The Context of Health Care Reform
Frustrating listening to tonight’s NPR report about health care reform. In the report Dave Koenig, an upper middle-class businessman in a suburb of Sacramento who’s satisfied with his employer-provided group coverage, was interviewed. He says he wouldn’t mind “reform” that would prohibit denial of claims based on “preexisting conditions” and end rescission, etc., but he doesn’t want “massive overhaul.” “I can see reform taking place in areas,” he says, “but do I want the system overhauled? No. And I don’t think the majority of the people in the country want it overhauled.”
He’s right. A majority of the country doesn’t want the system “overhauled.” Which is fortunate, since under the Obama reform plan the system will not be “overhauled”—at least not by any reasonable definition of the term.
Happily, Karen Politz of Georgetown University noted that Koenig has nothing to fear from the contemplated reforms. As long as Koenig’s policy meets certain quality standards (which it clearly does, based on Koenig’s description) nothing would change for him under the new law.
(And of course policymakers have consistently emphasized that if you have employer-provided insurance and like it, you can keep it. If this piece of information hasn’t yet sunk in, it obviously never will. Normally in politics, if you say something enough times, even if it’s nonsense, people will begin to believe it after a while. In this case it’s the opposite. No matter how many times Obama and others say it, even if it’s true, few evidently will ever believe it. It’s apparently just scare words, not comforting words, that people believe when they’re said again and again.)
But Melissa Block, interviewing Politz, repeatedly used the term “total overhaul” to describe Obama’s health care reform plan. This terminology—common in reporting about the issue—is scaring people needlessly. If “total overhaul” is what Obama wants, what exactly do single-payer advocates want? For that matter, what did John McCain want? He proposed taxing employer-provided health insurance as income, which would have quickly ended employer-provided insurance like Koenig’s. That was of course the idea—to end employer-provided insurance and shepherd everyone into the glorious free market for individual insurance, the market that has spawned nearly all the horror stories we’ve heard lately about denials of coverage, rescissions, etc.
I suspect Koenig, a “conservative” as described in the report, wasn’t too scared to vote for McCain, although admittedly the news media almost certainly didn’t tell him that he thereby voted to end his wonderful insurance arrangement.
The key contextual fact about health care reform is this:
A decline in employer-provided coverage from 63.9 to 58.5 percent (top diagram) over nine years may not look dramatic. But the process is inexorable: as health care prices rise, insurance will become increasingly unaffordable to companies, and employer-provided coverage will erode.
Where will people go as employer-provided insurance erodes? None of the current options—the individual insurance market, some form of government coverage, or no insurance at all—are desirable or sustainable in the long run. At present the bulk of people are turning to the government or going without insurance. But as the federal government cuts budgets, the individual insurance market may become the primary destination for people cut loose from employer-provided plans, truly a health care catastrophe.
Among available reform options, Obama’s proposal is the most conservative response on offer. As employer-provided insurance erodes, the idea is to let people stay in it as long as they wish or can, and then if they lose this coverage (as people increasingly will) the reform will provide a place for them to go. Right now, for example, if Koenig loses his job or changes it, he will lose his beloved insurance and may well be thrust into the individual insurance market. Under the Obama plan, if he loses his job or changes it, he will be able to purchase group-like insurance—either a private plan through an insurance exchange or the public option (should that become available). That’s what the reform means to people like Koenig: that rather than being dumped into the individual insurance market or forced to go uninsured or join the rolls of Medicaid, they’ll have an option that preserves the quality of coverage to which they’ve become accustomed. And that’s what Politz should have said.
The Point of the Public Plan
Addendum
Is Low Life Expectancy the Fault of Our Health Care System?
What Americans Believe
American Health Care: Best in the World?
Is 76.5 Large?
NBC-WSJ Poll
Inside the Asylum
More About Bubbles
Why Did Economists Miss the Housing Bubble?
Why Has Monetary Policy Been so Ineffective?
The Geithner Plan
Is 22.2 Large?
Economics: A Theoretical Divide
The New Deal and the Great Depression
Stimulus By the Skin of Our Teeth
The Interregnum
Postmortem
Obama and McCain on Tax Cuts and Health Care
Religion and the New Atheism
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