Policy Versus Politics, Revisited

This fall, I wrote about policy versus politics in the context of Ted Kennedy’s body of work. Health care events of the past few weeks have reaffirmed many of my conclusions. From the left flank, many prominent bloggers and pundits have taken vastly different stances on whether the current Senate health care bill is worth supporting. Let’s take a look at a one sample question from a 20-question back and forth on the current bill among Nate Silver from FiveThirtyEight, Markos Moulitsas from Daily Kos, and Jon Walker from Firedoglake. You can read all twenty questions here.

After reading all 20 questions and responses, along with other arguments all over the Web, it becomes clear that this is largely a politics versus policy debate. For an additional example from the politics camp, here’s ex-Hollywood producer turned left-wing blogger Jane Hamsher with her own ten reasons to defeat the bill. Her main conclusion is as follows:

The Senate bill isn’t a “starter home,” it’s a sink hole. It needs to die so something else can take its place. It doesn’t matter whether people are on the right or the left — once they understand the con job that’s about to be foisted on them, they agree. That’s why Harry Reid and President Obama are trying to jam it through as fast as they can, before people get wise. So email the list to your friends and family, tweet it and spread the word.

In the policy camp, here’s an example with health care wonk Ezra Klein answering one of Hamsher’s claims (his full 10 answers to Hamsher can be viewed here):

5) Paid for by taxes on the middle class insurance plan you have right now through your employer, causing them to cut back benefits and increase co-pays.

“You” probably don’t have these plans, which are tilted towards the rich, not the middle class. Your plan probably doesn’t cost more than $23,000 a year. And if it does, the only part that gets taxed is the part in excess of $23,000 a year. The average family health-care plan costs about $13,500 — almost a full $10,000 less than the plans this policy taxes. If we don’t manage to slow the growth in health-care costs, this policy will, over time, hit plans that are less generous. But economists consider the excise tax, which functions as a tax on insurers who let premiums grow too quickly, one of the most effective cost-control mechanisms in the bill.

There’s an equity aspect here, too: The problem with the excise tax is that it doesn’t go far enough. All plans should be fully taxable. This policy begins to chip at the edges of one of the most regressive elements of our system: Health benefits, which are mostly given to better-off workers, are protected from taxes, while income isn’t. A worker at Wal-Mart with no health benefits sees his entire paycheck taxed. If that worker goes to buy insurance on his own, the money he uses to buy it is taxed. A worker at Goldman Sachs with a $40,000 health-care plan is getting $40,000 of his paycheck tax-free. It’s wildly regressive, and not something that liberals should support.

Of course, the main reason for political opposition to the bill from the left is associated with the demise of the public option. While the public option would have been a small step forward in providing more competition in certain markets, its merits were largely overemphasized for political reasons. According to the Congressional Budget Office (CBO), the public option passed by the House of Representatives would have covered approximately 6 million or 2% of the 282 million Americans under the 65 years old. The CBO also estimated that this version of the public option would have had higher premiums for consumers, since it would likely have had severe adverse selection, attracting sicker patients on average. A single payer or robust public option would have obviously done more to control costs, but those options were never serious policy options even if President Obama had had the backroom negotiation skills of Lyndon Johnson. In whole, the proposed Medicare expansion would have covered even fewer people than the public option passed by the House.

For many on the left, this was, of course, never about the policy implications of the public option. Rather, the whole debate has been largely about the politics of the public option and what it meant for left-wing morale. After being steamrolled from 2003 to 2007 by a GOP trifecta, the left understandably wanted revenge. The public option was seen as a first step toward the eventual goal of single payer. While the public option would have been a good addition for policy wonks who care about cost control, in reality it was a very small part of the overall bill and the lack of a public option does not necessarily do anything more to preclude future moves toward single payer. (Admittedly, however, the Medicare expansion was perhaps more of a legitimate move toward single payer. Perhaps this should have been the goal of the left from the beginning?)

More importantly, the debate over the public option largely misses the point. The public option, Medicare expansion, and anything else up to and including single payer do not necessarily by themselves do anything to control costs in the long run. Yes, in the short run, they likely do eliminate some excess administrative costs. However, in the long run they do nothing to control runaway increases in costs that, subsides or not, will end up bankrupting the public, the government, or both. Coverage reforms by definition only involve what individuals are covered or not covered by what type of insurance; nothing more, nothing less. Real cost reforms go beyond this to reforming how care is paid for.

Unfortunately, Washington has historically viewed payment reform in the context of payment cuts. This of course leads to limiting of payments but does little to control costs. Real reform that actually bends the proverbial cost curve involves changing incentives and how providers are paid in ways that encourage collaboration, cost control, risk sharing, and sensible evidenced-based rationing. Yes, despite what Sarah Palin may be tweeting, the United States already rations care, largely by socioeconomic status, age, existence of a preexisting condition, and different knowledge levels about how to navigate the insurance appeal process. Rationing by evidence-based effective care and paying for quality instead of quantity are two needed long-term solutions. The Senate and House bills tiptoe in this direction with various demonstration projects. While at first glance, this is too little and too slow, respected health care writer, clinician, and wonk, Dr. Atul Gawande, takes the opposite viewpoint in his latest New Yorker article about how the Senate bill would potentially contain costs.

Another aspect of reform that largely has been forgotten in the political battles over the public option is access, which goes far beyond coverage. Simply insuring individuals does not ensure that there are a sufficient number of providers to care for these newly insured. This is especially true in many rural areas where there is already a severe shortage of primary care providers. Again, here, the Senate and House bills move in the right direction (e.g., payment incentives for primary care and general surgeons who practice in underserved areas), but probably don’t go quite far enough.

Senate vs. House vs. Status Quo

After digesting all of this from a policy standpoint, I would give the Senate and House bills and the status quo the following scores:

Senate:
Coverage: A-
Access: C+
Cost Control: C
Overall: B-

House:
Coverage: A-
Access: C+
Cost Control: C+
Overall: B/B-

Status Quo:
Coverage: C-
Access: D
Cost Control: D+
Overall: D+

Compared to the current system, the bills that have passed each house of Congress achieve much improvement over the status quo, and there is little overall difference between the House and Senate bills.  Both bills will achieve monumental improvements over the status quo in the area of coverage, adding more than 30 million individuals to the ranks of the insured.  Both bills will make more modest gains in the areas of access and cost control. With that said, thousand of lives could be affected at the margins, and it is important for policy wonks and politicos alike to continue to put pressure on Congress to produce the best bill out of conference. However, considering previous attempts at health care reform over the past 60 years, the current political environment, and the arcane Senate filibuster rules, it is outright naive to assume anything better than a “B/B-” was achievable in the first place. Considering the status quo, those who demand that the current bills be killed in favor of the status quo and the faint hope of a better bill are clearly deciding to put politics over policy. Such political calculations matter little to the estimated 45,000 Americans who die each year due to lack of insurance coverage.

Any views expressed here do not necessarily represent the views of any organizations that the author is in any way affiliated with.