Friday, December 13, 2013

In which Ezra Klein shorts Avik Roy

ACA supporters are naturally ticked off that conservatives are now carping at the high deductibles and out-of-pocket maximums in many ACA insurance plans, most notably the bronze ones. Ditto for "narrow networks" -- a limited choice among doctors and hospitals.  The Dish has a precis of complaints from Jonathan Chait, Jonathan Cohn, Kevin Drum and Ezra Klein. Here's Ezra:
What's confusing about this line of attack is that high-deductible health-care plans -- more commonly known as "health savings accounts" -- were, before Obamacare, a core tenet of Republican health-care policy thinking. In fact, one of the major criticisms of Obamacare was that it would somehow kill those plans off. "Obamacare may be fatal for your HSA," warned the Heritage Foundation on 2010. "Health Savings Accounts Under Attack" blared Red State....

Obama's pledge that "if you like your doctor, you can keep your doctor" is also under fire. The issue here is that insurers entering the competitive health marketplaces are tightening their networks in order to cut costs and improve quality. It's worked: Premiums in the marketplaces are far lower than was expected when Obamacare passed.

 This, too, is a success for a longtime conservative health-policy idea..."Narrow networks are not some cruel attempt to limit patient choice foisted upon us by the insurance industry," write economists David Dranove and Craig Garthwaite. "Instead, these plans may provide our best opportunity for harnessing market forces to lower prices."
Fair enough. However, when Klein asks his old healthcare sparring partner Avik Roy to explain the apparent hypocrisy, he lampoons Roy's response without engaging its substance, which is perfectly consistent with Roy's longstanding attack line against the ACA. There are, I believe, internal contradictions in that attack line, and Klein has dealt with them elsewhere. But not here:

Another answer was that Republicans believe that Obamacare is giving policies they otherwise like a bad name. "Giving consumers the choice of narrower physician networks and higher deductibles, in exchange for lower premiums, is a good thing," e-mails the Manhattan Institute's Avik Roy. "The problem with Obamacare is that people are trading narrower networks and higher deductibles for higher premiums.  And that’s because of all the other stuff that Obamacare does to the insurance market."

The problem, in other words, isn't the higher deductibles and the tighter networks -- it's all the other stuff. In that case, it's weird Republicans are focusing on the higher deductibles and tighter networks.

The GOP's problem is that the "other stuff Obamacare does to the insurance market" is wildly popular. Roy is right that the ban on discrimination against preexisting conditions, the limits on age discrimination, the elimination of lifetime caps, and related policies raise the costs of insurance. But Republicans don't want to oppose any of that directly.
In his endless one-on-one healthcare roundtable with Klein, Roy objected to only type of the "other stuff" Klein lists here: the limitation on age rating, whereby the oldest policyholders can be charged no more than three times as much as the youngest for a given policy (in the current individual market, the ratio can be as high as 6-to-1). That is his hobbyhorse, and he's made himself a spokesman for the young and relatively affluent (i.e., unsubsidized) buyers on the individual market who may be subject to "rate shock" when ACA coverage rules take full force on Jan. 1.  He has also taken issue with the "minimal essential benefits" mandated by the ACA, which decree that you must be covered for (and pay for) childbirth even if, say, you're a couple over 50, or for mental health benefits even if you feel confident you won't need them.  He acknowledges, though, in his roundtable with Klein, that the essential benefits plus the ACA surtax on expensive insurance plans (which he should support) add only about 10% to the increased price. He is not, however, against guaranteed issue (no price hike for preexisting conditions) -- nor, to my knowledge, against banning annual and lifetime caps on benefits.

In other words, Roy is consistent in his complaint that yes, we should all have substantial "skin in the game," i.e. be responsible for a large share of our healthcare costs -- but no, we should not have to pay for various services we may not need or want, and the young should not subsidize the old.  Here's how he put it in the roundtable:
So I think you’re right that the Bronze, purely from an actuarial value standpoint, the Bronze plans are pretty close to a reasonable insurance product. The challenge there is that Lanhee Chen and Phil Klein and some others have looked at this. If you actually look at plans in the individual market today in California, say, that are comparable to the Bronze plan products, so they have the $6,500 deductible, they have comparable co-pays, etc. The Bronze plans on the ACA exchanges are much more expensive because of all the other things—the benefit mandates, some of the risk pool change, etc. So there’s a middle ground, and again it is the devil is in the details.
Roy's complaints about community rating and essential benefits may be wrongheaded -- and his rooted enmity against the ACA is, I think, susceptible to a charge of bad faith, politely implied by Klein in the roundtable:
I think if somebody read your writings, right, they would say you hate this goddamn bill. Like you’re not one of the people who’s a repeal dead-ender on this, so to speak, but you’re very negative on it. You think it’s a bad bill. You would have liked to see it repealed. I mean I think it’s more that you’ve accommodated to the reality of it as opposed to you support it.

And then you talk here and it’s like well, the Bronze plan is kind of almost where I want it to be. It’s 5%, 10%, and maybe I’d like to see a slightly different approach to age rating, but that would obviously bring some other issues you’d have to deal with in terms of how do 55-year olds get insurance, maybe you subsidize them more. I don’t know what you do there. But it doesn’t sound that far. And this goes to something that I’ve always found is sort of fascinating about this bill.

Back in the day when we’d talk about the Swiss system, if we were talking about how do you take a first step towards it, something like this bill, like what Mitt Romney, a candidate you advised (although not when he was running for governor) did in Massachusetts, or what Senate Republicans proposed in the 90s, would have seemed like a good step. And I get having issues with this bill and wanting to sort of set the dials in different places from where it is. Frankly, I have a bunch of those issues myself, and in some ways I’d probably go a little bit lower on the actuarial value as well.

When I talk to you here, the vehemence of it seems a little bit surprising, and the focus only on the folks who will pay more. It actually seems like you have a significant zone of agreement.
Moreover, as I noted before, Klein also exposed the extravagant beside-the-pointedness of Roy's favored conservative nostrums, forcing him to acknowledge that the one common denominator among the very diverse national health systems that effectively control costs is government control over pricing.

But it really is not inconsistent for a conservative to assert that individuals should shoulder a large percentage of their healthcare costs but should not be forced to pay for services they don't want or need, or to subsidize other policyholders any more than is absolutely necessary. In this case, Klein gave Roy unduly short shrift.

1 comment:

  1. Roy's pandering and dodging and weaving no doubt frustrates Klein. Actually, with only a few exceptions (birth control pills being one), the Administration deferred to the insurers to define "essential health benefits", which I believe was a big mistake, but Roy and other critics ignore this. Having Federal (i.e., uniform) standards for health insurance would simplify the purchase of insurance; as it is, insurers are offering many plans with only marginal differences within each of the four categories, mainly as a way to mitigate the death spiral risk, but at the expense of simplicity and certainty for the insureds. As for limiting age discrimination, that ACA even allows the discrimination was a big mistake. Are the nearly old at greater risk? Absolutely. But they are at much lower risk than a young person with a chronic illness, and it's the explosion in the number of people with chronic illness that is driving the health care spending crisis. Besides, studies have already shown that limiting age discrimination has had a very small effect on premiums; rather, it's the prohibition on discrimination against the already sick that is the primary source for the increase in premiums.