An American road to single payer

Ezra Klein offers an astute political forecast:

...if Republicans leave Obamacare gutted and the political arguments that led to it in ruins, there’s not going to be a constituency for rebuilding it when Democrats win back power.

Instead, they’ll pass what many of them wanted to pass in the first place: a heavily subsidized buy-in program for Medicare or Medicaid, funded by a tax increase on the rich. A policy like that would fit smoothly through the 51-vote reconciliation process, and it will satisfy an angry party seeking the fastest, most defensible path to restoring the Affordable Care Act’s coverage gains.

A few thoughts:

1. If a Medicaid income-adjusted buy-in were offered only to nonelderly who lack access to employer-sponsored insurance or other government programs, it shouldn't require more funding than the ACA marketplace. OTOH, if the AHCA has passed, Democrats will need to replace the revenue provided by the ACA taxes Republicans will have repealed (close to $900 billion over ten years, rather than the $600+ billion Klein cites, if you include revenue from the repealed ACA mandates).

2. If a buy-in were subsequently offered to employers -- perhaps starting with small employers -- that buy-in would amount to a voluntary payroll tax.

Clinton avoids hard questions on healthcare reform in Ezra Klein convo (and Klein lets her)

Ezra Klein sat down with Hillary Clinton for an in-depth policy discussion. I find many of her responses frustratingly circumlocutory and vague. Let's take the exchange over healthcare reform, piece by piece.

Ezra Klein To ask about another interesting fissure from the primary: You often said that your preference was that we built on Obamacare to get to true universal coverage. And I’ve read your plan around Obamacare, and it doesn’t do that yet. So what would be your approach for taking that program from the roughly 90 percent covered that it’s at now to 100 percent?

Hillary Clinton Well, let’s celebrate that we’re at 90 percent coverage. And I think that is one of the differences: I see the glass at 90 percent full, not empty. And [I believe in not] starting over again — either by repealing it, as the Republicans advocate, or by coming up with a whole new plan.

Well yes, there's some cause for celebration. But given the starting point pre-ACA, the glass is far from 90% full.  According to Gallup's latest survey results, the uninsured rate has been cut from 17.1% since late 2013 to 11% now -- that is, reduced by about 35%.

Clinton continues:

Well, Ezra Klein, Republicans may not have "plan" to save insurance markets after King. But they may deal

Republican Senators Orrin Hatch Lamar Alexander John Barrasso are out today with a lightly sketched "plan" to salvage premium subsidies credited through the ACA's federal exchange if the Supreme Court rules for the plaintiffs in King v. Burwell.  The proposal closely resembles the  possible post-King negotiation that former HHS Secretary Michael Leavitt outlined to me. Here's Hatch et al:

First and most important: We would provide financial assistance to help Americans keep the coverage they picked for a transitional period. It would be unfair to allow families to lose their coverage, particularly in the middle of the year....

Second, we will give states the freedom and flexibility to create better, more competitive health insurance markets offering more options and different choices. Republicans understand that what works in Utah is different from what works in Tennessee or Wyoming. We want to give states the time and flexibility to design health-care systems that work for them, not for the bureaucrats in Washington.

People who live in states that have state exchanges will continue to be subject to Obamacare’s costly mandates and rules, along with the subsidies. But their states could also have the benefit of our solution. Every state would have the ability to create better markets suited to the needs of their citizens.

And here's Leavitt last week:

Obama soft-focuses our domestic ills

I usually find Obama interviews, especially long ones, reassuring. His understanding of issues is nuanced and multi-tiered. But his responses to Ezra Klein's questions about domestic issues and trends struck me as disappointingly unfocused, or off-focus, on several fronts. For example:

1. Asked about the causes of growing inequality, he back-loaded labor law:

Now, there are a whole bunch of reasons for that [stagnant middle class wages]. Some of it has to do with technology and entire job sectors being eliminated — travel agents, bank tellers, a lot of middle management — because of efficiencies with the internet and a paperless office. A lot of it has to do with globalization and the rest of the world catching up. Post-World War II, we just had some enormous structural advantages because our competitors had been devastated by war, and we had also made investments that put us ahead of the curve, whether in education or infrastructure or research and development.

Gruber clips inspire powerful condensed defenses of the ACA

On occasion, I've made my case against opinion writers' "paragraph briefs," which make an omnibus case for something by packing disparate and often dubious assertions in comma-separated series.

