  September 3, 2009; 2:12 PM ET
Categories:  Health Reform  
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Comments

EzK: It creates a universal system through an individual mandate and an employer mandate, and makes that system affordable and dependable..."

.., he asserted.

"If that proved insufficient, the basic plan — and the subsidies — could grow over time, as has happened in Medicare."

See, that's a big concern with me. Medicare itself ended costing over 900% more than the goverment projected within a a couple decades of enactment. Many fiscal conservatives, even a few Democrats I'd imagine, think we can't afford yet another "structure" for pols to "flesh out" at great expense. We already have a program (read structure) for the poor and near-poor. It's called Medicaid. Let's expand Medicaid incrementally with savings generated from savings elsewhere in the federal budget.

We already have "structures" for the more well to do - they're called private insurance companies. Let's offer subsidies to increase the affordability of premiums for the low-paid and introduce an individual mandate. Competition can be increased in a number of ways - in some cases by increasing regulation and others decreasing it. The truth of the matter is that Democrats led an effort to clip private insurers wings in recent years, inhibiting their ability to control costs. Such reforms had populist appeal but but they also "bent the cost curve" upward.

"It's become popular of late to talk about how reform is a process and programs grow."

Boy have they ever.

Posted by: tbass1 | September 3, 2009 5:27 PM | Report abuse

It seems like you are starting from a preconceived idea of what reform should be and then making up an argument to justify it.

I see the Public Option one of those structural pillars that needs to be in place in some form, or it will be almost impossible to add later.

The difference between the Public Option and Medicare Part A is that Part A was a windfall for hospitals. It ushered in the so-called "golden age of medicine" where everyone got rich and costs started going out of control.

The Public Option is a chunk out of the hide of that same constituency, one I see as vital to controlling costs. The track record of regulations controlling costs is nil.

Posted by: bmull | September 3, 2009 7:01 PM | Report abuse

This may be an ignorant question, but are any of the health reform bills currently under consideration planning on paying for the Medicare prescription drug benefit plan that was enacted a few years back, or will that remain on the deficits for the time being?

Posted by: Dave_C | September 3, 2009 7:06 PM | Report abuse

Glad you finally admit that the one thing in health care reform that really matters to you is the part that forces everyone to buy health insurance, even if they can't afford it and even if it forces them to purchase insurance from a private company. Forces them to buy it, even if they don't want a private company to profit from their forced payment.

It's been hidden there in most of your posts over the past few months, but this is the closest you've come to just saying it. You don't give a rat's ass about the toll the expense will take on Americans least capable to afford it. You don't mention the grandfather clauses that will allow existing crappy employer-provided "mini-medical" plans to continue even after the reforms take effect. And you seem to assume, over and over, against all evidence, that private insurers will suddenly produce reasonably priced, comprehensive coverage.

Why is the individual mandate the most important feature for you? Are your bosses telling you to shill for the insurance companies by supporting it, or else? Are you heavily invested in medical industrial complex stocks? Or do you just not care about those that don't want to pay private insurers for a crappy product?

Posted by: NealB1 | September 3, 2009 8:21 PM | Report abuse

Another in a long series of posts on Ezra the Budding Villager.

Simply put, Ezra wants The Deal. I'm going to say it again:

Kevin (Drum), you and Ezra want a bill more than you want reform, and you want a win a battle more than you want to win the war. You guys need to be l-i-b-e-r-a-l-s.

Look, it's really quite simple: we no longer can afford to piss away 20% of our national income, year in and year out, on hidden taxes and disastrous policies. We could do that when we were the richest nation in the world, but now we're the world's greatest debtor.

So stop fooling around with the little things. We need single payer with cost controls, but I'll settle for the strongest damn public plan around. We need to spend less, and we'll never get there with Full Insurance For All. We just get poorer. And we need to end the employer mandate. Now. The auto companies employ more people in Canada because the employers don't pay for health care there. It's a huge international competitiveness problem. Stop it. Now.

Next, we need to stop pissing away $800B a year on Homeland Security, whatever that is, and Defense, which we know is offense. Cut it 5%/year until the next Bush is elected.

Next, we need to stop pissing $700B/year away on foreign oil. We need real, aggressive mileage targets. Oh, did I mention that it owuld make our cars more competitive in international markets? And lower pollution? Why are we pissing around?

Finally, we need to save all this money because we need to spend it on EDUCATION. The only way we will compete in the world economy is to raise our collective education level. In one generation.

Oxen need to be gored, Kevin and Ezra. Get the hell out of the way.

Posted by: Dollared | September 3, 2009 9:14 PM | Report abuse

It creates a universal system through an individual mandate and an employer mandate, and makes that system affordable and dependable through a mix of subsidies, insurance market reforms, and out-of-pocket protections

-------------------------------

its comical that you say there are "out of pocket protections". Do you know what the out of pocket protections are in HR 3200? $5000 for singles and $10,000 for families. Not a lot can afford that annually nowadays in this economy but if they saved they could. Again those without jobs can't save anything so what goes for them? We subsidize their coverage do we subsidize their copays. Again it gets back to the real #1 issue is getting the economy back on track which isn't happening anytime soon.

