Friday, December 18, 2009

What Ezra and Paul and ... said...

From Daily Dish, Reader Jokes #1:

A chicken and an egg are making love.

The chicken climaxes, rolls over, lights up a cigarette and says, "Well, I guess that settles that!"
No one has done a better job of analyzing the health policy debate than Ezra Klein, who writes the Economic and Domestic Policy blog at the Post.

Ezra Klein: Can insurers use monopoly pricing under health-care reform?

"If insurance companies know people will be forced to buy policies, why would they lower premium prices?" Asks eegeterman over Twitter. "Why wouldn't they RAISE prices?"

I've been hearing this a bit today, so let's talk it through. In a world of one private insurance company and an individual mandate, it makes perfect sense. In a world of exchanges, with a dozen competing insurance plans, including national nonprofits, it doesn't.

Imagine that Blue Cross Blue Shield prices according to this monopolist logic. Their policy would normally cost $11,000. But people have to buy in, right? So they price at $13,500. For, say, Kaiser Permanente, whose policy costs $10,500, this is an opportunity. The market leader just jacked their prices up. So Kaiser begins advertising aggressively. Our policy, they say, is $1,500 cheaper than "our competitor's plans." The next year, people log onto the insurance exchange Web site to confirm their insurance plan for the year. Scrolling through the options, they notice that BCBS is way more expensive than Kaiser, or frankly, than everyone.

Maybe that's because Kaiser is worse? But consumer ratings, which are now available, show that Kaiser has a comparable satisfaction rating. Maybe it's because BCBS offers more? But no, the insurers have to list their benefits in a standard way, and it's pretty clear that BCBS isn't giving you more for your money. Ten minutes later, BCBS has lost a customer and Kaiser has gained one.

That's the market's solution to this problem. But the exchanges actually have a fail-safe solution, too. Rewind the tape to BCBS's decision to jack up premiums. Imagine that BCBS insures 420,000 people in California's exchange. As directed by law, they duly submit a notice to the Exchange Board saying they're increasing premiums. The exchange sends a letter back noting that underlying health-care trends don't justify that increase, which they're allowed to do under the law. BCBS says it doesn't care. The exchange, which doesn't much feel like being bullied, says fine, you're decertified. BCBS loses more than 400,000 customers, and has to reapply the next year.

And then, of course, there's the excise tax. Jack up your prices enough and suddenly you're paying a 40 percent surtax on the plan you're offering. Now you're way more expensive than the competition, and you're hemorrhaging customers.
Health-care reform isn't creating a monopoly market. There are other industries where people need to patronize some for-profit company. Food, for instance. But if there are a variety of companies competing for customers, monopoly problems don't emerge.

Under health-care reform, there are at least three bulwarks against the monopoly-profits scenario: Inter-insurer competition, regulators, and the tax on excessive premiums. Two of these mechanisms don't exist in the current market. One -- the market itself -- is much weaker and more opaque, and individuals have a far harder time navigating it.

At this point, I should have a macro on my keyboard for this concluding line: Is it perfect? No. Is it good enough? Maybe not, even. Is it better than what we have?


Update: Some have responded that this might all be well and good, but in some states, insurers already have near-monopolies. This is true, though it's not true in most states. But the point of the exchanges is that those monopolies are easier to break. Right now, it's very hard to switch insurers. It's hard to compare plans. Hard to shop for new plans. Hard to figure out whether one plan is better than another. And in a lot of states, there aren't many insurers offering plans.

Not so in the exchanges. It's easy to shop, to compare. The benefits are listed in a standardized format and accompanied by consumer ratings. Add in the presence of national plans, both for-profit and non-profit, and you should see a lot more competition. And if there isn't much competition, a state can link its exchange to that of its neighbors. Delaware might not be much of a market, but Pennsylvania is. That may not reduce the stranglehold a single insurer has over existing businesses, but the exchanges can only serve those who can access them. That's why I've long argued the importance of opening them up to larger employers.

For all that, it's still possible that the exchanges won't be sufficiently competitive, and we will want to do more down the road (like opening them!). But, again, it's a lot better than what we have now.

A message to progressives: By all means, hang Senator Joe Lieberman in effigy. Declare that you’re disappointed in and/or disgusted with President Obama. Demand a change in Senate rules that, combined with the Republican strategy of total obstructionism, are in the process of making America ungovernable.

But meanwhile, pass the health care bill.

