Subsidies to the left of me, regulations to the right
Republicans should concentrate on slamming the administration for poor execution of Obamacare, rather than on wholesale critiques of the concept of government health-insurance reform
By M.S.
MEANINGLESS gotchas are the reason why the Founders granted Congress oversight powers, and Kathleen Sebelius seemingly delivered with a gaffe at today's Obamacare hearings, stating that it would be illegal for her to get insurance through Obamacare's exchanges because she is insured by her employer. According to Andrew Kaczynski's reading of Healthcare.gov, this is wrong; she could forego her employer-provided insurance and sign up through the exchanges, but would then not be able to receive her employer's tax-free contribution. ThinkProgress' Igor Volsky retorts that it would in fact be illegal for Ms Sebelius to use the exchanges, since she is 65 and enrolled in Medicare.
Why do we care about this? Presumably because the spectacle of the head of the Department of Health and Human Services herself seemingly being unable to disentangle the many threads of Obamacare eligibility requirements speaks to the head-spinning complexity that the law's opponents argue is its fatal weakness. And in a way, whether or not Ms Sebelius got the answer right, the confusion over her status does illustrate the distressing kludginess of the system. Essentially, the problem here is that it's not clear whether she can legally take advantage of the new government-subsidised and -regulated system for individual insurance (Obamacare) without violating the rules of the government-subsidised and -regulated workplace health-insurance system (via the employer health-insurance tax exclusion) or the wholly government-financed insurance system for senior citizens (Medicare).
All of this would be excellent fodder for an I-told-you-so from single-payer advocates, who could boast that their system's simplicity would eliminate this type of confusion. But that is clearly not the point that the law's Republican opponents are trying to make. Their critique is that Obamacare represents too great an intrusion of the federal government into the health-insurance market. Why, then, do they care whether Ms Sebelius gets government-regulated, government-subsidised health insurance via Obamacare's exchanges, via her employer (the federal government itself, obviously), or via Medicare? There doesn't seem to be any stake here for opponents of government regulation and subsidies in the health-insurance market as such. In fact, the alleged gaffe sort of illustrates the opposite point: there isn't really any coherent standing point in this debate for that position.
Josh Barro made much the same point yesterday. He argues that even in the pre-Obamacare era, so-called private health insurance was so freighted with government regulation intended to accomplish public-policy goals that it doesn't make sense to think of it as really private. The basic difference between truly private insurance (for stuff like fire damage) and health insurance is that the latter isn't just designed to turn a big tail-end risk into a predictable premium; it's also "designed to shift costs across individuals, away from the sick and toward the healthy."
If you have foreseeably high health costs, your health insurance premium will be less than your expected claims; if you're likely to be healthy, it will exceed them. This system is a kind of shadow fiscal policy, redistributing income from the healthy to the sick. It can only work if consumer choice is restricted in such a way that many people are induced to buy policies that cost much more than they can expect to get back. Obamacare contains many such inducements (including subsidies and the individual mandate) but so does the pre-Obamacare status quo in health policy.
Mr Barro then runs down a long list of the pre-Obamacare health regulations, such as 1996's HIPAA, that force healthy people to pay for sick ones in order to distribute the costs of illness equitably across society.
Another way to describe the same issue would be to look at what happens when small-government conservatives design health-insurance reform alternatives to Obamacare. The American Enterprise Institute came out with a plan in August that was very conceptually interesting (although Henry Aaron attacked it for being non-responsive to the actual process of health-insurance reform unfolding today in America since it tried to act as though Obamacare didn't exist). The basic framework was to eliminate Medicaid and the employer tax exclusion, and give everyone a basic health insurance policy which would have a zero deductible for the poor sliding up to huge ones (in the $50,000 range) for the rich. How would this be established and paid for? Well, obviously the federal government would set the terms of the policy and would pay in full for poor people's insurance policies; the cost would probably be in the same range as Obamacare.
Or you could look at the plan proposed last month by the Republican Study Committee. This plan had severe conceptual problems; it actually gives rich people higher subsidies than poor people, since it works through tax deductions, and according to Sarah Kliff it's not clear it would lead to any significant number of the uninsured getting insurance compared to the pre-Obamacare status quo. But to take a really illustrative point, the way the Republican plan would deal with people who are too sick to get insurance at any affordable price is to put them into high-risk pools. High-risk pools have basically never worked very well, but the way they're supposed to work is that since these people can't possibly afford coverage themselves...the federal government will pay for them.
Maybe someone can explain to me why the high-risk pool concept makes sense, or represents "small government". Effectively, it seems to me you're telling insurance companies that they can provide people with "insurance", but if anyone ever gets really sick, the government will step in and pick up the tab. But I digress: the point is that whenever anyone has to really think about how to make sure everybody can get affordable health insurance, they end up with a government-regulated, government-subsidised system. The details vary widely; even some of the fundamental principles you're trying to achieve may vary widely. But it looks to me like some of the ferocity of the health-insurance debate is the result of people furiously refusing to accept conclusions they themselves know they can't get around.
Meanwhile, as to Kathleen Sebelius: clearly the rollout of Healthcare.gov has been a disaster, Congress is playing a helpful role by holding HHS's feet to the fire, and hopefully once Obamacare is up and running, heads will roll. It would be productive if, given that all reform proposals (including their own) include some form of large-scale government intervention in the health-insurance market, Republicans could concentrate on slamming the Obama administration for poor execution of its health-insurance law rather than on wholesale critiques of the concept of government health-insurance reform as such. That's not going to happen, but it's important to continue to say these things.
