Anthem Blue Cross And The Selling Of The Health Bill Regulations

By Big Tent Democrat, Section Other Politics
Posted on Thu Feb 11, 2010 at 09:51:47 AM EST
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Despite my counsel to the Villagers that there is no political return in selling the regulations contained in the Senate health bill, Jon Cohn tries here, using the Anthem Blue Cross 39% rate health insurance rate hike story. Cohn writes:

[T]he best way to avoid adverse selection, as I've argued many times, is to create one giant insurance pool--in which everybody, healthy and sick, gets coverage at the same rates. And, roughly speaking, that's what the Democratic health care bills would do, by creating insurance exchanges through which all individuals in a given state would buy coverage.

This paragraph does not even make internal sense. In what way is the creation of 50 state based exchanges "creat[ing] one giant insurance pool[?]" (Unlike the Senate bill, the House bill creates a national exchange.) But even that is deceptive. The exchanges will involve only a small part of the national health insurance pool. Most are covered through employer based plans. Cohn's argument is filled with holes. More . . .

In reality, Cohn's argument is aspirational - it is about what the exchanges might become in some magical future. Consider this:

Of course, only a relatively small portion of Americans carry individual insurance coverage. The majority of people with private coverage get it through their employers, where such stark rate increases are rare. But, without reform, it's entirely possible--some would say likely--that more and more employers will be dropping coverage, leaving more and more individuals to buy it on their own. That's why the California Anthem story should get everybody's attention.

(Emphasis supplied.) Is it true that without reform, employers will be more likely to drop employee health insurance? What is the basis for this statement? The reality I believe is different. The Senate bill makes it more likely to see a reduction in employer based health insurance. And that is not a bad thing policy wise so long as there is a real safe harbor for people.

But here is why arguing for the regulatory components of the Senate health bill is a political loser - you basically have to tell people they are going to lose their employer based insurance, and indeed, the Senate health bill is intended to forward that process (that is what the excise tax is all about.) That is a political loser.

Politics is not so complicated in my opinion. Policy is. I am not going to rehash my disbelief in the power of the state based exchanges and the regulatory reform framework that the Village wonks are