Yes, the filibuster-imposed need to get votes from “centrist” senators has led to a bill that falls a long way short of ideal. Worse, some of those senators seem motivated largely by a desire to protect the interests of insurance companies — with the possible exception of Mr. Lieberman, who seems motivated by sheer spite.

But let’s all take a deep breath, and consider just how much good this bill would do, if passed — and how much better it would be than anything that seemed possible just a few years ago. With all its flaws, the Senate health bill would be the biggest expansion of the social safety net since Medicare, greatly improving the lives of millions. Getting this bill would be much, much better than watching health care reform fail.

At its core, the bill would do two things. First, it would prohibit discrimination by insurance companies on the basis of medical condition or history: Americans could no longer be denied health insurance because of a pre-existing condition, or have their insurance canceled when they get sick. Second, the bill would provide substantial financial aid to those who don’t get insurance through their employers, as well as tax breaks for small employers that do provide insurance.

All of this would be paid for in large part with the first serious effort ever to rein in rising health care costs.

The result would be a huge increase in the availability and affordability of health insurance, with more than 30 million Americans gaining coverage, and premiums for lower-income and lower-middle-income Americans falling dramatically. That’s an immense change from where we were just a few years ago: remember, not long ago the Bush administration and its allies in Congress successfully blocked even a modest expansion of health care for children.

Bear in mind also the lessons of history: social insurance programs tend to start out highly imperfect and incomplete, but get better and more comprehensive as the years go by. Thus Social Security originally had huge gaps in coverage — and a majority of African-Americans, in particular, fell through those gaps. But it was improved over time, and it’s now the bedrock of retirement stability for the vast majority of Americans.

Look, I understand the anger here: supporting this weakened bill feels like giving in to blackmail — because it is. Or to use an even more accurate metaphor suggested by Ezra Klein of The Washington Post, we’re paying a ransom to hostage-takers. Some of us, including a majority of senators, really, really want to cover the uninsured; but to make that happen we need the votes of a handful of senators who see failure of reform as an acceptable outcome, and demand a steep price for their support.

The question, then, is whether to pay the ransom by giving in to the demands of those senators, accepting a flawed bill, or hang tough and let the hostage — that is, health reform — die.

Again, history suggests the answer. Whereas flawed social insurance programs have tended to get better over time, the story of health reform suggests that rejecting an imperfect deal in the hope of eventually getting something better is a recipe for getting nothing at all. Not to put too fine a point on it, America would be in much better shape today if Democrats had cut a deal on health care with Richard Nixon, or if Bill Clinton had cut a deal with moderate Republicans back when they still existed.

But won’t paying the ransom now encourage more hostage-taking in the future? Maybe. But the next big fight, over the future of the financial system, will be very different. If the usual suspects try to water down financial reform, I say call their bluff: there’s not much to lose, since a merely cosmetic reform, by creating a false sense of security, could well end up being worse than nothing.

Beyond that, we need to take on the way the Senate works. The filibuster, and the need for 60 votes to end debate, aren’t in the Constitution. They’re a Senate tradition, and that same tradition said that the threat of filibusters should be used sparingly. Well, Republicans have already trashed the second part of the tradition: look at a list of cloture motions over time, and you’ll see that since the G.O.P. lost control of Congress it has pursued obstructionism on a literally unprecedented scale. So it’s time to revise the rules.

But that’s for later. Right now, let’s pass the bill that’s on the table.

Krugman: Massachusetts health care polling

Gah. I see that some people are still using the Rasmussen polling on MA’s health care reform. You shouldn’t do that, because

1. It’s Rasmussen
2. It asks the wrong questions

The right poll to look at, which I’ve cited in the past, is this one from the Boston Globe and the Harvard School of Public Health, which asked people whether they want the reform to continue or to be reversed. The answer: 79 percent want it to continue.

Once you have even a rough approximation to universal coverage, people don’t want to go back.


By most head-counts, the Senate Democratic health care proposal has 59 votes. Because the Senate can be an absurd institution, legislation with 59 supporters out of 100 members necessarily fails.

The only holdout in the Democratic caucus -- the one who continues to hold reform hostage -- is, of course, Sen. Ben Nelson of Nebraska. He not only continues to oppose the bill, he's prepared to join a Republican filibuster, preventing the Senate from even voting on health care reform at all.

As the NYT noted this morning, the conservative Nebraskan is the subject of considerable attention right now.

Mr. Nelson, a former governor, state insurance commissioner and insurance company executive now serving his second Senate term, is the focus of increasingly intense entreaties by Mr. Reid and the White House. He has met personally with President Obama three times in the last nine days, and daily with Mr. Reid.

