Should the Bill be Killed?

I’m talking about the health care bill, of course.

The people I tend to trust on these sorts of questions, such as Robert Reich and Paul Krugman (here and here respectively) say the bill does more good than harm, and sets us down a path towards further improvements later. They also point out, rightly in my view, that if this moment passes we will not have another shot at serious health care reform for quite some time.

The trouble is that Howard Dean is also pretty convincing when he writes

If I were a senator, I would not vote for the current health-care bill. Any measure that expands private insurers’ monopoly over health care and transfers millions of taxpayer dollars to private corporations is not real health-care reform. Real reform would insert competition into insurance markets, force insurers to cut unnecessary administrative expenses and spend health-care dollars caring for people. Real reform would significantly lower costs, improve the delivery of health care and give all Americans a meaningful choice of coverage. The current Senate bill accomplishes none of these.

Real health-care reform is supposed to eliminate discrimination based on preexisting conditions. But the legislation allows insurance companies to charge older Americans up to three times as much as younger Americans, pricing them out of coverage. The bill was supposed to give Americans choices about what kind of system they wanted to enroll in. Instead, it fines Americans if they do not sign up with an insurance company, which may take up to 30 percent of your premium dollars and spend it on CEO salaries — in the range of $20 million a year — and on return on equity for the company’s shareholders. Few Americans will see any benefit until 2014, by which time premiums are likely to have doubled. In short, the winners in this bill are insurance companies; the American taxpayer is about to be fleeced with a bailout in a situation that dwarfs even what happened at AIG.

Kevin Drum offers an impressive list of good things the bill does:

  • Insurers have to take all comers. They can’t turn you down for a preexisting condition or cut you off after you get sick.
  • Community rating. Within a few broad classes, everyone gets charged the same amount for insurance.
  • Individual mandate. I know a lot of liberals hate this, but how is it different from a tax? And its purpose is sound: it keeps the insurance pool broad and insurance rates down.
  • A significant expansion of Medicaid.
  • Subsidies for low and middle income workers that keeps premium costs under 10% of income.
  • Limits on ER charges to low-income uninsured emergency patients.
  • Caps on out-of-pocket expenses.
  • A broad range of cost-containment measures.
  • A dedicated revenue stream to support all this.

An impressive list, and I could certainly support a bill that actually did those things. The trouble is that you know the insurance industry has already figured out how they are going to get around prohibitions against preexisting conditions and the like. The fact is that if there were anything in the bill that seriously inconvenienced the insurance industry, their shills in Congress would make sure it got stripped out before final passage. I think Drum is being a bit naive here.

Atrios with his customary style, cuts right to the heart of the matter:

The reason for thinking that without a public option or similar mandates are going to be a disaster is that without competition or sufficient affordability (due to not quite generous enough subsidies), you’re forcing people to buy shitty insurance that they can’t afford. Mandates aren’t bad in and of themselves, but they’re bad if they aren’t part of a comprehensive plan which is… good!

That sounds about right to me. The obvious counter, offered by Josh Rosenau for example, is that we already require people to buy car insurance:

The thing is, we do that already. To drive a car, you have to have insurance. We have an individual mandate for people to buy auto insurance. To my knowledge, there’s not a federal standard in place, nor subsidies to low-income drivers.

Hardly a perfect comparison. After all, you can opt out of the mandate by not driving. But as Atrios often observes, lots of people don’t have a viable option to avoid driving. So it’s a better comparison than it might first seem. Auto insurance isn’t perfect, but an individual mandate seems to do OK in that market, and this bill gives a lot more federal oversight of the insurance market, so there’s cause to think it’ll be better than auto insurance. At the very least, no discussion of the mandates in this bill should ignore the major mandatory insurance system

Sorry, but that’s a bad comparison no matter how many times you look at it.

For one thing, the moral case for requiring car insurance is a lot stronger than it is for health insurance. Why should you have to buy car insurance? Because other drivers need to be protected from you. Simple as that. You can do a lot of harm with a car, and there has to be some system in place to make sure you can pay for any damage you cause.

