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Even when a televised “summit” gathers the highest level of government officials, the search for common ground may descend to the lowest common denominator, at best, or just provide a more artificial replay of their respective twin peaks of political posturing, at worst (e.g. trying to turn Rep. Ryan’s Roadmap into Roadkill). In the case of this year’s mirage of health reform, we probably should count on rewarding the soft bigotry of low expectations. In any case, a more realistic objective would not be to finally achieve grudging capitulation by either hyper partisan side this year, but rather a somewhat clearer presentation to this fall’s cranky voters of how and why they differ.
The electoral majority of November 2008 reflected in Congress has grown badly out of synch with a de facto popular majority that balks at swallowing an indigestible prescription for comprehensive overhaul of health care policies and practices. But since it’s still February, let’s rerun health policy Groundhog Day with a drive-by look at several of the listed congressional Republican proposals that have drawn little serious scrutiny until now. Buckle up before we buckle down, in short order:
1. More seriously structured high-risk pool concepts are laudable, but they need much more extensive funding to do the job than even a $25 billion appropriation can handle. The latter figure is closer to a one-year cost than a ten-year budget estimate. It would be better to keep the subsidized premium threshold for high risks at 200 percent of standard rates, but then supplement it with an additional set of income-related subsidies. More affluent high-risk individuals still would be much better off in paying for only a portion of their actual health expenses through more expensive, but capped, insurance premiums. For a broader analysis, see http://www.aei.org/article/101189 .
2. Extending HIPAA’s group market portability protections against pre-existing conditions to the individual market is a reasonable compromise that would limit just-in-time coverage gaming and provide a strong near-mandate incentive to maintain continuous insurance coverage (http://www.aei.org/speech/100065 ). Dropping the COBRA exhaustion requirement is overdue. Further attention is needed for treatment of first-time entrants to the insurance market. A one-time open season (an Oklahoma land rush for health coverage) might not be administratively manageable. Another alternative would allow previously uninsured entrants of the future to be risk-rated initially whenever it’s worth the underwriting expense, before applying long-term guaranteed renewability protection to later changes in their predictable health risk status.
3. Eliminating health insurance spending caps is the latest junk food of health policy. But this approach fails to replace them with more transparent alternatives for acknowledging the need to manage the overall costs of the most persistently catastrophic medical conditions in line with exhaustible resource limits, yet provide a special override process for special cases.
4. The actual incidence of ex post rescissions falls well short of their anecdotal power. The limited amounts of current problems are usually matters of inadequate state regulatory performance (not enforcing existing laws effectively, rather than needing new ones). Creating a new federal appeals apparatus will add the appearance of more vigorous arm waving and finger pointing, but it’s unlikely to generate much business.
5. It’s probably no more harmful to try to bribe states to do the right thing (reduce costs and expand affordable coverage) than to bribe them to do the wrong thing (leverage the federal matching fund formula for Medicaid and squeeze provider reimbursement levels even lower). But why don’t the states already have enough incentive to want to fix their own coverage, cost, and budget problems? (See previous sentence).
6. If larger risk pools alone could constrain rising health care costs, health benefits expenses (and their growth rates) for large self-insured employers would be lower than they actually are. Merely averaging the costs of health risks does not necessarily reduce them; it mostly redistributes them. But if they can’t love the pool they’re with, smaller employers should be allowed to be with the pool they love. However, the CHOICE bill (HR 859) does a better job of not just beating the near-dead AHP horse, by focusing on captive insurers and catastrophic costs instead.
7. Perhaps a decade from now, we will hear that “30 is the new 25.”
8. Interstate insurance purchasing is no panacea, but it will shave insurance premiums downward in the individual and (more importantly) small group markets if structured to encourage vigorous competition among states in their respective brands of insurance regulation and among more insurers facing fewer barriers to entry. The realistic size of the insurance cost variation due to the regulatory wedge among states, however, is closer to 10-15 percent of premium levels at best. And the more extensive the safeguards that are added to the interstate competition process, the less the competition-driven premium savings will be.
9. Small ball for HSAs.
10. (Damage) caps are crude weapons but they don’t fire blanks. Most of the CBO-scored savings in the Boehner bill come from medical liability reforms.
11. Repeal of the CER Council removes one danger of centralized rationing but fails to replace it with a more pluralistic approach to competition in value measurement and enhancement. Remarkably enough, a late insertion into the Senate-passed Patient Protection and Affordable Care Act in section 10332 would begin to make Medicare data more available for external performance measurement and help jump start a better process.
Thomas P. Miller is a resident fellow at AEI.
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