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Tuesday, May 30, 2017

Bernstein: The ACA, the myths and flaws of Republican reforms, and single payer [feedly]

The ACA, the myths and flaws of Republican reforms, and single payer
http://jaredbernsteinblog.com/the-aca-the-myths-and-flaws-of-republican-reforms-and-single-payer/


Over at WaPo.

The piece was already too long so, while I didn't have time to get into another germane point: the role of single-payer coverage in this debate.

A key point of my analysis is that the problem facing private insurers in the exchanges was that they initially underpriced premium costs, leading to high medical-loss ratios and thin to non-existent profit margins. They've since been recalibrating and are in the process of returning to profitability, though now they're in a race with team Trump's sabotage.

A reasonable response from progressives would be: the problem isn't price calibration. The problem is this part of the ACA depends on profitable private insurers in the delivery of a partially non-market good (see my "fundamental flaw" point in the WaPo post). A single-payer plan would obviate such concerns.

[Note that I do mention the salient lack of a public option in the exchanges, and stress this irony:

Let's pause on the irony here for a moment. Conservatives' flawed ideology (explained below) that the private sector is the most efficient delivery mechanism for health coverage kept a public option out of the ACA. But the private insurers themselves said at the time, and maintain to this day, that they can't serve the exchanges without government subsidies. Now, Republicans want to block those subsidies, because … you guessed it … the private market blah, blah, yada, yada.]

On one level, that's a strong point–that a single-payer plan, by taking insurer profitability out of the picture, would ease a major constraint in the ACA–one which I support. The exchanges, though they cover a relatively small share of the population, have consistently been the most problematic part of the ACA.

But once again, I'm plagued by my adherence to path dependency, a point I often raise here and one which often raises the ire of the leap-froggers who are much less constrained by the challenge of getting from where we are to where we need to go.

But there are political constraints between here and there–big ones, protected by entrenched lobbies–and when we were crafting the ACA, it seemed clear to us that they needed to be brought on board. And there are economic constraints as well, including the disruption engendered by replacing a major, private insurance industry.

Thus, the path to single payer probably is an incremental one. Start with a public option in the exchanges, greater regulation of the industry, including cost controls (I also like Henry Aaron's policy tweak: if an insurer offers coverage in a state, they must also offer it in that state's exchange), and perhaps a slow reduction in the eligibility age for Medicare.



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