The only thing comparable to this with health insurance comes if you end up in an emergency room. Then all of us have to chip in to pay for your care. But to tell some twenty-something that he has to buy expensive health insurance because there is a microscopic chance he will end up in an emergency room hardly seems like an impressive argument.

Then there is the fact that the car insurance market is a lot healthier than the health insurance market. There is real competition among car insurers, and decent coverage is available at reasonable prices. Unless you are a truly rotten driver who is constantly causing accidents or racking up moving violations, you are not going to lose your insurance. Even the practice of automatically raising your rates after an accident is not so widespread as it once was.

By contrast, in many parts of the country, there essentially is only one health inusrance provider. The health insurance industry has also proven itself so unscrupulous in its business practices, that it is rather galling to force someone into it without ensuring that there is competition in the market.

And then there is simply the fact that this analogy is completely unresponsive to Atrios’ argument. That we force people to buy car insurance hardly implies that it is acceptable to force people to buy health insurance. As it is this bill places a huge financial burden on a lot of people who can not afford it. Don’t expect a lot of gratitude from them for “solving” their health insurance problem.

The fact is that a mandate without any serious measures to curb the worst excesses of the health insurance industry is repugnant. The benefit of broadening the insurance pool to spread out risk hardly seems like an adequate counter to this simple fact.

So what about the question in the title of this post? My answer is no. In the end, as awful as this bill is, I have to side with Krugman and Reich. The argument I find most convincing is that you have to pass something to get your foot in the door for future reforms. If the bill dies, that is it for health care reform for a good long time. Pass the bill, which does do some good things along with its more deplorable parts, and you establish the basic idea of universal health insurance. It will be pretty hard for future Republican majorities to take it away.

Of course, this could all be moot. Even if the bill gets out of the Senate it still has to go to committee. You could well have enough progressive members of the House willing to say they are not going to vote for a bad bill, political consequences be damned, to kill the bill in the House. A bill that is progressive enough for the House could be unpassable in the Senate, and a bill that could pass the Senate might be too right-wing for the House.

Comments

  1. #1 Greg Laden
    December 17, 2009

    This is a tough one. For the last 24 hours I’ve been walking around depressed thinking kill the freakin’ bill. The word kill comes to mind in other contexts as well.

    I might like reconciliation. I really want the filibuster rules removed.

  2. #2 NewEnglandBob
    December 17, 2009

    I am with Greg on getting rid of the filibuster. It is a travesty of democracy. It is usually used for no-good purposes.

    I just don’t understand how the liberals can lose out so bad here. The right wing is a minority but it gets what it wants. How does the public let them get away with this? A big majority of Americans WANT a public option, not this farce.

    Reconciliation: this is a word that has a meaning but quite often, in practice, it is twisted. See how it is pulled out of proportion by David Sloan Wilson:
    http://scienceblogs.com/evolution/2009/11/truth_and_reconciliation_for_g_18.php

    I am also torn between kill the health care bill and let it go as a start and pass a better one next year.

  3. #3 Oran Kelley
    December 17, 2009

    Yeah, I’m not sure it’s time to deep six the bill, but I’m surprised at how close it seems when you tot it up.

    One thing I’m becoming concerned about is the possibility that this is no longer the first step to something better, but has become so mired in claptrap that the system would require major reform in a few years not minor fixes.

  4. #4 Kevin
    December 17, 2009

    I think it will die a weak whimpering death. Besides, it seems like the more ‘rules’ put into place, the more loopholes there are. By the time it got out of committee, it would be so full of holes that an insurance company could drive their building through it.

  5. #5 The Science Pundit
    December 17, 2009

    I’m with Paul Krugman and Nate Silver on this: let’s get it done! Then we can work on improving it (and getting jobs).

  6. #6 Markk
    December 17, 2009

    What is depressing is that Republicans have provided zero help in opposition. They know that when Democratic congresses take up health care it is their best chance to destroy them – It worked once, and they are doing it again. So they are not even coming out with private sector plans or any ideas. Their strategy may very well work politically. They have disillusioned a bunch of Progressives it seems, so they have been quite successful in setting up 2010. But it is very negative for the country. Good opposition is important to good governance and the opposition has failed for the last decade both ways IMO.

