Question for the day: What is causing the huge emotional reaction both on the right and the left? To the health bill the Senate passed on Christmas Eve, that is.
Strangely, the bill would not solve any of the problems that its proponents talked about. But it would do two very important things almost no one has talked about.
First, the talked-about goals. Would this bill lower health care costs? No. Would it improve the quality of care? No. Would it improve average access to care? Probably not. Would it make health insurance portable? No. What about insuring half the uninsured? Yes, but a large chunk of those were already eligible for Medicaid and S-CHIP and most of the rest would have obtained insurance anyway in a short period of time. Since there is no mechanism for dealing with short-term uninsurance and since there will be strong incentives for the healthy to drop out, the actual number may fall way short of the projection. What about eliminating pre-existing condition requirements? Yes, but in a way that harms more people than it helps. Following the Massachusetts experience of going bare—getting sick—getting insured—getting bills paid—and then dropping coverage again is nothing to cheer about. Is the bill even “progressive?” Surprisingly, the answer is probably not. (More about all this in a future Alert.)
So having failed at all these goals, why aren’t the reformers completely depressed? What is causing so much elation? Answer: the not-talked-about accomplishments:
- For the first time in U.S. history, we are about to nationalize the health insurance industry; and
- Going forward, no one will ever be able to pay a real price for health insurance again.
Don’t cry for me, Argentina
Nationalizing health insurance. For the first time ever, the federal government will tell you what kind of insurance you must buy and (effectively) where you will buy it and what price you will pay. You will not be allowed to buy better, cheaper insurance that is more suitable for your and your family’s needs — even if an insurer is willing in principle to sell it to you.
Don’t underestimate the importance of this accomplishment. Nationalization is the abiding, overriding, everlasting, immutable, unending, permanent, unchanging goal of the political left. There is no other there, there. There is no other beef. All else is sound and fury signifying things that are way down the priority list.
So why should you care? Because (1) you will either be unfairly overcharged — paying much more than you should so that people who probably make a lot more than you do can pay less — or unfairly subsidized because people who make a lot less than you do are forced to pay more; (2) you will be permanently trapped in the same type of third-party payment system that has been causing all the problems of cost, quality and access all along; (3) insurers will be completely unable to solve these problems (for reasons given below); and (4) everyone (on both sides) understands that this is only a foot in the door. Precisely because no real problems have been solved, nationalization of health insurance is a prelude to nationalization of health care — ultimately leading to federal control of what every doctor does and what he or she gets paid.
Abolishing the possibility of a market for health care risks. Gone forever will be the ability of insurance companies to creatively and innovatively solve the core problems of cost, quality and access. John Cochrane’s idea of health status insurance will be completely illegal. My own proposal for making health insurance like casualty insurance will be out. Even more important, there will be no possibility of specialty health plans — plans that, say, cater to the needs of heart patients, cancer patients or diabetics.
Insurers will not be able to innovate in these ways because it will be illegal to charge patients or their employers a premium that reflects the value the innovation creates for the patients. Instead of a market for sick people, in which health plans compete to solve the problems of the seriously ill, health plans will do everything they can to avoid the sick (and when that doesn’t work, they will be tempted to undertreat them) — even worse than what we see under the current system.
Problems are not only not going to be solved. They almost certainly are going to get worse. That will create pressure for even more legislation and more government intervention. So Paul Krugman is correct to say that this health bill is only the beginning. There is much more to come.