Monday, September 07, 2009

Risk, Health Care, and Red America

Frank Pasquale

I agree with Andrew Koppelman's analysis of resistance to health insurance reform. But Red America's implacable opposition to the plans now debated in Congress has deeper ideological roots in a love of risk. As Thomas Edsall has observed, "A problem for Democrats . . . is the long tradition in the US of . . . venerating risk . . . and of a deep commitment to untrammeled individualism."

Even more frustrating for Democrats, the left's hard-won victories to reduce risk have left many people assuming that they can't gain much from reform. Consider four "backstops" that leave many people unworried about losing insurance:

1) Bankruptcy: The Republican party worked hard to water down bankruptcy protections during the Bush years. Nevertheless, these laws still protect many consumers. As health law expert Tim Jost writes, "Ultimately, the federal bankruptcy code must also be seen as our federal catastrophic health care program."

2) Medicare: Thanks to LBJ and an overwhelming Democratic majority in the 89th Congress, the elderly already have access to federal health insurance, and are wary of any coverage expansion that could drain resources from the program. Here the GOP's anti-spending and family values wings have formed a pincer movement that has whiplashed Democrats. First, fiscal conservatives used CBO's dubious cost estimates to demand "real savings" to pay for reform. Dreaming of bipartisanship, Obama's technocrats seized on the Dartmouth studies to argue that up to a third of all medical spending, including Medicare, is wasted, and that reform of the delivery system could rationalize that spending. At that point the GOP's "family values" wing talked up death panels, rationing, and "pulling the plug on grandma."

3) EMTALA: Can a relatively well off person "rationally choose" to be uninsured? As Jost notes, as of 2004, "many of the uninsured are in fact reasonably well-off—8.4% are from households that earn $75,000 or more per year." To the extent this group is calculating the costs and benefits, it's likely counting on the Emergency Medical Treatment and Active Labor Act of 1986 (EMTALA) to force hospitals to "screen and stabilize" those who come to their emergency rooms. Of course, once you're stabilized, the duty to care is over, but few people think very clearly about what it is like to slowly (and stably) die of cancer while the only effective treatments are too expensive to pay for.*

4) Medicaid: Finally, we come to another element of the social safety net many people think they can fall back on: Medicaid. Benefits aficionados know that only the categorically eligible can rely on it. Some reform proposals would replace the "numerous statutory and regulatory pathways for establishing eligibility" with a simple income test. But for now, those among the populace who just assume that Medicaid covers all the poor may believe they would have little to gain from reform even if they did face crippling medical bills. (They're probably also unaware of Medicaid's pitifully low reimbursement rates--but more on that later.)

None of these so-called backstops will help everyone, all the time. But one can imagine a risk-loving, red-blooded American wanting to roll the dice on them rather than endure the type of bureaucratic assessments and applications that will gradually poke and prod the uninsured making between 133% and 400% of the poverty level toward buying their own coverage on an exchange. Indeed, under the Senate HELP Committee's proposal, a family making 400% of the poverty level could be responsible for paying up to 12.5% of their income in premiums, for insurance that leaves them liable for paying $11,600 in out of pocket expenses. That's a worst case scenario of paying 26% of income for health care--better than bankruptcy, but potentially tantamount to the same thing in a country where the bottom half of the population has virtually no net worth. (And that cost-sharing estimate assumes the medical component of the CPI does not increase.)

The really appealing goal of reform--a strong public option that would be part of an exchange open to all--appears to be more of a bargaining chip than a firm commitment for the Obama Administration. Strategically, if your goal is to get "something" through Congress, this makes a great deal of sense: Republicans and some waivering Democrats think a public option smacks of socialism. But as a political matter, it is draining support for reform. People can understand a public option, and building support for it might have been as decisive to Democrats' fortunes as FDR's reformulation of the American social contract in the 1930s. Sadly, Obama's technocrats appear more attracted to wonk-talk like "bending the cost curve" than the forceful moral case for collective responsibility for health. Only the President can correct that course. It takes an ideology to beat an ideology.

*An earlier version of this post had a typo--I put "affordable" instead of "effective." Many thanks to a reader for catching this. (Now I just need to get the code for a "strikethrough" to note the edit in traditional blog form.)