Heresy on Health Care

In my new FindLaw column, “Should Advocates of Single-Payer Health Insurance Oppose the Public Option?” (to be published later today), I take a position on health care reform that I would not have expected to take even a week ago. Specifically, I argue that the "public option" in health care reform -- that is, having the government create a new health insurance program to compete with private insurers like Blue Cross/Blue Shield -- is not the next best alternative to single-payer. If we are not going to have a single-payer health care plan -- and we obviously will not, this time around -- it would actually be better to have a regulated group of private insurers with no public option rather than adopting the "middle ground" of having many private insurers and one publicly-owned insurer.

I realize that this is heresy among liberals, but so be it. I should point out that my argument is not another variation on the timeless liberal versus radical divide, i.e., whether things have to get worse before they get better (a/k/a incrementalism vs. absolutism). Although some of my argument is based on predictions about how the alternative systems would play out over time, I argue that the no-public-option approach is the better of the two remaining choices, not that any short-term pain suffered by the few is justified by the long-term gain to the many as we wait for the public to become so miserable that they rise up and demand single-payer health care.

In any event, I will not rehash my reasons for reaching that conclusion here. Instead, I will point out the political advantages of my approach as well as the aspects of health care reform that are both essential and achievable in the current environment.

Politically, my suggestion should be music to President Obama's ears (which is not to say that he is likely to hear about my suggestion). As a committed compromiser, and facing yet more fierce resistance from the right wing of his party (hardly "moderates," notwithstanding the press's descriptions of these guys), being able to oh-so-reluctantly back off from his "socialistic" proposal should be a natural move for Obama. The key is to use the bargaining chip well, to get the other elements of a good plan in place to make the best of a bad political atmosphere.

What are the essential elements of a good plan? Any good proposal, as I discuss briefly in the FindLaw piece, must regulate the adverse selection and moral hazard problems that have so badly distorted the current system. The plans on offer from the Democrats all involve some effort to require insurers to enroll people notwithstanding pre-existing conditions and to prevent insurers from refusing to provide coverage for people who become ill. Regulations of this type rise or fall on their details and enforcement, and Obama should push to make sure that the resulting legislation in all of its facets is as strong as possible.

In addition, cost controls must be a key part of any plan. (Of course, any non-centralized system is going to have much higher costs than single-payer, but again, we are well past first-best choices). All of the familiar proposals to reduce health care inflation must be included, especially changing the compensation schemes for doctors from piece-work to a holistic approach, emphasizing prevention and improved diets (veganism as first-best, of course), and computerized medical records. In addition, it is important to create competition in geographic areas where it does not currently exist, which amounts to requiring that providers offer insurance in some areas where they currently do not do so.

Would the forces arrayed against Obama go along with all of this? Certainly, they would not like this agenda. For reasons that are not entirely clear, however, they are fiercely opposed to the public option. (I realize that this very opposition might tend to disprove my basic thesis; but I suspect that much of the opposition to the public option is based on rigid ideology as well as fear of the unknown. I also strongly suspect that private insurers would quickly learn how to thrive in a world with a public option.) Given that opposition, this gives Obama and the Democrats serious bargaining power.

The health care debate is spiraling downward, and it is becoming distressingly possible that the entire effort to improve the health care system could once again collapse. We should not view the public option as the cornerstone of any acceptable reform and the line in the sand which cannot be crossed, as many liberals currently do. Instead, the public option should be seen as an unnecessary and potentially harmful part of any reform that could flow from the (badly flawed) basic approaches currently under consideration.

If we must have privately provided health insurance, the important thing is to force private insurers to change their behavior. The bargain that I describe above might achieve that result.

-- Posted by Neil H. Buchanan