An often more powerful variant, though still subject to slipping in slugs and ringers, is the link-packed paragraph brief.  These cite an array of evidence in a way that dares the reader not to take the cited authorities on faith -- each of them, maybe a half-dozen, are a click away. Of course, most of us do take most of them on faith most of the time. But the cards are on the table.

The Gruber brouhaha has driven a lot of progressive policy wonks to retrospection -- reviewing the legislative and political history of the ACA while chewing over Gruber's assertions that the process was deceptive and his apparent early impression that federal subsidies to states that built their own exchanges might not be immediately forthcoming.  That process has given rise to what's struck me as two particularly powerful paragraph briefs.

First, Ezra Klein delivers a short legislative history that rebuts the preposterous Halbig/King contention that the ACA's drafters intended to make premium subsidies available only to buyers in state-run exchanges:

Republicans wouldn't scrap the main driver of ACA rate shock

As the reality that millions have benefited from full implementation of the Affordable Care Act takes hold, more and more Republicans are resorting to what Ezra Klein has dubbed Fauxbamacare: propose to repeal the hated law, replace all its popular components without providing any details.

Progressives counter that if you claim you want to make health insurance affordable to all, unless you come out in favor of a single payer system there is no real alternative to the basic structure of the ACA: guaranteed issue (that is, no variation in health plan price based on a person's medical history), an individual mandate or equivalent* to offset the influx of sick people into the risk pool, and subsidies (or Medicaid) for those who can't afford the premiums.

While that's mostly true, it's also true that some plans crafted to current conservative specs look significantly if not radically different from the ACA. The vast majority of Republican elected officials have shied from putting forward such a plan -- or ignored the one put forward by Senators Coburn, Burr and Hatch --  since such alternatives require tough tradeoffs. The main difference is that conservative schemes give insurers more leeway to sell plans with skimpier benefits and lower premiums. They eliminate or vastly reduce the Essential Health Benefits (EHBs) mandated by the ACA. They loosen the allowing "age banding" of premiums -- the degree to which older buyers can be charged more than younger ones -- from the ACA-mandated 3-to-1 to the pre-ACA norm of 5-to-1.

It's true that for healthy people who were buying insurance in the individual market prior to the ACA, the law's coverage rules substantially drove up the premium price. Rate shock is a real phenomenon. As the complaints poured forth, the EHBs were a prime attack point.  "I'm 55 -- I don't need childbirth coverage." "I'm of sound mind -- I don't need mental health coverage."  Limited age-banding was also a rallying point, since the 5-to-1 ratio was based on actuarial calculations.  Why should a 23 year-old pay more so that a 58 year-old can pay less?

These complaints have some legitimacy. The EHBs and age-banding limits involve tradeoffs that can be argued from either side. But they are not the prime drivers of the rate hikes caused by the ACA.

Bringing a fire extinguisher to a flood

A few days ago,  a friend sent me a 297-word graduation speech by economics Nobel laureate Thomas Sargent, delivered in 2007, that's been making the rounds. The speech consists of twelve precepts, delivered with economists' economy, that have been hailed as a distillation of "everything you need to know about economics," as Ezra Klein -- too fond of such sweeping overstatement since launching Vox -- put it.

The piece rubbed me the wrong way, not because its precepts are not true, but because their uber-message seems out of step with our slow-growth, post-meltdown, austerity-hog-tied economy. The upshot, as Josh Barro summarizes it this morning, is that there's no free lunch. The two bullet points that bugged me in particular  were these:

4. Everyone responds to incentives, including people you want to help. That
is why social safety nets don't always end up working as intended.

5. There are tradeoffs between equality and efficiency.

To take the second first: sure. But as we've learned in the last few years, there's also tradeoffs between inequality and efficiency. When the top 1% grab 95% of the fruits of growth, they tend to 1) use their outsized capital unproductively, increasing their rents, 2) hollow out their customer base, and 3) extend their control over the political system, eroding checks on their own power and ensuring their further corruption.

"How politics makes us stupid": Ezra Klein's hypothesis, Chait's case study

Serendipity. On one sunny Sunday, Jonathan Chair purported to explain the controlling dynamic in U.S. politics. And Ezra Klein purported to explain the controlling dynamic in politics, period. Their hypotheses are congruent.

