The biggest threat to health-care reform
Last night, I rounded up some of the GOP's criticisms of the score the Congressional Budget Office produced for the Affordable Care Act. If you want the full rundown, click here. They're a pretty ragged bunch. Most of them are false. A few of them contradict each other -- for instance, the argument that the legislation cuts Medicare too deeply, and also won't follow through on its proposed Medicare cuts. All of the arguments they make against CBO's process -- that it doesn't count discretionary spending, say -- have been the norm for decades, and have never bothered Republicans before. And we won't even get into the irony of the party that passed the Medicare Prescription Drug Benefit arguing that the health-care bill, with its $500 billion in Medicare cuts and its unpopular new taxes, isn't sufficiently fiscally responsible.
For a more persuasive critique of the ACA, read David Brooks's column this morning, which focuses on some bad signs for the bill going forward. Brooks notes that 1) the high-risk pools have basically failed, 2) the individual mandate is endangered by the courts, 3) it's possible that the bill could cost more than projected if employers make a rational calculation to stop offering their employees health-care insurance, 4) there's continuing consolidation in the health-care industry, and 5) the legislation remains unpopular.
All of this is true. And it gets to a more serious and honest worry about the legislation: If the bill works as CBO expects, or if it works better than CBO expects, it will reduce the deficit by quite a lot. But if it works much worse than CBO expects, it could increase it by quite a lot.
In a moment, I'll respond to the various points Brooks raises. But let me move the conclusion from the bottom of this post to the top: Some things in the bill will work better than we expect. Other sections will prove major disappointments. That's inevitable. When we see the bill in action, we can make the changes necessary to improve it. That's how all of this stuff works. The process of evaluating performance and making revisions is a necessary part of effective policymaking.
The danger, however, is that Republicans will refuse to compromise with Democrats on fixing the bill. They'll want repeal, but since they can't get it, they'll settle for making the legislation work poorly under the theory that it will eventually discredit itself. And then what America will get is not the Affordable Care Act, and nor will it be repeal of the Affordable Care Act. It'll be a hobbled version of the Affordable Care Act, where what works isn't expanded and what fails isn't replaced. And though that might be better than nothing for the uninsured, it will be pretty terrible policy.
Now, on to Brooks's more specific concerns:
What worries me on Brooks's list are the individual mandate, the consolidation in the health-care industry and the bill's continued unpopularity. The high-risk pools were a bad idea when they were the center of the Republican alternative to the legislation, and the best you can say about them now is that they have no connection to how the bill will work come 2014. They're a stopgap meant to help people until we actually fix the underlying problems in the insurance market that make it unworkable for people with preexisting conditions.
Moving on: I'm not going to try to predict whether the individual mandate will survive the Supreme Court. Ask Anthony Kennedy. As a policy matter, the bill could survive the death of the individual mandate quite easily if the individual mandate is replaced by an equivalent policy. This one, for instance, which does nothing to regulate inactivity and thus dodges the objection Republicans thought up when they decided to stop supporting the individual mandate and reframe it as a threat to liberty in late 2009.
But if Senate Republicans filibuster any replacement and House Republicans refuse to pass any replacement, that's a big problem for the bill: It means that sick people can sign up while healthy people can hang back. (As a side note, this could make the bill quite a bit cheaper, as fewer people will be using the exchanges and thus qualifying for the subsidies. But average premiums will be much higher and the exchanges won't emerge as a viable alternative to the current market.)
Consolidation in the health-care industry is an ongoing trend, and, as this report (pdf) documents, not a good one. The ACA will encourage more of it, as consolidations tend to follow changes in the competitive environment. As I wrote back during the health-care debate, one of the major problems in health-care politics is that we spend all our time worrying about the cost of insurance when the cost of the health-care services the insurance is buying are a bigger problem. There's some good reforms on the delivery-system side of the bill, but I'd like to see us go quite a bit further. Note that the way other countries deal with this problem is that the government just sets the prices that hospitals can charge, and it seems to work pretty well. An alternative in the American system would be -- gulp! -- strengthening insurers, perhaps through all-payer rate setting, which appears to work well in Maryland and New Jersey.
Before I get to the question of unpopularity, let me talk about employer dumping, which I've left out until now. The basic concern here is that employers will stop being such nice guys and giving people health care and instead dump them into the exchanges so they can buy it at subsidized rates. I don't think this will happen: If we were going to see it, we'd have seen it in Massachusetts, which, like the ACA, makes it much cheaper for employers to dump workers into the exchanges. But there's no evidence (pdf) that it's been happening. Employer coverage has been shockingly resilient given the recession.
That said, I can see the argument that it'd be good if it did happen. Basically, it would mean that employers stop paying employees with health-care insurance and begin paying them with cash. That's basically how the Wyden-Bennett bill worked, and both Brooks and I liked that bill. If it happens in an unstructured way in the ACA, it could cause more disruption, but it could also be a positive step that makes the bill look more like Wyden-Bennett.
Which brings us to the legislation's unpopularity. We can argue about why it's unpopular, or what the unpopularity means. But for the moment, let's just grant the point. The GOP is relying on that unpopularity. They're obviously doing their level best to fuel it. They will not consider the sort of routine fixes and compromises you'd expect on legislation of this size to work with their long-term strategy. And that could be a serious problem indeed.
Photo credit: AP Photo/Alex Brandon.
| January 7, 2011; 3:23 PM ET
Categories: Health Reform
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