Rahm Emanuel apparently gave as homework to all White House Senior staffers Ron Brownstein's Saturday blog post in the Atlantic, in which Brownstein thumbs his nose a bit a "Democratic liberals" and touts how much of the Baucus plan got into Reid's bill.
Both the Senate bill's priority on controlling long-term health care costs, and its strategy for doing so, represents a validation for Senate Finance Committee chairman Max Baucus (D-MT). When Baucus released his health reform proposal last September, after finally terminating months of fruitless negotiations with committee Republicans, Democratic liberals excoriated his plan as a dead end. And on several important fronts--such as subsidies for the uninsured, the role of a public competitor to private insurance companies, and the contribution required from employers who don't insure their workers--Reid moved his product away from Baucus toward approaches preferred by liberals.
But the Reid bill's fiscal strategy, and its vision of how to "bend the curve," almost completely follows Baucus' path from September. Baucus' bill was the first to establish the principle that Congress could expand coverage while reducing the federal deficit; now that's the standard not only for the Senate but also the House reform legislation. And, perhaps even more importantly, the Reid bill maintains virtually all of Baucus ideas' for shifting the medical payment system away from today's fee-for-service model toward an approach that more closely links compensation for providers to results for patients. In the Reid bill, there is some backtracking from Baucus' most aggressive reform proposals, but not much.
Moving the system away from a fee-for-service model is crucial to long-term cost control on the provider side and to reducing the vast inefficiencies that account for much of the out of control costs of our current "system," and is the focus of Brownstein's post. These things will lead to reduced costs overall, that will eventually trickle down to the consumer, provided that the reformed system also addresses insurance industry abuses. And that's where Brownstein misses a big part of the story.
This single-minded focus that we've seen on bending cost curves and payment adjustment and incentive reform and that somehow almost random $900 billion benchmark too often obscures what for the vast majority of Americans, regardless of party identification, is the key component to reform: "assuring the availability of affordable plans."
The affordability factor is a component that's been troubling a handful of people, including jim bow here at Daily Kos and Nick Beaudrot at Donkylicious.
There are a couple of basic problems here, the first being a watering down of the basic benefits package offered at the "bronze" level, where a lot of the currently uninsured are going to end up entering the system. They'll end up with essentially catastrophic plans, with high deductibles and co-pays and will be left where a lot of underinsured are now, really hoping they don't get really sick. Subsidies will be in place to help purchase this insurance, but why would the bar on these plans be set so low? Why put subsidy money into crappy plans, rather than set a higher standard for the lowest level of benefits?
Jon Walker at FDL has been writing extensively about the other key problem in insurance reform, inadequte risk adjustment, (risk adjustment is the levelling out process insurance plans use to balance the costs of carrying sicker, more expensive patients, with healthy ones, often resulting in cherrypicking to get the expensive people off their books). Jon explains the problem:
The Dutch government, who have a history of "managed competition" among for-profit health insurance companies, called the lack of well-designed risk adjustment mechanisms the Achilles Heel of a health care system. In their system, over half of all money spent on health insurance is redistributed as part of risk adjustment. Without it, insurance companies would compete primarily by trying to drive away unhealthy customers, instead of by trying to provide higher quality plans, better consumer service, or lower prices. Without robust risk adjustment and regulations, it is impossible for an insurer to provide high quality, low cost coverage. It would soon be overwhelmed with unprofitable, less healthy customers.
The CBO and CMS conclusions about what the lack of sufficient risk adjustment mechanisms in the House bill would do to the public option should be a wake up call. They concluded that the new public option would be forced to charge higher premiums because of the serious problem of adverse selection. But the public option can be a stand in for any insurer that tried to be socially responsible, be it a private company, public entity, non-profit, or new insurance co-op. Any "well behaved" insurance company would soon be flooded with less healthy individuals.
Unfortunately, neither the House nor Senate bills have strong enough risk adjusters in place. This is how insurers are still going to be able to cherrypick healthy customers by creating plans that are attractive to young, healthy, inexpensive people and finding ways to cut out their sick, expensive subscribers. Which is why the public option probably wouldn't have substantially lower premiums, despite having much lower administrative costs.
The focus on "bending the cost curve" by eventually breaking down the fee-for-service model of delivery is important and it's not a separate argument, necessarily, from the affordability argument for consumers, at least not in the long run. But it shouldn't be paramount to the problem of providing universal, affordable, high quality coverage to the American people. Coincidentally, taking care of the latter is also going to be popular, and good politics. Forcing people to buy crappy, expensive insurance will not be popular. Something for the White House and Congress to keep in mind over the next month.