Pete Rouse, a senior White House adviser, has been assigned specifically to address Mr. Nelson's concerns. Senator Bob Casey, a freshman Democrat from Pennsylvania and a prominent opponent of abortion rights, was tapped to devise some sort of compromise language on coverage for abortions to bring Mr. Nelson on board. [...]

To help divine Mr. Nelson's thinking, a wide array of Democrats have reached out to him in recent days, including former Senators Tom Daschle of South Dakota and Bob Kerrey of Nebraska.

To date, Nelson has rejected compromise language, and compromises on the compromises. As of yesterday, he threw cold water on the idea of approving a bill by Christmas, and even raised the specter of scaling back whole portions of the bill, which would likely delay the process for months, and probably kill it altogether.

What's interesting, though, is that after reading Nelson's remarks yesterday, I was inclined to think the game is up -- reform by Christmas was an impossibility, and the entire effort may very well die at the hands of a Republican filibuster (with Nelson's help). But notice: everyone on the Hill keeps working towards the reform-by-Christmas goal. The leadership is well aware of what Nelson said and what Nelson has threatened, but Reid, Durbin, and others continue to work towards their deadline, and occasionally yesterday even sounded vaguely optimistic.

It's enough to make observers wonder, "Do they know something the rest of us don't?" The answer, apparently, is, "Maybe."

Sometime very soon -- and by that I mean, possibly today -- one of three things will have to happen. Either a) someone can convince Nelson to change his mind, possibly with yet another compromise offer; b) someone can convince Nelson to oppose the bill but let the Senate vote on it; or c) Sen. Olympia Snowe (R-Maine) will break ranks.

The Senate leadership must think one of those three remains possible, or they wouldn't be working so hard to reach the Christmas deadline. That said, I simply have no idea which of those three has even the slightest chance of happening.

Aravosis: Rep. Kissell's vote against health care "has enraged fellow Democrats" back home

The people who elected Larry Kissell last November aren't happy with Rep. Larry Kissell:

Fueled by the liberal grass roots, Democrat Larry Kissell stitched together a winning message about jobs and kitchen-table concerns, including rising health insurance costs, and he rode the Obama wave to unseat a five-term GOP congressman by 11 percentage points. Democrats here rejoiced. Finally, they were sending to Washington a representative to fight for their interests -- and to help enact the new president's agenda.

Now, one year later, the euphoria has given way to second thoughts at best and outright rebellion at worst. Kissell is siding with Republicans on Obama's top domestic priority, fixing the nation's health insurance system, and his "no" vote has enraged fellow Democrats.

As they plunge into next year's midterm contests, Republicans and Democrats are making dicey calculations with their health-care votes, each weighing the demands of their party's base against the political climates of their districts. With Republicans opposing the bill in lock step, the White House needs a fragile coalition of Democrats to enact reform, but it is vulnerable Democrats like Kissell who form the greatest obstacle.

And that is why Democrats here are steaming.

"People want change, and when someone puts their foot in the door to kill the whole thing, that's what has them riled up," said Michael Lawson, an African American leader of the state Democratic Party and one of Kissell's constituents. "It's almost like 'Mr. Smith Goes to Washington,' but Mr. Smith turned out to be somebody that wasn't Mr. Smith."
Imagine expecting a politician to actually keep his or her promises. Imagine that.

How do politicians expect to be reelected when they piss off the people who do the most work to get elected? Something happens to good people who run for office when they get to Washington. They start out with good intentions, but go through something like akin to high-powered car wash that strips them of their authenticity and humanity. Rahm Emanuel is the CEO of the car wash and the stripping process is orchestrated by the professional D.C. Democrats, consisting of the over-paid consultants, long-time hill staffers and fundraising types.

When politicians actually lead and aren't afraid of taking hard votes and don't cower, people respond positively. Leadership matters. When those politicians get all squirrely and only worry about reelection, they become just run-of-mill politicians, nothing more. That's what team Obama has done to the President. And, it's what Larry Kissell has done to himself.
Appel: Politics In The Real World

Megan tells it like it is:

Ultimately, the moderates had a very good alternative to negotiated agreement, and the progressives didn't, and that was crystal clear from Day 1. That meant the progressives were never, ever going to get very much. This was not a failure of political will or political skill. It was the manifestation of a political reality that has long been obvious to everyone who wasn't living in a fantasy world. If progressives decide that the lesson from this is that they haven't been sufficiently demanding and intransigent, they are going to find themselves about as popular with the rest of America as the Bush Republicans, and probably lose their party the House next year.