  7. #7 Gingerbaker
    December 18, 2009

    Just wondering if Obama has the power to make an executive order that Medicare must now cover down to age 55. Cut to the chase.

  8. #8 Galen Evans
    December 18, 2009

    Gingerbaker, if he has that power, why doesnt he use it to expand medicare to all citizens, boom universal coverage…

  9. #9 Joe
    December 18, 2009

    There’s the old saying “don’t let the perfect be the enemy of the good”. The bill’s not as good as it can be but it will improve the lives of many. Assuming the bill passes, I’m willing to bet that in several years people will realize that the awful things Republicans predicted would happen won’t actually have happened.

  10. #10 Richard Eis
    December 18, 2009

    If the thing can be changed down the line realistically then do it. Otherwise chuck it and demand better.

    If you can’t decide or don’t know then since the thing is improvement for many people, you should go with it by default.

    As Joe says if the thing does ok, the republicans will probably be telling us how it was all their idea in the first place after a couple of years…then you may have more support for improvements.

  11. #11 Kate
    December 18, 2009

    Medicare? Maybe great for the average guy on the street, but doesn’t do what it needs to for the elderly and disabled. I’ve always wondered why Medicaid (total coverage) is given to those who are well but un- or underemployed, while seniors and the disabled are given Medicare, where they have to deal with partial coverage, huge co-pays, gaps in coverage (especially prescription coverage) and premiums many can’t afford.

    Josh Rosenau’s ‘counter’ isn’t as good as it sounds. There are plenty of people out there who don’t drive at all. In part, it’s because some can’t afford car insurance.

    In the long run, the key word for many of us is going to be “affordability”. It does little good to mandate insurance people can’t pay for, for health care they still can’t afford due to high co-pays. That’s not going to keep people out of the emergency rooms at public expense.

    and “age” should be considered a pre-existing condition. If insurers are going to act like other insurance providers and set the premiums according to risk factors, You’ll definitely be pricing individuals out of insurance. Right now, it’s the elderly… so why is age a factor and not other risk factors in determining premiums? Sounds a lot like discrimination to me.

    After all that I do support the health care bill. It’s not the one I think we should have, but it’s a step in the right direction…

    …even though it looks like it could actually make things worse for me and my family, and likely many others.

  12. #12 JasonTD
    December 18, 2009

    If the thing can be changed down the line realistically then do it. Otherwise chuck it and demand better.

    If you can’t decide or don’t know then since the thing is improvement for many people, you should go with it by default.

    What if it turns out to be bad? That is, What if the effects of the bill itself cause people with insurance now to pay even higher premiums than they otherwise would? What if it causes some small employers to decide that it is cheaper to pay some penalty than to provide insurance to their employees, figuring that their employees can then get government subsidies in the private market anyway? What if all of the sources of the “dedicated revenue stream” Kevin Drum refers to turn out to be woefully inadequate to pay for it all?

    There are more than enough potential downsides to the bill to justify voting no unless those things could be convincingly shown to be unlikely. Especially since scrapping the bill and starting over is not going to be a viable option a decade down the road.

  13. #13 Richard Eis
    December 18, 2009

    -What if it turns out to be bad? -

    If the bad will outweigh the good then chuck it now. If you don’t know either way, then there is only one way to find out.

    The downside of chucking it out is that people can turn around afterward and say that it was never needed in the first place thus making it harder to do later.

  14. #14 Mike
    December 18, 2009

    So forcing people to buy health insurance will establish a universal right to health care like forcing people to buy car insurance (which, btw, you forgot all the people who don’t and the subsequent problems that causes) established a universal right to cars? And you know what’s an even BIGGER enemy of the good? THE BAD.

  15. #15 Dan Gilbert
    December 18, 2009

    My opinion on this matter fluctuates, but for the most part, I think we need reform, but I’m not sure if this bill is it. I can agree that it’s probably a good “foot in the door” action, but it’s certainly one giant, unwieldy, ugly foot. The bill has grown to such monumental proportions with so much crap in it that it sometimes seems like it should be scrapped… but then what?

