Snapping Into Place
Good news for health insurance reform:
The health insurance industry said Wednesday that it would support a health care overhaul requiring insurers to accept all customers, regardless of illness or disability. But in return, the industry said, Congress should require all Americans to have coverage.
The proposals, put forward by the insurers’ two main trade associations, have the potential to reshape and advance the debate over universal health insurance just as President-elect Barack Obama prepares to take office.
This is the right way to understand the mandate question relative to Obama’s mandateless initial proposal. Adding the mandate makes the plan more favorable to insurers. But relative to other concessions one might make, it’s also an idea that makes sense. But there’s no particular need for progressives to do the heavy lifting on this point — if we keep pushing for regulation of the firms, they’ll keep pushing to put everyone in the system, and that’s how the job gets done.
UPDATE: Of course this does raise the question of whether Team Obama had a cunningly brilliant plan or sort of just happened to stumble into a tactically beneficial situation. The latter seems most likely, but really nobody ever accomplished anything major without benefiting from a lot of good luck along the way.
46 Responses to “Snapping Into Place”
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November 20th, 2008 at 9:17 am
I can’t help but think that some insurers are actually excited at the prospect of being rewarded for managing care better than the rest rather than simply underwriting better than the rest. So many probably would be ok with reform as long as the government ensures a level playing field for the insurers.
November 20th, 2008 at 9:26 am
I always thought that Obama’s unwillingness to propose mandates was a generational pander. When you add the proposal that young’ns could stay on Mom and Dad’s insurance until the age of 25 — how cool is that? Now, if kids could get a share of the homeowner’s insurance deduction when they move back in, life would be great! Student Loan bailouts would be Change we could believe in, too!
It’s all good; just as long as I retain the right to shoot the kids on my lawn.
November 20th, 2008 at 9:30 am
As an ex-pat, for the time being at least, I wonder how this would affect me. I don’t pay US taxes, but would I be required to buy into the system? I wouldn’t mind it, considering the plan I currently have will cover me anywhere in the world, EXCEPT the USA.
People here in Japan are constantly shocked by how much I’ve had to pay for health care in the US. I got my teeth cleaned the other day, cost me $15. Spain was the same way, my US insurer had absolutely no problem paying for all the dental work I could get, considering filling cavities cost roughly 1/3 of the cost back home.
November 20th, 2008 at 9:51 am
No – requiring people to purchase coverage merely gives the insurance companies a profit with no risk. We already are required to purchase auto insurance; how about requiring the insurance companies to provide that minimal required insurance at no profit? If they can create a better product or even sell additional coverage (whether the insured needs it or not), good for them – they can make as much profit on that as they want, but the minimum should not give them money.
If I have to give money to someone, I would rather it be through taxes that I have some minimal say in how it gets spent than just giving my money to some company whose interest is *not* in providing me with coverage, but in taking my money to line their pockets.
November 20th, 2008 at 9:54 am
This is exactly what I expected. And Obama was smart to keep the mandate out of his program. Now he has something to give to the insurance industry. And he can get something back for it. And what he gets back better be guaranteed coverage. This has been my concern the whole time. I can’t buy insurance because of pre-existing conditions. My concern about mandates was that I’d be forced to pay for insurance that provides no coverage for those conditions. In other words, I’d subsidize other people’s health while I’d die because my health issues wouldn’t get covered. By not offering a mandate right away, Obama got the insurance industry to cave on the coverage issue in order to get the mandate. Works for me. What’s amazing is that Obama is already changing the world and he’s not even president yet. Who knows? If more things like this happen, maybe Mozilla will acknowledge that ‘Obama’ is a properly spelled word.
November 20th, 2008 at 9:57 am
The entire function of an insurance company is to accurately price someone’s risk so that it can be pooled in a proportional way with everyone else’s risk. If insurance companies are no longer providing that function because the government mandates insurance for everyone at fair prices, what exactly is the purpose of insurance companies? This is a case of either extreme being better than the middle ground; the free market or a government single payer system would both be far more efficient than this.
I guess the idea is we have to bribe the insurance companies with taxpayer money to convince them not to lobby against health care reform? The Democrats won, can’t we just get rid of these people? If we make them even more dependent on government it will just make it harder to get rid of them later.
November 20th, 2008 at 9:59 am
Cut and pasted from Ezra Klein, who says it far better than I ever could:
The question is not whether they’ll offer to sell coverage at all, but at what price? Selling insurance products that no one can afford may mean you’re not technically denying people access to insurance, but it doesn’t guarantee accessibility, which is a necessary precondition for a universal system.
