Matt Yglesias

Kent Conrad Hasn’t Understood T.R. Reid Very Well

One of the strangest spectacles throughout the health reform debate has been Kent Conrad’s insistence on repeatedly citing T.R. Reid’s book The Healing of America as a source for erroneous factual claims about foreign health care systems. It’s especially noteworthy because as best I can tell not only are the things Conrad thinks are true not true, but Reid’s book says they’re not true.

This all started when Conrad started saying Reid’s book shows that France has a great system without a public option. In fact, the French system shows no such thing and Reid’s book says that “In practice, France acts like a single-payer system.”

Today, though, Conrad went on Dylan Ratigan’s MSNBC show. Ratigan’s hobbyhorse for weeks (months?) now has been to complain that the health reform bill isn’t dramatic enough in its impact on most people. He wants to see something more Ron Wyden-style that would sever the employment-insurance link more rapidly. I think this is a fair point, but it’s not practical and in the long-term it’s not going to matter since the bills in congress do head in that direction. Either way, Ratigan had Conrad on this morning to harass him about this, resulting in a dialogue in which Conrad asserts that Germany, France, Japan, Switzerland, and Belgium all have great employer-based systems. Ratigan points out once or twice that this is wrong, but Conrad insists, Ratigan seems to lose his confidence and pivots to Singapore, then Conrad comes back to his claim about Europe and Japan and says everyone should read T.R. Reid:

I think it’s fair to say that Ratigan had this right the first time. Employment isn’t totally irrelevant to French health care, but it works nothing like our employer-based system and most French people are covered by what amounts to a single-payer system. In Germany employers have a big role in financing people’s insurance premiums but, again, that’s not the same as what America’s employer-based system does. In America what happens is that the cost of your premium is split between you and your employer, but your choice of insurance options is determined by your employer’s HR department. The German system is more like a payroll tax that funds government subsidies for you to sign up for the “sickness fund” of your choice. In Switzerland “individuals — not employers or the government — choose from a broad array of health plans, sold by private insurance companies.”

I don’t know anything about Japanese or Belgian health care and I don’t want to look it up. But the common thread here, it seems to me, is that you shouldn’t confuse the idea of financing things through a levy on employers with the idea of a system in which the employer actually plays a large role. You might like at Social Security and decide that it’s an employer-based pension system, since it’s financed largely through payroll taxes and historically speaking eligibility for benefits was related to which sector you worked in (initially, for example, agricultural workers and domestic servants were excluded). Today, though, it’s actually a public sector pay-as-you-go pension scheme.

Does Government-Provided Health Insurance Violate American Values?

According to Kent Conrad it does. Here he is talking to Ezra Klein:

EZRA KLEIN: How much of this is a product of political systems? Reid has a line in the book where he says the difference between America and France is that the French love their system and change it all the time. The Americans hate their system and can’t seem to touch it.

ENT CONRAD: It’s fascinating, isn’t it? I just don’t know. I’ve been trying to figure this out for a long time. I was very involved back in the ’90s reform effort. I was part of the Chafee-Durenberger centrist alternative to the Clinton plan. I’ve been searching ever since for models that I thought would fit America’s values and American culture. I’ve felt for a long time that a system that’s not government-run, but does have universal coverage, does a good job on quality and containing costs, and has the elements we see in some of these other countries is most likely to fit here and win political acceptance and be effective. Somehow in this debate, we’ve gotten very sterile. If it’s not public option, somehow it won’t be effective at providing competition to the insurance industry. I just don’t think that’s what the Reid book shows or what other observers of international systems would conclude.

As I read that I was saying to myself “but what about Medicare.” Fortunately, Ezra asked about this:

EZRA KLEIN: The question of values always runs into the existence of Medicare. You can imagine people saying that Medicare was simply too government-driven when President Johnson was trying to enact it. But Americans love Medicare.

