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Can you reform the health-care system if you can't change it?

The exchanges are closed to 90 percent of the population for the same reason that the public option is weakened and limited only to the exchanges, and even then, limited to the states that want to offer it, at least in the Senate's version. These rules exist for a simple reason: to stop people from fleeing employer-based insurance. Rep. Anthony Weiner, speaking at the New Republic's heath-care reform panel this morning, is a bit confused.

What are we trying to protect when we're trying to protect against the destabilization of a system we all agree isn't working and that we think people are trying to leave?

He's right, of course. Among the many implicit precepts directing health-care reform are the following:

(1) The employer-based system doesn't work, either to assure coverage or control cost.

(2) The employer-based system must be preserved.

(3) A strong public option would offer consumers lower premiums and attract a lot of customers.

(4) A strong public option cannot be included because private insurers cannot effectively compete with it.

(5) Among the worst economic distortions of the system is the fact that employers choose insurance for their employees, and thus employees don't really understand the cost of coverage.

(6) The exchange cannot initially be open to employees, and may never be opened to employees, because they might leave employer-based insurance in order to shop for their own policies more aggressively.

You can go on in this vein, of course. It's a bit of a problem. Underlying it is the political insight that people want the system changed but are afraid of rapid changes to their personal situation, and so reformers are trying to build out their reforms such that people can transition to new and better options gradually. The problem with that, of course, is that the reforms won't necessarily have the size or scale to show their power, and many people will be legally prevented from changing over even if they would like to. It's a bit like rolling out a new television, but refusing to sell it to people who own televisions larger than 25 inches. You've lost a big pool of early adopters, which means you might also lose the people who would otherwise follow them.

By Ezra Klein  |  October 27, 2009; 9:16 AM ET
 
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Next: Ron Wyden: 'There is an exchange that works.'

Comments

This is madness.
The whole process is a sick, sick joke.

Posted by: adamiani | October 27, 2009 9:22 AM | Report abuse

Ron Wyden's Free Choice amendment didn't make it during the merge of the two bills I guess. And I fail to see how it makes it in during the regular amendment process.

I'd rather have Wyden's amendment without a public option than a public option without Wyden's amendment.

Posted by: MyrtleParker | October 27, 2009 9:26 AM | Report abuse

Ezra,

is the symposium you're at available via the web anywhere?

Posted by: visionbrkr | October 27, 2009 9:40 AM | Report abuse

So, you finally realize that Congress isn't actually making the changes necessary to reform health care?

As your next step, please write that you oppose the current health care legislation.

Posted by: ostap666 | October 27, 2009 10:06 AM | Report abuse

Are you sure that all of this illogic and inefficiency isn't being done not because the public is weary of too much change, but because of the political power of the insurers, and their ability, with Republicans, to deceive the public?

The public may be weary about being forced to change, but are they really weary about being given the option to buy something cheaper and better only if they want to, otherwise they can keep the same thing they currently have with their employer?

Posted by: RichardHSerlin | October 27, 2009 10:11 AM | Report abuse

Ezra --

I understand your point about how employees are trapped without options. As an employer, though, I'm trying to insist on decent health insurance for all our employees -- and see that those who don't have it skip treatment, then miss work because of illness. I guess the reforms around deductibles, coverage, etc will take care of this, but what if that doesn't work. Employers do have an interest in their employees being healthy. But when the employee has to pick up 20% of the cost of insurance, they want to go cheap. Thoughts?

Posted by: mcjd1 | October 27, 2009 10:14 AM | Report abuse

Let's take step 1!

If we could open up exchanges to everyone now, great. If not, let's get step 1 done.

Businesses, if they perceive that it will save money, will lobby to get in. In this country, business always gets what it wants.

Let's, at the least, prove the model can work. Then, we'll only have to open it up in the future. Model will be built.

Posted by: rat-raceparent | October 27, 2009 10:16 AM | Report abuse

This is where we get to the disconnect between Washington political commentators and the public need for information/education. The whole effort was built on preserving an unsustainable model...by extending a dysfunctional model to more people.