    What I’d rather see is for the bill to go away and magically be replaced with universal health coverage. Poof! Problem solved. ;-)

  16. #16 Mike
    December 18, 2009

    The comparison between car insurance and health insurance are faulty.

    First, there is no mandate that a person have auto insurance before he or she can drive. If any person says that such a mandate exists, that person is either a liar or ignorant on the topic and should not be trusted. It is perfectly legal to drive all you want on private property. I drove since I was 10 or 11 on my family’s farm without car insurance. Auto insurance is only required if a person drives certain classes of motor vehicles on public right of ways. Other classes of motor vehicles can be driven on public right of ways with no insurance.

    Neither of my grandmothers nor one of my wife’s grandmothers ever drove on public right of ways and thus never had car insurance. If the health insurance mandate was just like the car insurance mandate, then it would be possible for people to live their entire lives without purchasing health insurance and never pay a fine to the government for not having it.

    A third difference is that auto insurance is not for yourself. The usual minimums are for liability insurance in case the driver hurts or injures another person. health insurance is not intended to protect another person from harm you cause them.

  17. #17 geht's noch
    December 18, 2009

    Obama’s original version of the bill was great, but the Republicans (and many Democrats as well!) have neutered it with their illogical fussing about socialism, death camps for the elderly (WTF!) and other misinformed beliefs.

  18. #18 Eric
    December 18, 2009

    Agreed, I would like to see a bill pass that curbs health insurance industry abuses. Unfortunately, the ‘foot in the door’ argument cuts both ways. Conservative ‘deficit hawks’ will eventually return to power (probably sooner than later). They are going to see the mandate ‘subsidies’ as ‘Social Welfare’ and not fund them (“Welfare Reform”), while not repealing the mandate (due to the negative impact on insurance companies).

    Additional flaws with the auto insurance analogy,
    1. Congress has not eliminated public transportation
    2. Most do not buy it through their employer

    Medicare and Social Security are broad-based programs, and popular because of it.

    The mandate portion of this health-care bill will only impact the small portion of americans who purchase individual insurance. Thus, it will not succeed and it will not receive sufficient support from the majority of americans for the improvements that are needed.

    Conclusion: Eliminate the mandate and pass the rest of the bill.

  19. #19 DrYes
    December 18, 2009

    This bill should be killed…Physicians like myself see that it will lead to government interference in delivering health care to patients and greater rationing. As Senator & physician Tom Coburn says, “The Bill is scary.”

    http://online.wsj.com/article/SB10001424052748703514404574588842779569168.html?mod=googlenews_wsj

  20. #20 James Sweet
    December 18, 2009

    and you establish the basic idea of universal health insurance. It will be pretty hard for future Republican majorities to take it away.

    This is exactly right, as evidenced by those morons braying about how “the gov’t is going to get involved with my Medicare!” (epic fail) Once it’s out there and people have been living with it, it will be harder to call it “socialist” and still get taken seriously.

    @DrYes: I feel pretty comfortable rejecting out of hand anything a Republican politician has to say about it. There was a time when the GOP provided a legitimate conservative counterbalance, but that day is now gone. Even if we hypothetically assume a reasonable person is still in the Republican party, how can a reasonable person with an iota of conscience still identify with a party whose mainstream is pandering to nonsense such as the birther movement and death panels and the like?

    Any person not completely full of shit would have left the GOP by now. (And as it turns out, all of the conservatives whom I both know and respect have disavowed themselves of the Republican party sometime in the last five years or so, as it continue to descend into theocratic paranoid insanity. There’s a few left whose opinion I never respected to begin with, but…)

  21. #21 Silverlock
    December 18, 2009

    I would like to see the Senate progressives force conservatives & moderates of both parties into actually filibustering the bill. Don’t try to invoke cloture. Put video of Republicans reading cook books to the Senate on every TV network in the country and make clear to the public that obstructionism – and not meaningful collaboration, debate, or reform – is the name of their game.

  22. #22 Kevin (NYC)
    December 18, 2009

    Kill the Bill…

    The House should take some of the reform ideas such as no denial for pre-existing conditions and 85% ratio for claims vs premiums and a few others and craft a slimmed down bill and put it in reconcilliation and send it to the Senate.

    if we have any appropriations bills left .. Pelosi just let the defense bill with the debt ceiling extension go through .. if that was only for enough till Feb then package this up and put it together.