KENT CONRAD: I’ve thought about that a lot. T.R. Reid’s book is so interesting on this point. Different parts of our system fit different models. Part fits the Beveridge model. Part fits the Bismarck model, where employers and employees contribute and it’s private doctors and hospitals. And other parts are national health insurance, which is Canada, and that’s Medicare. For our senior citizens, we have adopted the model that is closest to the Canadian model. But there are serious issues with that model if it spreads society-wide in terms of waiting times. I don’t think that fits American culture.

This is nonsense. Canadian waiting times are caused by budgetary issues. If they went up to our per capita level of Medicare spending, they would eliminate those waiting times. The relevant difference between US Medicare and Canadian Medicare is that we get more services because we spend more money, not that expanding the system to cover those under 65 would magically cause waiting times.

At any rate, a couple of questions later Conrad is back to talking about culture:

EZRA KLEIN: Do you support the public option?

KENT CONRAD: No.

EZRA KLEIN: Why?

KENT CONRAD: I go back to the T.R. Reid book. I don’t think a government-run plan best fits this culture. A plan that’s not government-run has the best chance of succeeding in being passed into law.

Conrad’s right, of course, that it’s easier to pass a bill that goes easy on for-profit interests than one that includes a public option. But that’s not because of “culture” it’s because of interest-group pressure. And of course one major practical problem with the public option is that powerful senator Kent Conrad opposes it. But Conrad doesn’t—or at least shouldn’t—get to cite his own opposition as the reason he opposes it.

Kent Conrad Erecting New Procedural Hurdles to Health Reform

Budget master Kent Conrad

This is a bit in the weeds, but you should go read Ryan Grim’s story about Kent Conrad directing the CBO to score health care reform in a 20-year budget window rather than the usual ten. This will tend to make the score less accurate, since projections get more and more uncertain the further you go out. It will also make it harder to pass a health care bill. But it will disadvantage the more-liberal House bill more than it disadvantages the Senate bill. And I think it’s usually best to assume that members engage in these kind of procedural moves because they understand their impact—Conrad is trying to kneecap the liberal version of health reform, and considers making it harder to pass any kind of health reform an acceptable price to pay to meet that goal.

Officially, though, we’re just supposed to think that Conrad really, really hates budget deficits. But as Ezra Klein notes, Conrad’s record doesn’t totally support that:

The first came earlier this year when Conrad modified Obama’s first budget. Obama had eliminated a couple of Bush-era gimmicks that made the deficit appear smaller than it really was. Bush, for instance, shortened the budget window from 10 years to five, so the total deficit sounded smaller. Obama’s budget returned it to the traditional 10. And then Conrad changed it back. The Politico reported that Conrad made this decision “because of the uncertainty of long-range forecasts.” Others thought he did it to hide the size of the deficit. In any case, 10 years, as the alert reader will notice, is less than 20 years. If 10 years was too long a time period for certainty, then it is difficult to see how 20 years could possibly be acceptable.

The second came in 2003, when Conrad voted for the Medicare Modernization Act, better known as Medicare Part D. The Congressional Budget Office estimated that the bill would increase the federal deficit by $421 billion and reduce federal revenue by another $174 billion. The total cost to the deficit, then, neared $600 billion. Conrad not only accepted the CBO’s 10-year time frame, but he voted for the bill. His press release enthusiastically touted the fact that the bill would “bring more than $70 million to North Dakota hospitals over the next ten years.”

Conrad’s record in the Senate, then, would lead you to believe a couple of things. For one, he distrusts long-range projections. Even 10 years is too uncertain. He also believes some priorities overwhelm deficit concerns, health-care coverage being one of them. But when faced with a health-care reform that will be deficit neutral within the 10-year time frame, he is demanding that it instead be measured against an even more uncertain 20-year time frame, and by an agency that he claims underestimates savings. The CBO’s scores are terrible, in other words, and come in such small portions!