November 20th, 2008 at 9:59 am
On the contrary, I don’t think anyone had to be a genius to figure this out – it’s bargaining 101. Since mandates are basically a sop to the insurance industry (the whole argument in favor of mandates is that without them private insurance would go belly up), the insurance industry should be the ones to push for them. Why concede them in advance when they’re your best bargaining chip? And that’s what’s happening.
I know I, and many others, made this not-so-complicated strategic point right here on this blog and other blogs during the primary mandate-wars. Maybe that’s because I’m even smarter than I think, but I doubt it.
Amazing how lucky Obama’s been in his life, isn’t it?
November 20th, 2008 at 10:03 am
This affected reluctance – “ok, but only if you include mandates” – strikes me as a bit of briar patch strategy. The more important question is whether they will treat customers with chronic illness fairly. If they get government-enforced buy-in to their plans but nonetheless continue weaseling out of claims, then this amounts to a massive windfall for them. The insurers know that 75% of health care spending goes towards chronic illness – they actually need that revenue stream. They just don’t want to get stuck with the final bill for sick people.
November 20th, 2008 at 10:13 am
The politics have changed. I think Obama was just worried last year that mandates would be a tougher political sell, and that pushing for them might hold up or even sink the whole health care reform package. The political power of the anti-government choice-and-liberty crowd has diminished significantly since then.
I’m expecting that we are going to see some other changes in the original Obama health care reform plan.
November 20th, 2008 at 10:29 am
DTM,
So are we just ready to accept and excuse the spreading of parasitic corporations which exist only to enrich themselves at taxpayer’s expense? Because health care is so important that we need to appease all opposition now through any means necessary?
Ok. But this is an expensive way to achieve progressive legislation. I suppose fighting global warming will require massive bribes to oil companies.
November 20th, 2008 at 10:39 am
“I don’t think anyone had to be a genius to figure this out – it’s bargaining 101.”
Yup. And anyone who’s ever bought anything in Asia knows this. You never give up anything without something in return. And you don’t offer anything until it’s demanded.
November 20th, 2008 at 10:41 am
So are we just ready to accept and excuse the spreading of parasitic corporations which exist only to enrich themselves at taxpayer’s expense? Because health care is so important that we need to appease all opposition now through any means necessary?
Yes.
Ok. But this is an expensive way to achieve progressive legislation. I suppose fighting global warming will require massive bribes to oil companies.
Not oil companies. Car companies, utility companies, assorted tech firms and farmers.
November 20th, 2008 at 10:53 am
Managing care is a value-add proposition and some companies do it better than others. There should be a lot more to health insurance than just underwriting and risk pooling. Insurers should have the resources to help doctors determine what is effecting care and what isn’t. They have resources to help their insureds improve their health, etc. We should be creating incentives to get health insurers to get creative in those pursuits.
In this country, there’s a huge percentage of people that will always think that if there’s many ways of doing things with some better than others, you’re better off creating a market where different companies can experiment with different approaches to solving some of these problems with the profit incentive driving improvements. So it’s government’s job to create a market that provides constructive incentives instead of destructive incentives. I can’t wait to work for a health insurer that operates under proper incentives.
November 20th, 2008 at 10:59 am
Why not bribe oil companies Willie? They are the ones funding the anti-science propaganda. I’m sure 50 or 100 billion taxpayer dollars would put a stop to that, and that’s nothing compared to the cost of global warming.
November 20th, 2008 at 11:01 am
Why not bribe oil companies Willie? They are the ones funding the anti-science propaganda. I’m sure 50 or 100 billion taxpayer dollars would put a stop to that, and that’s nothing compared to the cost of global warming.
Sure, go ahead and bribe them too if you like. I was just listing companies that stand to benefit from Obama’s “green revolution” industrial policy.
November 20th, 2008 at 11:47 am
“The political power of the anti-government choice-and-liberty crowd has diminished significantly since then.”
I love it when the choice-and-liberty side loses. Who wants choice or liberty?? Not me! Fuck liberty! Bring on state control of everything!
November 20th, 2008 at 12:11 pm
This is a cunning stunt. I mean, a….never mind.
November 20th, 2008 at 1:46 pm
Chance favors the prepared mind, Matt. When you’re talking about someone who can turn a primary and general campaign season into two sessions of political rope-a-dope and win both of them, I think the adjective “prepared” might fairly be applied.
In every game of skill and chance ever created, the skilled players struggle to hide their grins whenever a loser complains about luck (either his own, or his opponent’s).