The inside stories about the public option, bipartisanship, or CBO estimates have little or nothing to do with obtaining actual health care reform. Process is more interesting to journalists than content. As a result, we have been ill-served by the press and the result is a windfall for private insurance companies.

Posted by: Athena_news | October 27, 2009 10:17 AM | Report abuse

Ah, it's simple enough: what they want is a better yesterday.

Posted by: vagueofgodalming | October 27, 2009 11:04 AM | Report abuse

rat-raceparent is dead on....lets take the first step. Business sees the exchanges as viable and they will lobby to get in (and they will get what they want). There are too many businesses who would exit in a heart beat IF (big if) they knew there was a viable alternative. Assuming this works, we will back ourselves into a Wyden world.

Posted by: scott1959 | October 27, 2009 11:28 AM | Report abuse

Someone on a different board pointed out today that much of the reform is actually a "trigger." It puts pieces in place but doesn't let them work, in hopes this will pressure the industry to do better.

Posted by: bmull | October 27, 2009 11:37 AM | Report abuse

You keep repeating that "The exchanges are closed to 90 percent of the population" while never acknowledging the natural turnover in the job market. According to the White House in "a two-year period, one in every three Americans goes without health care coverage at some point.". That's 33% of America that will be able to make a choice about what kind of new job they want, one with access to the exchange or one without.

Take a survey of your Juicebox Mafia. How many of your friends have changed jobs in the past 2 years? It's just wrong to say people will be denied access to the exchange when moving forward they can consider access to the exchange (and public option) as a factor in moving from job to job.

Posted by: jamusco | October 27, 2009 2:08 PM | Report abuse

Much of the mess could have been avoided by focusing on socializing (Federalizing) catastrophic costs (where insurers probably allocate most of their investigative costs and profits); allowing private competition in the "gap" underneath the catastrophic layer or around its periphery, leavened by competition a premium-funded public option in that space; subsidizing purchase as with current proposals; implementing the rules against denial of coverage for pre-existing conditions and other consumer protections.

As a form of social risk-sharing, catastrophic losses should in principle be a tax-supported function with graduated responsibility applying to it like any other shared government expenditure. (It could be funded by a surtax on existing tax liabilities, which means graduation would be built into it.)

Premiums for the "gap" -- i.e, without insurer responsibility for catastrophic costs -- would be dramatically lower. Employers under far less pressure -- with a predictable ceiling on exposure -- could then decide whether they want or arrange, subsidize or even self-insure the gap insurance for employees, but the system wouldn't not be dependent on employer coverage. This would be single-payer at the catastrophic level -- OK, that would need a definition -- and assured responsibility for such payment would reduce costs significantly.

Posted by: urbanlegend | October 27, 2009 3:50 PM | Report abuse

thanks jamusco,

I would've said the same thing but my friends constans and pseudo would've called me on the carpet for it.

Not only that but has everyone forgot the idea of employee dumping? Ezra, you yourself complained about the "free rider" provision. A $750 penalty as compared to healthcare costs here in the US will absolutely have employers that are responsible now dropping their plans to save money.

I get the feeling that liberals are playing this down as "no one can get in it" even though they know that won't necessarily be the case. Its amazing when you can use both sides of the same argument with a straight face.

Posted by: visionbrkr | October 27, 2009 4:23 PM | Report abuse

jamusco raises a good point...the exchanges are closed to most of the population but as I lose my job and move to either unemployed status or to an employer who offers no health care, the exchange opens up. However, if I get a job with an employer who does offer health care, the exchange closes to me.

So whether I want to keep the exchange provided plans (including the PO) is a factor in where I decided to work next: employer A with a health care plan, or employer B with no health care plan.

Lots of factors though play into this, though, so it is not clear cut what someone would do in the post reform world: the level of the employer subsidy vs. the level of the subsidy I would get should I remain in the exchange (both of which determine my ultimate contribution), do benefits attract/retain (for me, maybe that is a factor, for someone else, maybe not) etc?

I think the exchange, should it work, will gradually open. Small employers may be more likely to drop benefits, raise pay and tell employees to go buy their own. Larger employers may want in when they see it works...most companies like to focus on operations, not HR staff and benefits

Posted by: scott1959 | October 27, 2009 4:55 PM | Report abuse

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