post by Paul Kelleher
A few days before Christmas, the New York Times's Economix blog published a characteristically excellent post by Uwe Reinhardt on the recently released Wyden-Ryan proposal (pdf). As many of you know, Reinhardt is a master when it comes to explaining complex health policy concepts and principles in clear, accessible prose for non-experts. In this particular post, Reinhardt pellucidly lays out "the major economic functions any health system must perform" (see his first numbered list for these functions). He then remarks:
Most of the debate over health policy in this country has been over two questions.
First, to what extent should healthier or wealthier members of society be asked to subsidize the health care received by their poorer or sicker fellow Americans? Second, influenced by the answer to the first question, who should perform the functions listed above: government, private nonprofit entities or for-profit entities?
The first of these questions is quite obviously a central values question for health policy, and I've written a few posts addressing it here on the blog. As Reinhardt notes, the answer to the second question must be influenced by the answer to the first, but the second question is also clearly more empirical and technocratic in nature than the first.
Reinhardt says that the Wyden-Ryan plan, which is a form of "managed competition," answers the first values question thus:
Let there be a limit to the extent to which healthier or wealthier Americans are forced to subsidize the health care received by sicker or poorer Americans – that is, to the practice of social solidarity.
According to Reinhardt, Wyden-Ryan incorporates this "truncated" conception of social solidarity by limiting the size of the voucher that individuals would receive to purchase health insurance plans within a regulated health insurance marketplace:
The major point of contention in the political debate over managed competition...is over the nature of the “defined contribution,” which defines the extent to which the concept achieves social solidarity in health care. The crucial distinction here is between “vouchers” and “premium support” (as explained in Section B of this Brookings Institution document). [emphasis added]
I think Reinhardt makes a slight mistake here, for I do not think it's true that the answer to this question--i.e. how generous the vouchers should be--"defines the extent to which [a form of managed competition] achieves social solidarity in health care."
To illustrate, imagine that you and I have both been given a very very generous subsidy by the government to purchase insurance on the open market. Let's assume it's $30,000. In most cases, this will be enough to purchase gold-plated health care for a single person. And this may well be true in your case, since you're relatively healthy. But now suppose I have a super expensive pre-existing condition. Depending on how expensive my condition is to treat, there may be no insurance company that would offer me coverage, even if I had $30,000 per year to spend on premiums. If we nevertheless think there is something wrong with that situation, we may choose to place regulations on the marketplace that forbid insurance companies from denying me coverage and that ensure I have affordable access to needed medical care.
Now, these regulation cannot exist in a vaccuum: if insurance companies are required to cover me, then other regulations will have to be put into place to ensure that the market doesn't become disfunctional. Such additional regulations are precisely the regulations the Affordable Care Act imposes for precisely these reasons, as Reinhardt masterfully explains elsewhere.* Yet since these regulations have potentially burdensome implications for others--e.g. they may involve an individual mandate (or its equivalent) and/or make insurance premiums more expensive for others--there is every reason to think that they too help define the extent to which health policy embodies social solidarity. Put differently, if you think it violates some freedom or prerogative of yours to be mandated to have health coverage or to pay a premium higher than is justified by your own actuarial health risks, then you may object to the marketplace regulations embraced by the ACA and Wyden-Ryan. And this may influence--or be influenced by--your understanding of the demands of reasonable social solidarity.
This isn't a big disagreement with Reinhardt, obviously. And I hope he'd agree with my minor correction to his useful post. Still, I do think it's super important to be able to locate the areas of health policy that must be responsive relevant social values. Reinhardt himself proves why: since health care policy has so many moving parts, it may be possible to adjust several dials to achieve the same degree of social solidarity while lessening the burden placed on others. But we won't get it right if we think that the size of the voucher is the only choice that must be responsive to our understanding of social solidarity.
*Really, if you are going to give someone you love just one thing to read on the ACA, give them the Reinhardt piece linked to here.