Booman: Quote of the Day
From Boner:

House Minority Leader John Boehner told reporters today his party is pumped for campaign season. As the calendar ticks down on 2009, Boehner says he likes his party's chances at making significant gains against what he sees as a fractured Democratic majority.

"The Democrats seems to be having a field day tearing each other apart," he said. "I think 2010 will be a stormy year."

And this is precisely what their obstruction is supposed to do. Any questions?

White House Health Reform Director Nancy-Ann DeParle and Senior Advisor David Axelrod hosted a 30-minute conference call with bloggers last night (I was one of several who participated) to discuss the reform bill. They covered a fair amount of ground, but there was one response from Axelrod that stood out.

Susie Madrak posted the audio of the conference call, and wrote up a detailed report on the discussion topics, which included re-importation, enforcement of new insurance regulations, annual caps on health care expenses, and recent polling data.

Of particular interest, though, was Axelrod's response to a question about Sen. Ben Nelson (D-Neb.), who continues to threaten to hold health care hostage.

"We are working hard to persuade Senator Nelson that this is in the best interest of Nebraska and his constituents and the country. And we will continue to do that as we will with other members of the Senate," Axelrod said. "And the main thing I would say to him and others members of the Senate is that after a long, long, long and thorough debate, let us have a vote.

"What we are arguing about today is not whether a majority support the bill in the Senate," Axelrod added. "A majority does. What we are arguing about is whether they will have a chance to express themselves and vote -- or whether a minority will thwart the majority and keep that vote from happening.

"And so my hope is that for Senator Nelson, who has always said under Republican administrations that we shouldn't use procedural maneuvers to try and keep bills from coming to the floor, that he will not allow that to happen here."

That's probably about as critical as any White House official has been of Nelson during the process. It's also a good point.

I don't doubt that all of the relevant players are well aware of this, but I still think the strongest possible pitch with Nelson is "just let the Senate vote." Whether he meant it or not is unclear, but Nelson has always denounced obstructionism. Now he can prove his sincerity.

Nelson doesn't have to like the bill; he doesn't even have to vote on the bill. He just has to clear the way for his colleagues to have a say after a grueling year.

Fat chance of that . . .
JedL (DK): Ben Nelson: Bill covers too many uninsured people, must be scaled back

Sen. Ben Nelson (D-NE) gave one hell of an interview yesterday to Lincoln, Nebraska’s KLIN-AM radio, expanding his 'cloture ransom' to include more than just massive new restrictions on abortion. Nelson is now demanding that the bill be "scaled back" to cover fewer than the 30 million promised by Pres. Obama, that its revenue provisions be eliminated, and that its Medicaid expansion be made voluntary. Not surprisingly, he says he can't imagine that the legislation will pass the Senate by Christmas.

Here's audio:

Nelson's key points:

  1. Asked if he would vote for cloture even if his initiative to restrict abortion were adopted, Nelson flatly said "no."
  1. Nelson not only said a vote before Christmas was not feasible, he joked about it taking until next Christmas.
  1. Nelson said unless the bill's Medicaid expansion provisions were made optional he would oppose cloture.
  1. Nelson said the bill's revenue provisions were unacceptable because the economy was bad.
  1. Nelson said because the subsidies which provide the bill's coverage expansion couldn't be paid for without additional revenue, they needed to be "scaled-back"
  1. Nelson also that unless cost control were addressed first, coverage couldn't be expanded.

In sum: unless Ben Nelson is bluffing, the only way he will vote for cloture is if abortion is restricted, the subsidies are whacked, the revenue provisions are nuked, and its Medicaid expansion is gutted. Oh, and he doesn't think there's any chance of it happening by Christmas.

So now that Ben Nelson has named his price (not that he can't move the goalposts again), Democratic leadership must choose one of three scenarios: (a) cave in to Nelson's demands Lieberman-style, thereby eliminating any pretense of this being a good bill; (b) call Nelson's bluff and schedule a cloture vote without satisfying his demands; or (c) abandoning negotiations with Nelson and choosing instead to pursue reconciliation.

The one thing they can't do is blame kos or Howard Dean or progressives for killing health reform. If health reform dies, it will be at the hands of the Joe Liebermans and Ben Nelsons of the world -- and the people who negotiated with them.

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