Originally posted on PoliticsOlogy
And you thought we were going to just stop talking about the public option...
The Supreme Court will rule on healthcare reform any day now. Their ruling will be followed by endless discussion of what it means, why it matters for the New Deal, who it hurts or helps electorally in November, how it’ll help fundraising for Romney or Obama, etc. But politics and law should not be the chief consideration when analyzing the decision; the most important factor to consider is what it means for healthcare itself. If the law stands with the individual mandate, we’ll get a chance to see if Obamacare works and then tailor future legislation to the expected growth in healthcare spending.
But the most likely outcome is the removal of the individual mandate, which will entail a political reordering. Without the individual mandate in Obamacare, spending will be an even bigger problem. The moral imperative behind healthcare reform demands that policymakers don’t bow to the whims of the unelected branch.
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Many liberals see the loss of the individual mandate as the loss of the bill itself. The mandate is crucial to driving down healthcare costs for everyone, as it forces the young and healthy to participate. Mark Thoma explains the basic economics behind health insurance here. Bottom line: "With the relatively healthy people dropping out of the insurance pool, the price of insurance must go up, and when it does, more people drop out, the price goes up again."
Sarah Kliff comes to a similar conclusion after analyzing what happened in Washington (the state, not the capital). Washington passed a similar bill to Obamacare in 1993. Two years later, legislators decided to repeal the law’s individual mandate. The response? Because legislators had placed so many requirements on companies, like the requirement to take on a person with pre-existing condition:
Health insurance companies, meanwhile, were losing money — and leaving the state. Between 1993 and 1998, 17 health insurance carriers had left the state’s individual market. The two remaining plans — Regence Blue Shield and Group Health, a health maintenance organization — stopped writing policies in 1999. Washington state’s individual market was essentially dead.
Still, there’s reason for optimism. Robert Reich thinks that the conventional wisdom is mistaken, at least about what will happen after the mandate is repealed. A dead private insurance market requires the creation of a public insurance market, the so-called "public option" that liberals love and conservatives hate. Reich thinks that a Court repeal of the individual mandate will make Obamacare stronger, by changing focus from the least to most popular parts of the bill. If the individual mandate is repealed, Reich predicts that the insurance industry will demand the end of the mandate that insurers cover those with pre-existing medical conditions, as it would be too expensive.
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The only problem is that that’s the portion of the bill that is very popular, unlike the individual mandate. Reich predicts that the Court, counterintuitively, by striking down the individual mandate will "open alternative ways to maintain coverage [for pre-existing conditions]—including ideas, like the public option, that were rejected in favor of the mandate." Without any other options, the public option will be reborn. Healthcare will be nationalized. Marx will smile, in conservative's minds, Adam Smith cry, and so on.
Reich explaining the public option in 70 seconds:
This is all wishful thinking. Reich doesn’t explain how the public option could be reintroduced, particularly in a Republican controlled Congress. Jonathan Bernstein makes this point cogently for the Washington Post. He asks why will Congress take the public option up if no one's advocating for it but Reich. But Reich's analysis makes sense and its backed up by Washington's example. If the Court removes the mandate, it could inadvertently kill the private market. If so, legislators will be put in the hot seat to come up with a new plan. And the public option’s out there. Waiting. Always waiting. Let’s hope legislators have the wherewithall to figure that out.
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