  23. #23 Jim Harrison
    December 18, 2009

    In the mainstream media any significant change in the way we govern ourselves in this country is represented as some sort of wild-eyed revolution. But we do need significant change. The filibuster rules, which could be changed at any time by the Senate itself, are an obvious example; but the Constitution is also operating past its expiration date—how can anybody possibly defend the undemocratic way the Senate works, with the huge advantage it gives to small states? And what conceivable argument can make sense of the campaign contribution laws, which currently disenfranchise everybody in favor the corporations.

    If something doesn’t give, we’ll all wind up living in Mississippi. The ironic thing is that if the system can’t change incrementally, it will eventually be time for the guillotine to do its grim work and it will be the conservatives who brought about that eventuality.

  24. #24 H.H.
    December 18, 2009

    Actually the car insurance analogy would be a good one if we had a public option. If I can’t afford to drive I can take public transportation. I can ride the bus, rapid, train, etc. Where are my public health insurance options?

  25. #25 Tyler DiPietro
    December 18, 2009

    The economics of healthcare are different from those in operating vehicles, mostly because the contingencies of health and disease are far more problematic for risk-assessment than those of automobile accidents. Josh is just comparing apples to oranges.

    In an environment where people can’t afford health insurance, which is what we have, a mandate will simply force them to spend their money on crappy plans with high deductibles, which will really make sure that actual care is still out of reach. It’s not a solution to the problem, and trying to make a moral equivalence to requiring automobile insurance just obfuscates that fact.

  26. #26 BaldApe
    December 19, 2009

    The right wing is a minority but it gets what it wants. How does the public let them get away with this?

    How?

    By listening to outrageous lies (Death Panels! OOOhhh NOOOOO!) and not thinking.

    By accepting silly ideological statements (Government is the problem, not the solution. Keep your gov’mint hands off my Medicare!) without examining their assumptions.

    The only thing comparable to this with health insurance comes if you end up in an emergency room. Then all of us have to chip in to pay for your care.

    But that’s not the “only thing” by any means. There’s the epidemiological benefit of keeping everybody else healthy. There’s lost productivity when people get sick. There’s the much higher cost of treating the eventual effects of lingering illness after serious damage has been done.

    The thing that drives me crazy is the repeated claim that we can’t afford it. Somehow every other industrialized nation manages to afford it. The only reason we will have trouble is that the lobbyists won’t let us, and whose fault is that really?

    The Republicans certainly understand that once an entitlement is established it is just about impossible to get rid of. If it’s poorly structured and hard to pay for, that can be fixed later. That’s why they are fighting so hard, and that’s why the bill needs to be passed, almost no matter how bad it is.

  27. #28 BaldApe
    December 20, 2009

    As it stands the mandate puts a pretty big financial burden on people who can ill afford it. To tell those people that they have to fork over potentially a large percentage of their income today because of vague and tenuous benefits about saved productivity or potentially serious illness far down the line just is not very compelling.

    Which would be an excellent argument that employers should shoulder a fair chunk of the cost.

    ISTM that the best argument for a mandate is that risk is more universally shared. That’s an argument from a fairness point of view, and one that runs up against the costs to healthy people of paying for insurance they don’t think they need. But that’s what societies are supposed to do- take care of their members.

    Also, without universal buy-in we won’t have the negotiating power to control costs. This is something the current bill won’t do very well, but will have to added later when it becomes obvious that costs will get out of hand.

  28. #29 Louis
    December 20, 2009

    Way to Go Biden. Did you find the money tree?Where’s the money going to come from? Your deep pockets? – Found this – sums up essentially how I feel about people’s involvement & government Tictacdo

  29. #30 Ezra Robison
    December 20, 2009

    Jason,

    You are a brilliant mathematician, a saint among Evolutionists and one of the finest chess players by whom I have ever been beaten (granted, I never played Gata Kamsky). However, I am going to have to give you a gentleman’s C on the subjects of Economics and Insurance.

