What vot­ers were re­ally say­ing on health care

The Washington Post Sunday - - BUSINESS - Wonkblog Roger Lowen­stein

Health care just be­came an en­ti­tle­ment.

Not by law — that hap­pened in stages over many decades, be­gin­ning with Medi­care in the 1960s and con­tin­u­ing to the Af­ford­able Care Act un­der Pres­i­dent Barack Obama.

What hap­pened last week was the Amer­i­can peo­ple rat­i­fied that they want health care — mean­ing fed­er­ally sub­si­dized health care. They ex­pect it and will vote ac­cord­ingly.

This is a big ex­pan­sion of the fed­eral role, and the rea­sons for it are clear. Over the past twoscore years, health-care costs have mush­roomed while me­dian fam­ily in­come has barely budged. (From 2012-2016, health care rose 15 per­cent, at dou­ble the gen­eral rate of in­fla­tion.) Peo­ple who once could af­ford it now want help — re­gard­less of the party in power.

Yes, Pres­i­dent Trump cam­paigned for re­peal, but the vot­ers didn’t mean it. They

meant, maybe, to give the fin­ger to Obama and to his sig­na­ture leg­is­la­tion — but they didn’t mean that any­one should touch their cov­er­age. Sen. Rand Paul (R-Ky.) and the Club for Growth can blather about re­peal, but for a ma­jor­ity of vot­ers, re­peal was a slo­gan, like “Build a wall” or “Lock her up.”

Some hard truths about health-care pol­icy pos­si­bly might now emerge. So­cial Se­cu­rity, which went through a sim­i­lar evo­lu­tion from con­ser­va­tive scourge to po­lit­i­cal third rail, is in­struc­tive.

Ever since the lat­ter’s en­act­ment in 1935, the right thun­dered that it had to be re­pealed, lest it sink the Trea­sury De­part­ment un­der a fis­cal swamp. Barry Gold­wa­ter said it should be made vol­un­tary — no man­date. He car­ried six states.

Pres­i­dent Ron­ald Rea­gan floated a fan­tasy of pri­va­ti­za­tion. Pres­i­dent Ge­orge W. Bush re­vis­ited the idea in 2001, just as the stock mar­ket was tank­ing. Peo­ple reck­oned that putting re­tire­ment sav­ings into a tech bub­ble wouldn’t have been so shrewd.

Since the Rea­gan era (his rhetoric aside) the par­ties have agreed to fix So­cial Se­cu­rity, tweak re­tire­ment ages and so forth, as needed, but not chal­lenge its ex­is­tence.

Health care could use more than tweaks be­cause of its com­plex­ity and be­cause Amer­ica has half a dozen sig­nif­i­cant pro­grams — Medi­care, Med­i­caid, the Rea­gan-era Co­bra, the Clin­ton-vin­tage Chil­dren’s Health In­sur­ance Pro­gram, the Ge­orge W. Bush pre­scrip­tion­drug en­ti­tle­ment and the ACA. As that tax­on­omy sug­gests, the en­ti­tle­ment mind-set has been tak­ing root for two gen­er­a­tions, with Se­nate Repub­li­cans, it seems, fi­nally catch­ing up to the Amer­i­can pub­lic.

How to go about ra­tio­nal­iz­ing that cum­ber­some and sub­op­ti­mal patch­work? Oba­macare arose to plug a hole be­tween two sets of in­com­plete pro­grams — Medi­care and Med­i­caid (cov­er­ing the el­derly and, ini­tially, the very poor), and work­ing fam­i­lies cov­ered by pri­vate in­sur­ance plans.

The win­dow ex­isted by ac­ci­dent, not design. The New Deal­ers who leg­is­lated So­cial Se­cu­rity wanted to cover health care, too — ev­ery­one’s health — but didn’t have the po­lit­i­cal mus­cle. Pres­i­dent Harry S. Tru­man pro­posed na­tional health care and failed.

Cor­po­rate Amer­ica was against it — but cor­po­ra­tions, in that era, faced a pow­er­ful ad­ver­sary: Big La­bor. Af­ter the war, largely be­cause of union pres­sure, Big Busi­ness be­gan to of­fer health in­sur­ance to em­ploy­ees, at in­creas­ingly sub­si­dized rates. Over time, this spread more gen­er­ally into the pri­vate sec­tor.

