Friday, August 14, 2009

Is Health Care Moving Too Fast?

Conor Friedersdorf ponders if the current health care reform proposals are going fast and too broad. Essentially, can we reform health care one piece at a time. Friedersdorf writes:
"Especially curious is President Obama’s decision to pursue comprehensive health care reform when it failed so spectacularly under the Clinton Administration. In contrast, 'small bore' reform efforts initiated years later extended insurance to millions of children and afforded senior citizens a hugely expensive prescription drug benefit. Why are those who seek further reform so invested in a sweeping approach certain to provoke intense blowback? They’ve enjoyed their best successes using more incremental methods!"
Matt Steinglass responds:
"Substantively: the reason one often can’t pass individual planks of the reform in isolation is that taken individually, each plank generates perverse consequences that will lead to strong opposition from a particular constituency. Universal community rating, for instance, will make health insurance for the young and healthy more expensive. That creates adverse selection, as the young and healthy will drop out. And adverse selection threatens private insurers’ revenues: they lose their best customers. So to kill such a bill, private insurers will trade on young people’s fear that they’ll lose their health insurance. And they’ll be correct!

To pass universal community rating, you also have to have subsidies to keep low-income healthy people in the system, and you probably ultimately need a mandate that everyone has to buy insurance. That’s a deal that satisfies the insurance companies. But a deal like that also includes a couple of things that can be used to scare people: government subsidies, out of my taxes? A mandate that I have to buy insurance? And so your bill gets more complicated and easier for the political opposition to demagogue. And that’s how we wind up where we are."

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