To be fair to Conrad, the vast majority of soi disant “deficit hawks” on the Hill are huge hypocrites, much worse than Conrad. Conrad didn’t vote for the 2001 Bush tax cut, the invasion of Iraq, the 2003 tax cut, or the Kyl-Lincoln estate tax cut all of which attracted Democratic support, typically from the kind of members who complain about deficits. So in the scheme of things, he really is a committed deficit hawk. Still, per Ezra’s post there’s still lots of wiggle-room in this commitment, and the latest twist makes very little sense on the merits.

Note that the theory that the CBO underestimates the cost savings in health reform isn’t just some nutty theory. Among others, the Institute of Medicine agrees. I think there are sound reasons for the CBO to be conservative in its approach, but we should keep in mind the fact that the CBO’s approach is deliberately designed to be conservative.

Scaled-Back Health Reform?

Jonathan Cohn has an excellent explanation of why Senator Kent Conrad’s notion that we ought to reduce our ambitions in health reform is daft:

Put aside, for a moment, whether this makes sense substantively. It makes absolutely no sense politically. Scaling down legislation basically means gutting the benefits that would go to the working and middle class. In other words, it would help fulfill the fear many of these voters already have and that opponents of reform have tried hard to stoke: That reform doesn’t have much to offer the typical middle-income American.

You can imagine why Republicans might think this is a dandy idea. But why on earth would Democrats agree?

Obviously one answer could be that some Democrats prefer to see health reform defeated, but owing to their partisan allegiance don’t want to come right out and say that.

As I’ve said from the beginning of this process, the most important known unknown in health reform is nothing to do with the Obama administration’s tactics and everything to do with the actual subjective premises of the handful of moderate Democrats who control the balance of power in the Senate. If Max Baucus, Kent Conrad, Mary Landrieu, etc. want to see a universal health care plan enacted there’s nothing stopping them. But if they don’t want to see a universal health care plan enacted, neither the left nor the White House has any particularly impressive leverage to use against them. In the House of Representatives where the leadership does have more leverage, Waxman and Pelosi seem ready and able to deliver the votes necessary to pass a good bill. But if moderate Senators don’t want a good bill, we won’t get one. And I think it increasingly looks like they don’t want one.

Senators Have Agency

The Ironist

In today’s column, Paul Krugman lamented the circular arguments you sometimes see presented as a reason for watering-down reform:

And Senator Kent Conrad of North Dakota offers a perfectly circular argument: we can’t have the public option, because if we do, health care reform won’t get the votes of senators like him. “In a 60-vote environment,” he says (implicitly rejecting the idea, embraced by President Obama, of bypassing the filibuster if necessary), “you’ve got to attract some Republicans as well as holding virtually all the Democrats together, and that, I don’t believe, is possible with a pure public option.”

Timothy Noah had a great example of this near the end of a recent column offering a tour of health care systems around the world:

Afterward, Sen. Ken Salazar, D-Colo., who has since become interior secretary, noted that other countries saw a conflict between profits and health. How could the United States possibly persuade insurance companies to give up profits? [Author T.R.] Reid answered that Switzerland, home to many powerful insurance companies, had done it in 1994 when it adopted the Bismarck model. The insurers fought it tooth and nail, of course, but now they compete energetically to sign up people for basic care on a nonprofit basis because they constitute a customer base for supplemental insurance that they’re allowed to sell on a for-profit basis. This answer didn’t satisfy Baucus. “Perhaps you don’t know how much money [U.S. insurers] have,” he told Reid.

Which would be an amusing and apposite remark from Baucus were it not for the small part that Max Baucus is the most powerful legislative voice on health care policy in the country. It makes sense for Tim Noah or Paul Krugman or Matt Yglesias or TR Reid to ironically step outside the debate and start talking about the political obstacles to really hitting the insurance companies where it hurts. But Max Baucus chairs the Senate Finance Committee! “Political reality” is something pundits and activists need to adjust to, it’s something powerful Senators create.

