There are so many naive assumptions in this post by Jacob Heilbrunn I don't even know where to start, but the real thing that has me thinking is his assertion that a compromise bill (assumedly without a public option) will pass, and that Obama and Congressional Democrats will ride a tidal wave of public love for the bill into success in next year's midterms.
It seems foregone that if some kind of legislation does pass, it will include a bunch of good provisions on which there seems to be broad support in Congress: banning insurance discrimination against individuals with pre-existing conditions, for example. Or banning an annual cap on insurance coverage payouts. These are real and tangible things that a member of Congress can campaign on, that means something to voters. But the problem is that providing competition in the form of a strong public option seems to be the keystone to a system that will, in combination with those other reforms that have broad support, actually improve things. Without it, things could actually get worse. Consider:
If you ban discrimination for customers who have pre-existing conditions, but don't place any caps on deductibles or do any type of rate regulation, all you get is a lot of companies who are forced to offer insurance to sick people, but no one is buying it. You still have 49-year-old diabetics who want to purchase individual insurance, but face deductibles and premiums that are unaffordable, so not much changes.
Premiums for everyone else could go up. Forcing companies which seek to make as enormous profits as possible to pay beyond a level at which they would have previously stopped paying (e.g., enforcing a ban on annual or lifetime caps), or forcing them to accept new patients they would have previously denied that will consume a lot of care, will reduce profits. Since health insurance companies, as Anthony Weiner put it, operate to make profits by giving away as little as possible and collecting as much as possible, I would not be surprised if premiums for everyone go up in the absence of a public option providing competition to keep that from happening.
Adverse selection causes things to get worse for the healthiest among us. Following the last point, if premiums go up for the healthiest (imagine a 25-year-old male with no bad family medical history who doesn't see himself getting sick), they will drop their coverage. This leaves a higher risk pool, e.g. the sickest, for insurance companies to cover, meaning higher costs and higher premiums for those staying in the market. So they raise premiums again and force people out of the market, etc. This is what my boyfriend Perry, who teaches health economics at Syracuse University, calls "the insurance death spiral". It causes things to unravel for everyone else.So things for people like me (who is indeed a 25-year-old male and so far happy with his insurance) could get bad really quickly.
It will not make insurance any more affordable. For those who can't afford insurance now- be they healthy, sick or likely to become sick- one of the points of providing a competitive public option is to provide competition to the insurance industry, forcing down rates, etc. Without it, there will still be a lot of people who can't purchase an individual plan, a lot of businesses who are suffering under high costs of providing insurance, and so forth.
Looking at the political effects, it will be difficult for someone like me, who has insurance I am so far happy with, to find anything useful to me in the bill aside from feeling good that some provisions have been passed. It will be difficult for someone who has had to fight with insurance companies over tens of thousands of dollars in bills to find anything good in the bill either, because it offers no alternative to doing anything other than fighting with them again down the road, rather than switching to a public plan. So it's hard to imagine people who already have insurance they are happy with (so far) to be find anything good about the bill.
My point here is that while many Congressional Democrats and President Obama think that if they pass some bill, any bill, it will bring them lots of love in the punditry for coming to the table, and that the public will send their approval ratings soarings and award them in the 2010 midterms. That may be the conventional wisdom way of looking at it, but it ignores the policy effects, and it's completely wrong. You can't just agree on lots of smaller provisions that ostensibly do some good on paper, but don't cause any real positive change in voters' lives- and in fact, could make things worse absent competition. Without real competition, things could unravel even faster than they are now. A strong public option is the linchpin that makes all these things work together.
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