Thoughts on the President's Speech

I'm much happier with this speech than I'd expected. I think the President made a strong case for the public option, which was in itself good. And he also referred to a plan that includes the public option "my plan". That's good, too.

But, even better, I think the President drew a line in the sand on the public option. A fine line, and a line that is open to some interpretation, but a line nonetheless. I haven't gone back to the video to confirm my notes, but I am pretty confident that I got at least the gist: he's open to any alternative to the public option that achieves its goals, that is, anything that insures that all Americans have access to affordable insurance. Short of a single-payer system--which is certainly not in the cards today and I doubt will be in my lifetime--I don't see how you achieve that goal without a government-backed insurance plan that introduces real competition into the market.

Both substantively and tactically, I think that the President made a smart move by mentioning medical malpractice reform. Republicans have a valid point about fear of lawsuits and the cost of medical malpractice insurance being a contributor to the rising cost of health care. It is far from the biggest cause, but it is a cause and we should be looking at ways to address everything that's contributing to the spiraling cost of health care in the US. I'm genuinely interested in what happens with this. Tactically, of course, it makes it just a little bit harder for the Republicans to use malpractice reform as their default alternative to broader health care reform.

Update: Josh Marshall also notes the President's drawing a sort of faint line in the sand on the public option, though he is a bit more skeptical than I am. I agree with Josh's contention that there is a lot of wiggle room in the President's position, but, I think it gives those of us who support the public option rather more leverage than I'd expected from the speech.

A Friend Asks about Health Reform

A conservative friend of mine sent me the following email this morning:

Tell me what’s wrong with this idea:

• Mandate that any employer offering health insurance must also offer the job without the insurance (ie at a higher take home rate) [this would very likely motivate people to go for the dollars and buy their own insurance, insurance that is likely to be true catastrophe insurance not an expensive maintenance contract]
• Mandate that everyone should carry a minimum level of catastrophe level insurance [like auto]
• Set up safety net to cover low income folks with the subsidy calculated based on market rate of minimum catastrophe insurance rates and the subsidy progressive, ie lower subsidy as one’s income approaches the trigger (eg, $75k) and higher as income goes lower

In my mind, people would finally be cost sensitive to insurance, deductibles and medical care; insurance policies would develop away from employers and control of care would remain with doctors/patients.

I think that these are all good suggestions that would drive costs down. There are a few things missing, however.

First, there is no provision for pre-existing conditions which is one of the biggest problems in the current system. A second and related point is that you would not only have to compel people to buy insurance, but also compel insurers to provide it to everyone at a reasonable price.

Imagine that someone with a nasty pre-existing condition--say, diagnosis of pancreatic cancer--and goes to Blue Cross/Blue Shield of Texas and asks to buy catastrophic care insurance. BC/BS will correctly see this person as a ticking time medical cost time bomb. At a minimum this is a person who is looking at an expensive course of treatments with a highly specialized oncologist and also likely one or more complicated and expensive surgeries (perhaps even organ transplant). I could easily imagine that the expected short-term tab for this person's health care would run into hundreds of thousands of dollars and the administrative costs for BC/BS are also likely to be substantially higher than for their typical customer.

If BC/BS is going to sell this person a policy, it is going to be very, very, very expensive because they are not only insuring against unexpected events (this guy could also be in a serious auto accident or develop brain cancer) but also making projections about all but certain costs. In a single-payer system (and, to a lesser extent, with something like the "public option"), this individuals risk just gets priced into the overall risk of the insured pool, i.e., his insurance is subsidized.

A third point is that I think nudging toward catastrophic-care-only insurance is bad policy because it results in both worse health care outcomes and higher costs. For example, maintenance-level care for a diabetic is pretty cheap but catastrophic care (treatment for diabetic coma, renal failure, amputations, etc) is very expensive. We're all better off if diabetics have access to inexpensive, convenient maintenance treatment and policy should nudge in that direction.