Klein deployed social science research from a team led by Yale law professor Dan Kahan demonstrating that all of us actively resist evidence that challenges our assumptions. In matters of passion and identity, we almost literally can't see contrary evidence. Exhibit A is an experiment in which people who had already demonstrated their ability to use math to arrive at a counterintuitive conclusion disabled that capacity when it threatened to undermine a political conviction.

In Kahan's experiment, people who had previously parsed data about the effectiveness of a skin cream were shown similarly presented data about the effectiveness of gun control. And, lo:

For Ezra Klein, the past isn't past. It's news.

New York Times media columnist David Carr, delving into why Ezra Klein could not find a home for his new venture at the Washington Post, cites Henry Blodget in a claim that digital media is different in kind from print media, and builds up to this:

Great digital journalists consume and produce content at the same time, constantly publishing what they are reading and hearing.

Klein himself, however, describes the mission of the new venture as doing exactly the opposite:

Early last year, Melissa Bell, Matt Yglesias and I began wrestling with a question that had bugged all of us for a long time: why hadn't the Internet made the news better at delivering crucial context alongside new information?

This year, we're founding a new publication at Vox Media in order to do something about it.

New information is not always — and perhaps not even usually — the most important information for understanding a topic. The overriding focus on the new made sense when the dominant technology was newsprint: limited space forces hard choices. You can't print a newspaper telling readers everything they need to know about the world, day after day. But you can print a newspaper telling them what they need to know about what happened on Monday. The constraint of newness was crucial.

What Avik Roy won't tell you about healthcare in Switzerland and Singapore

Avik Roy so despises the Affordable Care Act that he wants it to swallow Medicare and Medicaid.

According to Roy's latest sketch of a conservative plan to offer universal health insurance, Medicare and Medicaid are the chief culprit in the United States' uniquely expensive healthcare system -- notwithstanding that they pay less per procedure than private insurers and patients, and that most experiments in alternatives to fee-for-service payment are located within them.

In Roy's free-market healthcare vision, Medicare and Medicaid patients would be transitioned onto deregulated health insurance exchanges, where insurers would be free to offer even skimpier insurance than the current exchange bronze plans, designed to cover just 60% of average patient costs. They might also be free to expand the ACA's age-rating, which limits the ratio of older patients' premiums to young patients' to 3-to-1, and be freed from offering the ACA's minimum essential benefits.

To flesh out this vision, Roy touts the virtues of his two favorite national systems: those of Singapore, which features mandatory individual health savings accounts (HSAs), and  Switzerland, in which everyone buys insurance on private exchanges (subsidized for about a third of the population). But as is his wont, Roy fails to mention the feature that enables each of these systems work: strong government influence over pricing.

Take first Roy's sketch of Switzerland's free market system:

The ACA's pre-existing condition

Ezra Klein is that rare interviewer whose questions are determined almost as much by what his interlocutor just said as by what he's got planned.  That often includes teasing out real or apparent contradictions between two statements in the interview. So it was in this exchange between Klein and healthcare consultant/ACA critic Robert Laszewski:

K: That brings up two issues. The first is the individual mandate, which begins this year but is a much bigger penalty in year two, and then even bigger in year three. So one question here is how well that works.

RL: I have an interesting answer for that. I think the mandate is almost worthless because the word is getting around that they can’t really collect it. And by year three, it’s really a lot of money. I think there’ll be real pressure to just get rid of it. I don’t think you can force people to buy this insurance. If they don’t want it there’ll be a political groundswell to get rid of it. So in my mind the individual mandate is kind of irrelevant to this.

Writhing out of narrow networks in a medical seller's market

In a recent post, I voiced some unease about the "narrow networks" offered by a majority of plans on the ACA exchanges. According to a McKinsey study cited by the WSJ, 70% of silver plans are "ultranarrow" (offering access to five or fewer hospitals) or "narrow" (offering access to thirteen or fewer hospitals). Doctor rosters are similarly trimmed.  These networks reflect insurers' relative lack of pricing power versus providers.  As Ezra Klein highlights in a column spotlighting the missing link in U.S. healthcare reform, "It’s health-care providers -- not insurers -- who have too much power in the U.S. system."  That's because the U.S. is the only wealthy country in which government does not effectively set prices.