Oh and that phantom cap isn't a true cap. Even if the public option survives and your doctor sends you somewhere and the place he sends you doesn't participate in the public option those figures don't go towards that cap, same as private insurance. Those that believe like fools that the actual cap is $5,000 and $10,000 are fooling themselves.


oh and more on the "profit" that insurers make. Last year the top 10 insurers made 12.82 billion in profit. Too much, absolutely. One third of that was from United Healthcare who made most of that in their specialty and Medicaid programs (they're contracted to do AARP's Medicare Supplement programs). When the 177 Billion in subsidy is taken away (as it should be) whose paying that cost? If its 177 Billion over 10 years that's 17.7 billion per year. Goodbye profits and that's good but who pays? hmmmmm.

oh and in comparing industries how about looking at oil companies. Insurers top 10 profits 12.82 billion. oil companies top 10 profits, 84.67 BILLION. In fact the top company Exxon made 40 billion in profit more than 3x the top 10 insurers combined. I guess they're not the devil this week.


oh and to those that complain about having to be forced to buy insurance there are subsidies for that. If you don't want to buy in then fine, just pay the tax but do me a favor and stay out of the ER then. You're not paying your fair share. that tax isn't even close to what one ER visit costs.

Posted by: visionbrkr | September 3, 2009 11:13 PM | Report abuse

i hate not being able to adjust posts after the fact. I meant:

One third of that was from United Healthcare who made most of that in their specialty and MEDICARE programs (they're contracted to do AARP's Medicare Supplement programs).

Posted by: visionbrkr | September 3, 2009 11:17 PM | Report abuse

visionbrkr- The insurance industry was quite profitable before Advantage and they will be profitable after--very profitable in fact if there's an individual mandate.

I can't speak for all insurance companies but I know at least one that took the billions they made from Advantage and sunk it back into new facilities and information technology. That will pay off big time later on.

Posted by: bmull | September 3, 2009 11:34 PM | Report abuse

bmull,

i don't think so. an 85% nationwide required loss ratio will make profitability very difficult as it should. What we need to do IF a public option is off the table with a trigger (which is what I think should happen) is that insurers need to go back to the 90's model. I was at a client today who has Geisinger Health plans who has had 4-5% increases year by year over the last 4 years since we've put them there. The reason, their model is innovative with an old HIP style plan but revamped for the current time. Below is a link to an explanation of them and how they work. This is how insurers should work in the future and this will control costs. If you add their system to a plan that requires an individual mandate you can have a healthcare system that keeps pace with inflation and doesn't trample it like most other plans do.

http://www.achp.org/page.asp?page_id=1061

Posted by: visionbrkr | September 4, 2009 12:29 AM | Report abuse

bmull: "The Public Option is a chunk out of the hide of that same constituency, one I see as vital to controlling costs. The track record of regulations controlling costs is nil."

Over the underwriting cylce insurer profits only average to about 1% of national health expenditures so even if you were to eliminate them altogether you wouldn't have done much to either make health care more affordable or changed the underlyting cost drivers.

Posted by: tbass1 | September 4, 2009 1:07 PM | Report abuse

NealB1: "Glad you finally admit that the one thing in health care reform that really matters to you is the part that forces everyone to buy health insurance"

Would I be correct in assuming you post is addressed to me?

"You don't give a rat's ass about the toll the expense will take on Americans least capable to afford it."

In fact I do. I support an expansion of Medicaid, subsidies for low-income Americans and a guaranteed issue requirement. I also support taxation of health benefits - I doubt that would endear me to private insurers.

"And you seem to assume, over and over, against all evidence, private insurers will suddenly produce reasonably priced, comprehensive coverage."

Kaiser would be an example of a private insurance company that offers good value. [And before you ask, no I do not work for Kaiser.]

Why is the individual mandate the most important feature for you?

It's not. I'm more concerned with cost control features. And, in fact, I oppose a mandate on principle but concede that it is a workable approach to achieving near universal coverage and could live with it if it were part of a wider reform package that lowered costs and therey improved affordability.

"Are your bosses telling you to shill for the insurance companies by supporting it, or else?"

Uh, no.

"Are you heavily invested in medical industrial complex stocks?"

No, I'm invested in diversified stock and bond mutual funds. You sure are keen to impugn my motives aren't you?

"Or do you just not care about those that don't want to pay private insurers for a crappy product?"

I'd be fine with with a gov't plan which were supported only by its own premium revenue (as opposed to taxes) and didn't claim the right to pay Medicare rates to physicians, hospitals, drug companies, etc. In other words, compete on a level playing field. But that's not what's on the table. The plan that's on the table would drive the private insurers out of the market and ultimately leave us with a de facto single payer system. I don't favor such an outcome.

Posted by: tbass1 | September 4, 2009 1:32 PM | Report abuse

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