All in all, your argument resembles the New Deal denialist argument that FDR was just lucky enough to be inaugurated when the economy was poised to recover on its own, in spite of his useless meddling.
November 20th, 2008 at 2:15 pm
I do have to wonder how much of this is based on looking at Detroit and pondering their future five, ten years from now.
GM et al have behaved like a**holes for years, and are now discovering that, in their time of need, practically everyone in the US is not just happy but gleeful at the prospect of them going bankrupt — that’s what thirty years of lobbying against the environment, labor, and healthcare buys you.
Your average health insurance exec, well aware of the extent to which his company is despised by its customers, may be realizing that there are advantages to no longer aggressively flouting the obvious desires of thepublic.
November 20th, 2008 at 2:50 pm
The private health insurance industry is a vast nickel and dime bureaucracy, complete with 50 state health insurance departments just for good measure. Getting rid of this top heavy nonsense is another good argument for a tax financed single payer system.
I hope Obama remembers the U.S. already spends more per capita on health care than any other country, including those that have universal coverage. It’s no secret how they do it. The problem in this country is political – GOPocrats in Congress caring more about campaign contributors than voters.
November 20th, 2008 at 3:05 pm
Getting rid of this top heavy nonsense is another good argument for a tax financed single payer system.
Thank You!
November 20th, 2008 at 3:54 pm
I’m not so sure. I think that, at the very least, Team Obama understood the dynamic you’re discussing here (and that mandates are beneficial to insurers). The “no mandates” thing was a point of differentiation vs. Clinton and meant to diffuse an easy attack from the right (”I don’t have to buy health insurance if I don’t want to, I’m an Amurikan!”). But after all we’ve seen from these guys, I’m sure they understood the argument from an insurer’s perspective.
November 20th, 2008 at 4:16 pm
This post made me think of a possible pothole of making haste with what I hope will eventually turn out to be the ousting of the disgusting system upon which Americans now rely for health care. How many people do the health insurance companies employ now in jobs (financial, administrative, etc.) that might not exist in a new system? Is it enough that if we took them on full force at a time like this, it could further damage the overall economy more than the current healthcare situation is already doing?
If you suspect that I have any sympathy at all for insurance companies,I assure you, you are dead wrong. My father has deep vein thrombosis and I have severe depression. (I’m a 23-year old student.) My 5 person family pays 36,000 USD per year on healthcare. That is more than 77% of 2005 median household income in the US, plus co-pays, seeing Drs. who don’t acccept insurance (like most reputable psychiatrists, and 18,000 USD last year for a course of Electroshock Therapy. Could we pay less? Sure, but no other plan would cover even the 50%-75% of medical costs that the current one does. Yes, people like me cost the health insurance system a lot in any system, but in the current configuration, they can charge me anything they want because they know no one else will take me because of “preexisting conditions.”
Even worse, state law discriminates against my family because we buy our own insurance (my dad owns a SMALL software company) instead of being able to get a group plan. In the state of VA, students who have had to take time off for medical reasons are required to be covered until they finish with school or turn 25, whichever comes first, as long as its a group plan. My parent’s plan drops me next month.
If we can switch systems without shooting our economy in the face, those bastards can go to hell. Bring on single payer!
November 20th, 2008 at 8:48 pm
mandateing health care insurance while millions are losing their jobs sounds like a no-win situation.
I voted Obama…but have worries that he might be as arrogant as Bush. How’s he going to get the panhandlers on the Streets of Philly or a part time carpenter like me to pay huge health care premiums and if we don’t we’re going to get fined? And what about the millions of new unemployed coming down thru inaugeration day? Medicaid is the Largest health care insurance provider of today. Tomorrow it’ll be much larger as the ranks of the poor grow…who’s going to pay their care? It means more taxes on a declining market where even the billionaires are losing money.
I say fix the economy, stupid! Number one problem that needs to be addressed with Keynesian methods…so no money to spare throwing it down the medical insurance rathole.
November 20th, 2008 at 8:50 pm
This deal has been on the table for a long time. It’s really quite favorable to the insurance industry. After all, most uninsured people are young and healthy and would be net payers into the system, while most seriously ill people are already part of the system (whether in public programs, or on their spouse’s policies) so the insurers would suffer few new high cost suscribers.
November 20th, 2008 at 9:01 pm
The Economist has never admitted to any fear of my terrifying intellect, but I did ask exactly that question on July 8th
http://rjwaldmann.blogspot.com/2008/07/economics-makes-for-strange-sick-bed.html
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