Incoherency is not an Asset

Something inhuman has taken Paul Krugman from us, I'm afraid.

I’m not sure what happened to Dr. Paul Krugman that fateful night of dinner at the White House, but I’d like the shrill one back now. Was it something in the food? Was it something in the conversation? Who knows? But in as much a Buddhist can offer a Jewish guy a come to Jesus moment, I’d like to take the opportunity to ask him to step forward and confess lest the devil grab his soul (or in my case–no soul to lose–but more confused subtle conscious and an accumulation of some really bad karma). What exactly is this Dr. Milquetoast?

You see, it has been clear for months that whatever health-care bill finally emerges will fall far short of reformers’ hopes. Yet even a bad bill could be much better than nothing. The question is where to draw the line. How bad does a bill have to be to make it too bad to vote for?

Now, the moment of truth isn’t here quite yet: There’s enough wrong with the Baucus proposal as it stands to make it unworkable and unacceptable. But that said, Senator Baucus’s mark is better than many of us expected. If it serves as a basis for negotiation, and the result of those negotiations is a plan that’s stronger, not weaker, reformers are going to have to make some hard choices about the degree of disappointment they’re willing to live with.

So, the Baucus bill is “unworkable and unacceptable” but even a bad bill could be much better than nothing? What? You want to try that again? So, first he tells any of us that support single payer, that we’re being unreasonable by sticking by our convictions during the first real phase of negotiations. I know Krugman knows game theory, so I ask you, where is the sense in negotiating your potential end game position from the start of the first node?

Krugman does mention these three problems with the bill, so again he realizes it’s basically a very bad piece of policy. You gut these out of the bill, however, and you don’t have the Baucus bill at all. It’s a blank sheet of paper. So why not say, dump the thing and let’s start over?

First, it bungles the so-called “employer mandate.” Most reform plans include a provision requiring that large employers either provide their workers with health coverage or pay into a fund that would help workers who don’t get insurance through their job buy coverage on their own. Mr. Baucus, however, gets too clever, trying to tie each employer’s fees to the subsidies its own employees end up getting.

That’s a terrible idea. As the Center on Budget and Policy Priorities points out, it would make companies reluctant to hire workers from lower-income families — and it would also create a bureaucratic nightmare. This provision has to go and be replaced with a simple pay-or-play rule.

Second, the plan is too stingy when it comes to financial aid. Lower-middle-class families, in particular, would end up paying much more in premiums than they do under the Massachusetts plan, suggesting that for many people insurance would not, in fact, be affordable. Fixing this means spending more than Mr. Baucus proposes.

Third, the plan doesn’t create real competition in the insurance market. The right way to create competition is to offer a public option, a government-run insurance plan individuals can buy into as an alternative to private insurance. The Baucus plan instead proposes a fake alternative, nonprofit insurance cooperatives — and it places so many restrictions on these cooperatives that, according to the Congressional Budget Office, they “seem unlikely to establish a significant market presence in many areas of the country.”

The insurance industry, of course, loves the Baucus plan. Need we say more?

Yes, you do need to say more other than watch and see what happens as it evolves and becomes more complex. Krugman is hoping that it eventually passes some ‘threshhold of acceptability’. Since you’ve given up so much so soon, what the heck do you now consider the minimum threshold of acceptability? As far as I can see, Dr. Krugman, the entire thing would have to be gutted to come close to anything that looks like a subgame perfect, let alone a Nash Equilibrium from my standpoint. But then I really want universal and affordable health care. There are a lot of ways to go about that, but the Baucus bill does not even appear to contain ONE of them. That’s probably because it was written by a Well Point Lobbyist.

It has those hapless health co-ops that history already proved worthless. It has an excise tax on working class and middle income folks that have good insurance to punish them for insurance premium inflation and mark-ups for excess paperwork, overhead, and excessive profits that is hardly their fault. In most cases, they’ve got no choice in their plan and their at the mercy of their HR department or Union negotiator. There’s no provisions to increase choice in states that have none already. It doesn’t address the majority of uninsured who still will remain uninsured. It doesn’t even kick in for several years out. It threatens to take benefits from the working but limited public options we have now and punish recipients for either being old or in poverty or still in childhood. That’s above and behind the stinkers Krugman has already listed. How can you improve on something that just needs to be scrapped?

Meanwhile, as this headline in WaPo today suggests–Affordability Is Major Challenge for Reform: Burden on Middle Class Is a Top Concern–we’re doing nothing with either the availability or affordability issues that were supposed to be at the heart of this reform.

How to make insurance more affordable to the estimated 30 million uninsured people who would be required to buy coverage under the Baucus proposal is emerging as a central challenge as the long-awaited plan advances to full committee debate Tuesday. Democrats and Republicans alike worry that a bill intended to address one source of financial hardship — the skyrocketing cost of health care — could lead to another, in the form of hefty premiums.

“It’s very clear that the driving issue of this debate is affordability, particularly for middle-class folks. And the Democratic caucus is very much committed to getting this issue right,” said Sen. Ron Wyden (D-Ore.), a Finance Committee member who said he will offer amendments next week in an effort to improve affordability and choice.

As long as you’ve got over paid third party payers with a market that’s rife with information asymmetry, moral hazard, and cherry picking, you’re going to get a mark up that will not come close to anything affordable. This insistence on making extraordinary profits off of the sick is beyond the pale to me. People on all sides see issues that no one is working to clear up.

When Obama mentioned Baucus’s bill Thursday, members of the crowd booed. Although moderate Democrats have expressed support for the proposal, liberal Democrats are disappointed that the senator rejected the idea of creating a government-run insurance plan to compete with private firms, and that his plan might force people to buy insurance without providing an adequate safety net.

Let me say, this first point is an unbelievable nonstarter for any one that knows anything about risk pools.

The Baucus plan attempts to make insurance more affordable through a variety of mechanisms, including lowering premiums for everyone who purchases coverage directly from an insurer rather than through their employer.

First, you have to make certain that you’re not being placed in what would amount to various ‘tranches’. In other words, if you’re a healthy 25 year old, you get coverage for nothing. If you’re a 50 year old with some history of a disease, you dumped into one of those health co-ops and your premiums are sky high. I don’t see anything in this bill that stops insurance companies from dumping people into a variety of plans based on cherry picking. They may have to cover you if you have had a cancer experience, but that doesn’t mean you’ll be placed in a plan you can afford. Then, of course, if you go the group option from an employer, you’re going to get punished with an excise tax. This is just plain unacceptable to me.

I’ve been reading the Baucus plan, all 233 pages of it. I can already see a series of bad outcomes, including the number of ways businesses are going to try to get around the fees for not having insured employee. (Hint: employee some one with a spouse that has a group plan from their employer.) I’ve not made it all the way through yet, but if this is the starting position, I’d like to find a way to opt out now.

I’m still trying to get France to buy New Orleans. What do you say Monsieur Sarkozy?

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