Apparently FDR didn't include universal health care in the New Deal because he thought the issue was too complicated for politics as usual. One-liners, rhetoric and spin would trump reason, no matter how pressing health care reform might have been. That may have been true then, but it can't be true now. Health care reform is too integral to the economy and too indicative of our values to skip over because of politics or complexity.
Senator Baucus's America's Healthy Future Act of 2009 has fallen flat because the proposal feels too much like inside politics and too much like a compromise. Senator Baucus was so intent on keeping all the stakeholders at the negotiating table and tiptoeing around the already insured that he couldn't put incentives in place to fundamentally reduce health care spending. This left him in a quandary.
Without strong policies to slow health spending, Senator Baucus lost the support of cost-conscious Democrats and reform-minded Republicans. Absent the flexibility that cost savings would have afforded him, Senator Baucus had to pare back many of his proposals, couldn't adequately reduce the variation in insurance premiums, and has struggled to create a mandate for insurance coverage that doesn't hammer the middle class. This cost him liberal Democrats.
Nevertheless, the Baucus proposal does include some useful features. His proposal expands access to Medicaid, requires every American to have health insurance and forbids insurance companies from denying coverage based on pre-existing conditions. As a result, the challenge before us is not to rip down the Baucus plan, but rather to come up with ways to make the proposal better.
Three misconceptions have driven the health care debate off course and have given rise to some of the problems in the Baucus proposal. These misconceptions need to be corrected so we can get back on track.
The first misconception is the idea that you can't make big changes to employer-based health insurance without scaring off the already insured. We can make big changes that will be well received and we ignore employer-based insurance market at our peril. More than half of Americans get their insurance through their employer and far too many of them are paying too much for unreliable coverage. Giving additional choice to Americans with employer-based coverage would not be a threat to those happy with their insurance. Instead, it would be a relief to those who are under-insured, left in the dark, and paying too much.
The second misconception is the belief that the public plan, in any of its various incarnations, was going to fundamentally slow health care spending. In its most ambitious form, the public plan would have only affected the 6-10% of Americans who buy their insurance on their own or get it from their small business employer. A public option would have done little for everyone else. While the public plan is symbolic, it is not an arbiter of whether reform is a success or failure. While I agree that we should have a public plan, and one that is available to all Americans, the inclusion of public plan won't be my litmus test for health care reform.
The final myth is the implication that Switzerland and the Netherlands serve as examples for how America can rely on private insurance companies without a public option. The insurance markets in Switzerland and the Netherlands are so regulated that they would make your head spin. The Dutch government, for example, says what services insurers must cover, dictates the terms of insurance, and sets prices for every hospital service in the country. The Swiss and the Dutch are examples of why we need more regulation and more competition for insurance companies not why we can live without a public option.
To guarantee affordable health insurance that's comprehensive and secure, the insurance market needs more regulation and it needs to be more competitive. In addition to what Senator Baucus has proposed, everyone, including those with employer-based coverage, needs to have a choice of insurance plans and the ability to get another form of insurance if they're not happy with what they have today.
Right now, there's no competition in the insurance market. With one insurance company covering 74% of the market in Iowa and another insurance company occupying 89% of the market in Alabama, we can't be surprised that insurance costs too much.
Every reform proposal so far has included an insurance exchange - a so-called amazon.com for health insurance, where we can compare plans, and compare prices. We need more information on quality and coverage, accessible reviews of insurance plans, clear information on prices and the ability to switch if we're not happy. That kind of clear information, together with greater choice will help keep insurers honest.
Americans want to see the price of health insurance go down and their coverage improve, and at this point, that's what they expect from President Obama. This kind of policy tension -- the pressure to do more with less -- requires smarter reforms and more dynamic policies that put pressure on insurance companies to become more efficient. My litmus test for health reform will be whether I see legislation that increases competition and forces insurance companies to really step up their game.