Insurers are thus retailing overly expensive care.  You can't blame them for trying to cut out the most expensive providers in our most-expensive-in-the-world market.  In that prior post, I highlighted one alternative that many employer-sponsored (or funded) plans provide:

Free market visionary foresees healthcare apocalypse

Free market fundamentalist John H. Cochrane gave himself a Christmas gift on the Wall Street Journal op-ed page on Dec.25, allowing himself to anticipate the Affordable Care Act's certain imminent demise. Then, like a Left Behind acolyte imagining the apocalypse, he moved on to a vision of the new healthcare heaven and earth (liberally adorned with those free market halos, stock tickers):

We need to permit the Southwest Airlines, LUV -0.18% Wal-Mart, WMT +0.42% Amazon.com AMZN +0.95% and Apples of the world to bring to health care the same dramatic improvements in price, quality, variety, technology and efficiency that they brought to air travel, retail and electronics. We'll know we are there when prices are on hospital websites, cash customers get discounts, and new hospitals and insurers swamp your inbox with attractive offers and great service. 

The Affordable Care Act bets instead that more regulation, price controls, effectiveness panels, and "accountable care" organizations will force efficiency, innovation, quality and service from the top down. Has this ever worked? Did we get smartphones by government pressure on the 1960s AT&T T +0.30% phone monopoly? Did effectiveness panels force United Airlines and American Airlines to cut costs, and push TWA and Pan Am out of business? Did the post office invent FedEx, FDX +1.01% UPS and email? How about public schools or the last 20 or more health-care "cost control" ideas? 

The long and the short of income inequality

Ezra Klein made a splash a few days ago by arguing that Obama is wrong to call rising inequality the defining challenge of our time, asserting that jobs should take precedence: "Growth simply isn't producing enough jobs. This is a more severe and more urgent problem than inequality.

Today, Paul Krugman counters that inequality that the president was right -- first because stagnant incomes may have contributed to the debt crisis and are now depressing consumer demand, but more fundamentally, because the wealthiest have converted their disproportionate economic power into disproportionate political power, corrupting the country's ability to address its policy challenges.  The  the super-0rich, Krugman charges, triggered the financial meltdown by building a bipartisan consensus for financial regulation -- and have crippled the recovery by demanding austerity.

Klein's binary choice between addressing unemployment or austerity seems fundamentally mistaken to me, I would supplement Krugman's analysis with research by Peter Turchin (thanks, T. Greer), who has identified very long-term cycles of expanding and contracting inequality, and tied them chiefly to the supply of labor:

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:

A caveat for Ezra Klein

[updated, with a rather large caveat to the caveat...]

..who has a cogent set of questions about how well HealthCare.gov will be working as of Dec. 1 and going forward.  On one key question I think there's a moderating factor:

9. Where the Dec.1 deadline really matters is for people who've already had their plans canceled and who need to be able to sign up for a new one in time for it to start on Jan.  1. If the Web site isn't working smoothly for these people in the next week or so it'll be an utter disaster when 2014 comes and many of these people find themselves uninsured and some get sick.

Most people subject to policy cancellations in the individual market are probably not eligible for subsidies, since they've already found insurance affordable. That means they don't really need HealthCare.gov.  They can easily get complete information about their options on ValuePenguin and then sign up directly with an insurer. [UPDATE: I'm afraid my premise here is severely compromised; William Ocasio reminds me that a recent Families USA study found that 71% of those currently in the individual market are below 400% of the Federal Poverty Level, and thus potentially eligible for subsidies. In practice, though, many people above about 270% FPL are not subsidy-eligible -- you only get a subsidy if the full cost of the benchmark silver plan exeeds a benchmark percentage of your income, and plan prices vary pretty widely from market to market. Still, probably more than half of those subject to cancellation are in fact eligible for at least some subsidy.]

Those who have received policy cancellations and are eligible for subsidies will need to get a subsidy application processed by hook or crook (that is, by online, phone or print application to the federal government) by Jan. 1. If they can't, I would imagine that some kind of retroactive subsidy payment will have to be worked out, after a lot of angst. For what it's worth, the subsidy-eligible probably won't be subject to rate shock, unless they're at the very top end of the scale, where the subsidy can shrink to near nothing.

Related:
Bypassing HealthCare.gov, cont.
Who needs HealthCare.gov?

