Krugman: Keeping it simple on healthcare

KISS, as we used to say about building your case for trial:

One health care reform, indivisible

by Paul Krugman
(so nice he won the Nobel as the Chicago School sinks into the dustbin, after incalculable damage to the economies of the world - not to mention their desiccation of legal theory. -gwc)

Jonathan Chait reads Peggy Noonan, so I don’t have to:

The public in 2009 would have been happy to see a simple bill that mandated insurance companies offer coverage without respect to previous medical conditions. The administration could have had that—and the victory of it—last winter.

Instead, they were greedy for glory.

Chait explains why this is nonsense. But let me explain at fuller length, because this is one of the great misunderstood keys to the whole health care debate.

Start with the proposition that we don’t want our fellow citizens denied coverage because of preexisting conditions — which is a very popular position, so much so that even conservatives generally share it, or at least pretend to.

So why not just impose community rating — no discrimination based on medical history?

Well, the answer, backed up by lots of real-world experience, is that this leads to an adverse-selection death spiral: healthy people choose to go uninsured until they get sick, leading to a poor risk pool, leading to high premiums, leading even more healthy people dropping out.

So you have to back community rating up with an individual mandate: people must be required to purchase insurance even if they don’t currently think they need it.

But what if they can’t afford insurance? Well, you have to have subsidies that cover part of premiums for lower-income Americans.

In short, you end up with the health care bill that’s about to get enacted. There’s hardly anything arbitrary about the structure: once the decision was made to rely on private insurers rather than a single-payer system — and look, single-payer wasn’t going to happen — it had to be more or less what we’re getting. It wasn’t about ideology, or greediness, it was about making the thing work.
from Paul Krugman's blog The Conscience of a Liberal,  New York Times online, January 8, 2010