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Beware this Republican Narrative

With the House set to vote on a full health care reform bill as early as this week, Republican leader John Boehner has announced that the GOP leadership will introduce a formal alternative of their own. The proper response, I suppose, is "Are you kidding?"

By my count, it's been more than eight months since President Obama announced that health reform would be his top domestic priority, signalling that it would be the dominant issue of 2009. Republican leaders had countless opportunities to step forward with a proposal to hold up against the Democratic approach. They declined, preferring instead to scream about rationing and socialized medicine. Now that passage of a bill seems likely, I guess, they've changed their minds.

But, in the spirit of enlightened debate, let's look at what Boehner and his colleagues have in mind. Based on various press accounts, like this one in the Wall Street Journal, it appears the proposal will be a familiar mix of conservative ideas: Allowing people to buy insurance across state lines, allowing small businesses to pool their resources in order to buy coverage, reforming malpractice laws, and establishing (or strengthening) high-risk pools for people who can't buy affordable coverage because of pre-existing medical conditions.

Nobody seriously believes these ideas will dramatically expand the number of people with health insurance. High-risk pools, for example, have a track record. And it isn't good. Karen Tumulty, who once looked into such a plan on behalf of her brother, explains:

These pools already exist in more than 30 states, but they tend to be too expensive for those with limited means to buy into. And often, people cannot get into them for as long as a year after they apply.

My colleague Harold Pollack agrees, as he wrote in this space a few weeks ago.

But Republicans aren't hiding the fact that their bill would do little to expand health insurance. They're bragging about it. As Indiana Congressman Mike Pence told Politico:

This is going to be one of the real conflicts of vision presented to the American people this week. Their focus is to get as close presumably to universal coverage as possible, and that’s their every right to do. Republicans, listening to the American people back home, believe the real issue is cost.

This is a politically clever construction, since it creates a narrative that is both intellectually simple (Democrats focus on coverage, Republicans focus on costs) and consistent with preconceptions about the parties (Democrats want to help the poor, Republicans want to help everybody else). But it's not actually true.

President Obama and his allies have made controlling costs a top priority of health care reform--at times giving it more emphasis than I, for one, would have preferred. And the bills moving through Congress show it. They include a tax on high-end benefits, incentives for doctors to form integrated care groups, a commission with far-reaching powers to set Medicare reimbursement rates, and other reforms that should--if successful--actually make medical care less expensive. Although there is certainly room for disagreement about how great an impact these reforms will have, respected experts from both ends of the ideological spectrum have said they believe these changes will, in fact, restrain the growth of medical costs in the future.

More immediately, reform should bring premium relief to those people who have the toughest time finding affordable insurance now--individuals buying on their own and small businesses. As MIT economist Jonathan Gruber notes in a new analysis, which he will be presenting to Congress today:

The House proposal issued today provides premium assistance and market reforms which will make health insurance much more affordable for individuals facing purchase in the non-group market.  The premiums that individuals will face in the new exchanges established by this legislation are, according to the non-partisan Congressional Budget Office, considerably lower than what they would face in the non-group insurance market, due to the market reforms put in place by the House plan, the mandate on individuals to participate regardless of health, and the market economies of new exchanges.

Gruber helpfully includes a chart, based on his projections of how a family of four buying insurance on their own would fare with--and without--the reforms in the House bill:

The difference is most dramatic for the poorest families, who benefit from large government subsidies. But even those making more than four times the poverty line--and thus ineligible for government financial assistance--would be better off.

Gruber goes on to note that lower premiums are consistent with the experience in Massachusetts, where the cost of coverage in the non-group market fell dramatically after its reforms went into effect.* 

Republicans would argue that their proposals would lower insurance costs, too. And, in a sense, they are correct. Letting people buy coverage across state lines, letting small businesses form special new groups, and siphoning off the sick into high-risk pools are all means for accomplishing the same goal--gutting the existing regulations of insurance. And without those regulations, insurance would become cheaper. But it'd be cheaper only because it provided less protection--and was available only to people or small groups with predictably good health.

And that's really the key distinction between what the Republicans and the Democrats are offering. Because of their aversion to regulation and government spending, Republicans embrace reforms that make health insurance cheaper by offering less security. The healthy win, while everybody else loses. Democrats prefer reforms that offer a combination of lower costs and more security--not just for the medically fortunate, but for everybody.

Note: I have more to say about Massachusetts in an article that appears in the new print edition and should be online within the next few days.