That still left unin­sured peo­ple younger than 65 at com­pa­nies not of­fer­ing plans, as well as the un­em­ployed, the marginally em­ployed and many of the self-em­ployed. That was the win­dow for Oba­macare.

But Oba­macare is not, in an eco­nomic sense, an in­sur­ance pro­gram. En­ti­tle­ments and in­sur­ance are in­con­sis­tent. You buy in­sur­ance for things you wouldn’t get oth­er­wise. If you don’t have in­sur­ance on your home and it burns, you’re home­less. But you don’t buy in­sur­ance in case your fam­ily needs pub­lic school­ing. If you have a kid, you send them free. You’re en­ti­tled.

By guar­an­tee­ing cov­er­age for pre­ex­ist­ing con­di­tions, Oba­macare was ensuring not in­sur­ance but treat­ment. The in­di­vid­ual man­date — re­quir­ing healthy peo­ple to pur­chase cov­er­age — was nec­es­sary to pre­vent the non­poor from get­ting their treat­ment sub­si­dized.

It’s anal­o­gous to say­ing, if you’re wealthy or even mid­dle­class you have to pay school taxes, re­gard­less of whether you have chil­dren. Which, in fact, we do.

The Repub­li­can plan, as Hol­man Jenk­ins wrote in the Wall Street Jour­nal, was worse be­cause it was in­co­her­ent with re­gard to the philo­soph­i­cal dis­tinc­tion be­tween en­ti­tle­ments and in­sur­ance. It stip­u­lated cov­er­age of pre­ex­ist­ing con­di­tions (the en­ti­tle­ment model) but did not in­clude a man­date (the in­sur­ance model). In other words, although it en­cour­aged peo­ple to re­tain their cov­er­age, it would have left them free to go with­out in­sur­ance un­til they de­vel­oped a symp­tom.

Go­ing for­ward, it would help if the health-care dis­cus­sion ac­knowl­edged that health care, up to a cer­tain min­i­mum level, is an en­ti­tle­ment. Amer­i­cans are go­ing to — and should — get treat­ment. The only hon­est pol­icy de­bate is over the size of the en­ti­tle­ment: Who gets a sub­sidy, and how much?

Sec­ondly, since health care is an en­ti­tle­ment, pri­vate health in­sur­ance should be al­lowed to wither. The only eco­nomic func­tion for pri­vate, mul­ti­payer in­sur­ance is for care that falls out­side the pub­lic sub­sidy.

Thirdly, there is no par­tic­u­lar rea­son to re­tain a sep­a­rate pro­gram for peo­ple over 65. The em­ployee-plan model was ar­guably more ap­pro­pri­ate in the era when most peo­ple spent their ca­reers at long-term 9-to-5 jobs. In the Uber econ­omy, fewer peo­ple will be get­ting ben­e­fits at work.

Even worse, em­ployer plans were and are based on an un­spo­ken de­cep­tion — a giant sub­sidy. Com­pa­nies deduct the cost of their plans, but em­ploy­ees do not pay taxes on the ben­e­fits, a huge give­away from Un­cle Sam. The U.S. Trea­sury es­ti­mates this sub­sidy will cost $2.7 tril­lion over the next decade — three times the cost of the mort­gage de­duc­tion free­bie.

Sub­si­diz­ing peo­ple be­cause they have jobs makes no more sense than sub­si­diz­ing peo­ple who pur­chase homes.

Pre­sum­ably, health-care sub­si­dies should be based on need, tem­pered by the goal of fis­cal pru­dence and mod­er­ated by in­cen­tives that re­ward sen­si­ble be­hav­ior.

Rec­og­niz­ing that heath care is — has be­come — an en­ti­tle­ment fo­cuses the task. It re­duces the ter­rain over which Democrats and Repub­li­cans have to ar­gue (only about the money, as they say).

The in­tel­lec­tual chal­lenge for pol­i­cy­mak­ers is to de­ter­mine whether a vari­ant of the ACA or a vari­ant of Medi­care can best de­liver the en­ti­tle­ment. There is no need for both, not to men­tion for six over­lap­ping plans. The pub­lic would be served by one well-crafted plan, not more.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.