Co-Ops are No Substitute for a Public Option

Senator Kent Conrad (D-ND)

Ezra Klein’s interview with Senator Kent Conrad (D-ND) is probably the best source for information for Conrad’s thinking about health care co-ops as an alternative to for-profit private plans. I think the interview also makes clear that Conrad’s thinking about this is still a bit on the vague side. Part of the issue is that a lot of the thinking is clearly political thinking, thinking about how to come up with something that Republicans will vote for. As Ezra says and as Jonathan Cohn agrees, the merits of this proposal aside it’s just not a substitute for a robust public health insurance option.

To put it most crudely, the available evidence appears to overwhelmingly indicate that governments can provide health insurance of equal quality at lower cost to the private sector. It’s also true that a certain kind of ideological dogma says this can’t possibly be true. The view behind the public insurance option is that the dogma ought to be put to the test through competition. Proposals that aim to do something, nut that don’t aim to put the dogma to the test, are not a compromise. Indeed, the idea of a “public option” is itself a compromise between ideological dogma and the evidence in favor of single payer. The health co-ops seem like an interesting idea to me, but anything that drops the public plan is a proposal to drop the public plan not really a public plan “compromise.” That said, insofar as Congress is inclined to do this it ought to be done well.

Igor Volsky has some suggestions:

Mayo Clinic (Wikimedia)

1. To exert maximum purchasing power and achieve bargaining clout to compete with provider oligarchies (that are currently setting prices) Congress would have to establish a single national cooperative.

2. Congress should allocate federal start-up funds to quickly establish the cooperative.

3. The cooperative should follow all of the rules of the Exchange. It would have to guarantee coverage at community rates and would not be able to discriminate against individuals with pre-existing conditions, or impose lifetime or annual limits on benefits for any participant or beneficiary. The cooperative must commit an appropriate percentage of premiums towards medical benefits.

4. It should be transparent and accountable to its members and the public.

5. The cooperative should be required to provide the same minimum benefits as private insurers.

6. The cooperative could be required to implement delivery system and payment reforms and “replicate the accountable care organizations like the Mayo Clinic and Seattle’s Group Health that provide a proven model for delivering high quality, affordable care in a non-profit, group practice setting.”

It strikes me as a little weird that this idea seems to be flying into place so suddenly out of left field, but it seems to be gaining a lot of momentum over the past few days.

Health Care Co-Ops

Yesterday, Kent Conrad floated the idea that instead of having a robust public option in health care “exchanges,” we could instead implement rules designed to spur the creation of non-profit “co-ops” that would provide an alternative to private companies without government control. Or, of course, government’s ability to piggyback on Medicare and achieve cost controls. I’ll recommend Igor Volsky’s analysis of the problems facing health co-ops that legislation would have to overcome.

I’ll say that I think this is a pretty good idea, but it stands on its own merits completely apart from the merits of a public plan. In other words, there’s no reason we shouldn’t have co-ops and private plans and a real public plan. Medicine has always been a mix of state, non-profit, and for-profit actors and I think it’s worth broadening the mix of insurance options available to ordinary people.

That said, as an alternative to a public plan this simply doesn’t meet what I see as the main objective of a public plan. But beyond this, I think the larger issue is that you sort of can’t “compromise” around the core political issues here. Insurance companies object to the idea of a public plan because they don’t want to lose business. Anything you dream up that would cause insurance companies to lose business, they’ll object to. After all, what else are they going to do? But anything you dream up that doesn’t cause insurance companies to lose any business isn’t going to accomplish anything meaningful. Insofar as what’s really going on in the halls of congress is that members are trying to balance progressive pressure for a public plan with industry opposition to it, you’re going to keep banging your head against the reality that you can’t split the difference between “incumbents face a new strong competitor” and “incumbents don’t face a new strong competitor.” And incumbents really don’t want to face a new strong competitor—incumbents hate competitors!