The ACA as a framework for (further) conservative healthcare reform

Austin Frakt does AEI's James Capretta the honor of seriously considering* elements of Capretta's attempt (with Douglas Holtz-Eakin) to fill in the long-empty "replace" blank in Republicans' purported "repeal and replace" program for the Affordable Care Act. After spotlighting various lacunae as well as potentially workable elements in Capretta's "decentralized, market-diven alternative to the PPACA," Frakt comes to a core point, implicitly questioning whether conservative healthcare wonks are acting in good faith:

6...Democrats are well aware of the limitations and problems with the Affordable Care Act. Some are so troubling that the administration is considering some interesting proposals that would require Congress to act. Point being, there is leverage for some negotiation on some aspects of the law. And, crucially, some of the things Capretta has proposed fit within the structure of the ACA, such as allowing Medicaid enrollees to buy exchange plans (see Arkansas), capping the employer-sponsored insurance tax subsidy (see the Cadillac tax), or making exchange plans more catastrophic. But that brings me to …

We're still in the sequester's grip

George Packer zooms out from the latest fiscal skirmish to assess the state of budgetary warfare in the Obama era:

President Obama and the Democrats in Congress appear strong for refusing to give in to blackmail.

But in a larger sense the Republicans are winning, and have been for the past three years, if not the past thirty. They’re just too blinkered by fantasies of total victory to see it. The shutdown caused havoc for federal workers and the citizens they serve across the country. Parks and museums closed, new cancer patients were locked out of clinical trials, loans to small businesses and rural areas froze, time ran down on implementation of the Dodd-Frank financial-regulation law, trade talks had to be postponed. All this chaos only brings the government into greater disrepute, and, as Jenny Brown’s colleagues dig their way out of the backlog, they’ll be fielding calls from many more enraged taxpayers. It would be naïve to think that intransigent Republicans don’t regard these consequences of their actions with indifference, if not outright pleasure. Ever since Ronald Reagan, in his first inaugural, pronounced government to be the problem, elected Republicans have been doing everything possible to make it true.

Could a "doc fix" have a bigger impact on U.S. healthcare than the ACA?

Two interrelated features of the U.S. healthcare system are probably the primary causes for the uniquely high cost of healthcare in the U.S.: weak government control over pricing, and the fee-for-service payment model.

These interrelated weaknesses are exacerbated, as a weekend Washington Post exposé showed, in that Medicare pretty much lets doctors determine the rates at which they paid, by leaving it to the AMA to produce estimates of how long each procedure takes. Surprise! The doctors' chief trade group massively pads the estimated times required for most procedures. 

Even if procedure prices were based on accurate time estimates, free-for-service incentivizes providers to perform a high volume of the most expensive procedures. Nonetheless, countries in which the government imposes monopsony price control -- i.e., every other wealthy country in the world -- generally manage to deliver universal healthcare at two thirds to half the cost per capita of healthcare in the U.S.  Government control over pricing, as Ezra Klein recently forced healthcare free market evangelist Avik Roy to admit, is the sine qua non of effective heathcare cost control.  And we in the U.S. don't have it, as a study published in Health Affairs ("It's the Prices, Stupid...", Gerard F. Anderson et al., 2003) explains:

Why I'm glad that Democrats didn't change the Senate rules

Almost since Obama took office, almost every writer on politics whom I enjoy reading most, driven mad by GOP obstruction in the Senate, has urged filibuster reform.  Let Harry Reid's latest complaint stand in for a long statistical litany of GOP obstruction: he has had to deal with over 400 Republican filibusters, compared to Lyndon Johnson's one. 

Without doubt, Senate rules could use some rational tweaking. But I have argued since 2009 that the problem is not so much with the Senate rules as with the GOP destruction of governing norms. Instead of a loyal opposition we have had a nihilist one, unwilling to let the majority govern (with a rational level of resistance and negotiation to shape laws more to the minority's liking) and abide the electoral consequences of the laws they pass, unwilling to let the executive branch be staffed so it can perform its constitutional functions, unwilling to allow the lengthy enactment process to work for laws already passed and signed.

The problem is not so much the rules as the GOP; such nihilist opposition is dangerous, and bespeaks graver danger should the extremist party gain control of the presidency and both houses of Congress. Against that very real possibility the filibuster stands as a bulwark: I would rather let the GOP inhibit the Democrats' ability to pass legislation and fill vacancies than enable the GOP to wreak legislative havoc unrestrained if it has not moderated before the next time it gains power.