There are three essential components to health care reform -- or else it's not worth doing.
- Coverage. Obviously, the reform has to cover folks who are currently uninsured.
- Personal. Everyone should have access to good health care; good health care shouldn't depend on a person having a job. Health care is a personal good. Aside from this fact, the US's system of linking health care to employment puts US companies at a competitive disadvantage by subjecting them to the so-called "triple tax": companies pay once for their employee's health care, indirectly subsidize Medicare and Medicaid through those payments,* and pay higher premiums to help cover the cost of treating the uninsured. This triple tax is then passed along to employees in the form of a lower salary, and other negative effects.**
- Deficit. We pay an unprecedented amount for health care -- indeed, no other OECD country devotes as much of its economy to health care as we do -- and we face an enormous, and growing deficit. Health care reform should reduce both, and you should see the reduction in the budget projections. (See "bending the cost curve," below.)
Those should be the criteria for evaluating any health care reform package. Note what's left out:
- Claims that we will "bend" the cost curve. There are sensible things that we can do to try to moderate cost, and nearly every plan tries to do at least some of them. But no one has presented a test to determine whether any of them will work to the degree promised. Indeed, the CBO estimates that at least one of the reforms under debate -- HR 3200, presented by the Democratic leadership in the House -- will bend the cost curve in the wrong direction. Hope is not reform.
- An argument for, or against, a public option. I'm against most versions of a public option, but whether a plan has -- or doesn't have -- a public option shouldn't be part of the test. If a public option meets the three criteria, then the plan must be taken seriously. (What does it mean when I say I'm against "most versions of a public options"? Well, I can see the arguments for state-run cooperatives, particularly if multiple states are allowed to band together in the same cooperative.)
These three, related criteria -- the impact on coverage, personal care, and the deficit -- are the criteria that I propose that we use to measure any health care plan.
If you look beyond labels and rigorously apply those three criteria, I think that you'll find that the version of health care favored by the Democratic leadership in the House (HR 3200) is a bad idea. Yes, HR 3200 expands coverage to a certain extent. But, as a recent report by the CBO confirms, HR 3200 strengthens the link between employment and good health care. That's a step in the wrong direction. You should have access to health care because you're a person, not because you're employed. Linking health care to employment is also bad for business. Indeed, the legacy cost of health care is a key reason why we, the tax payers, have been forced to bail out American automakers.
HR 3200 also penalizes small businesses. Under HR 3200, a business with a payroll as low as $250,000 -- that could be a family-owned restaurant or a local bookstore -- either has to pay for its employees' health insurance or is subject to a penalty. Employees of small businesses should absolutely have access to good coverage. But it's a bad idea to mandate that small businesses pay for that coverage. It's not as though small business owners are currently refusing to provide health insurance to their employees because they're evil; health insurance is expensive.
Regarding the last element of the test -- the deficit -- HR 3200 has a disastrous impact. Even if Congress adopts the new penalties and surcharges imposed on small businesses, the surtax on the wealthy, and the numerous other complicated regulatory and tax changes hidden in HR 3200's one-thousand-plus pages, HR 3200 still adds $239 billion to the deficit over the next decade while having none of its purported "curve shifting" benefits.
HR 3200 is not a good bill. Its defects are fundamental. It should be killed, not reformed -- particularly since HR 3200 is not the sole Democratic option. There are many other Democratic bills in circulation, several of which don't have HR 3200's problems. But these alternate Democratic (and Republican) bills won't have a chance to breathe so long as HR 3200 is sucking the oxygen out of the room.
The Democratic leadership in the House needs to get out of the way.
*This is because, by law, Medicare and Medicaid usually pay doctors less for any given service than a private insurance plan. Thus, to continue to make acceptable profits, doctors tend to charge private insurers more than they otherwise would. These additional charges are passed along to employers (and, indirectly, employees) in the form of higher insurance premiums.
**That employer health care results in lower cash wages is also among the findings of the authors who studied Hawaii's mandatory employer-based health care system.
UPDATE: Some minor wordsmithing.
UPDATE 2: Good. There will be no healthcare vote in the House before the August recess. That gives opponents of HR 3200 an excellent chance to kill the bill, and, perhaps, give time for the bipartisan Senate group discussed by Publius (or, as I suspect Publius hopes, a different group) to consider other options.