    For starters, let me say that

    a) American Society needs to staunch the rate of medical inflation and
    b) American Society needs to make health care as universally available as possible.

    The latter is more clearly the role of Government (although maybe State, not Fed). The former simply isn’t. The Feds can’t respond fast enough to the rapidly changing environment to (a) deal with emerging sources of costs and (b) deal with emerging strategies for gaming the system.

    On this subject, I commend you to Hayek and other prominent members of the Austrian Economics movement. I also recommend Russ Roberts, blogger, podcaster and unbelievable speaker for the movement.

    Also, I think it’s very important for all people commenting on insurance regulation to remember that Regulation Increases Costs. For the latest powerful example, check out the 4/1/2008 Massachusetts Personal Auto Reform. When Massachusetts went from mandating rates to allowing the insurers to compete every single insurer lowered their prices. Prices had been bolstered by the states over-regulation.

    So, if you want to see insurers cut out administrative costs allow them to compete openly. They desperately want to steal each others business and will happily do so.

    In all honesty, I think that your analysis of the comparison of Personal Auto to Health insurance was pretty good. But let’s talk about a similar comparison: Health Insurance to Workers’ Compensation (WC) insurance. WC covers employee’s health, so it’s a little more like health insurance. But it has a marketplace that’s as competitive, generally, as Personal Auto. All 50 states have some form of “residual market,” a mechanism for ensuring availability to every employer. 25 or so states have some kind of State Fund — a public option. In truth, it is not clear which form of residual market works better — Public Option or pure residual (where the state assigns employers to various companies and taxes the industry to pay for the insurance). But it is clear that State Funds have the capacity to drive out competition. Check out California around 2000, and Rhode Island and Maine over the past decade. When the rates offered by these Public Options become too low, the market place disintegrates, sending all the costs to the taxpayers, with very few mechanisms to control them.

    So what do I recommend? By all means, pass the bill. Better to do something for the uninsured than nothing for anyone. But the more you can allow the insurers to compete with each other, the better everyone else will be. Figure out how to incent more competitors, not less. And the Public Option doesn’t count, because it can’t play fair.

    Cheers,
    Ezra Robison

    (The views expressed in this comment do not reflect the views of Ezra’s employer, Actuarial Society, Synagogue, A capella group, kids or most of his friends and family. Except for the “brilliant mathematician” observation. We all agree on that.)

  30. #31 Jason Rosenhouse
    December 20, 2009

    Hi Ezra! Nice to hear from you.

    (For everyone else, Ezra is an old high school buddy of mine.)

    I liked the first paragraph of your comment. The rest, a bit hit and miss.

    I’m all in favor of increased competition among health insurers, as I thought I made clear in my comparison between the health insurance market and the car insurance market. This bill does promote increased competition, by allowing insurers to cross state lines. So that’s good.

    I think it is a bit simplistic to say “Regulation increases costs.” Surely it depends on the regulation? Regulations can also ensure basic fairness and curb abuses, which are important things. My main concern about the mandate is that people are going to be forced into a system that will extort a lot of money from them while giving them not very much in return. Perhaps increased competition by itself will solve that problem, but I doubt it.

    As for Switzerland, their private insurance market is heavily regulated, but if I can believe what I read in the papers, the Swiss are happy with what they have. Read this.

    My guess is what will happen (assuming the bill eventually passes) is that quite a lot of people who currently don’t have health insurance will now be able to get it. It will then be politically impossible for future Congresses to take that away. That will force them to take steps that will ensure reasonable premiums to people for a decent product. Time will tell.

  31. #32 Tyler DiPietro
    December 20, 2009

    There’s another crucial difference between the current bill and the Swiss system that often goes overlooked: in Switzerland, insurers are not allowed to make a profit off of the mandated package specified in their 1994 law, though they can make profits on supplemental packages. If anything as progressive as prohibiting insurance companies from making profits were on the table right now, I’d forgo the public option in a second.

  32. #33 Tyler DiPietro
    December 20, 2009

    BTW, the Austrian economics crowd is a bunch of cranks. They go so far as to disown the scientific method in favor of a pre-scientific method of deduction from first principles. I wouldn’t attach too much credibility to anything they say.

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