If I had to choose the most important aspect of health reform, it wouldn't be the public plan. Nor would it be the individual mandate, or the employer mandate, or the employer tax exclusion, or the Medicaid expansion. It wouldn't, in fact, be any of the issues that are dominating the political conversation. Rather, it would be the Health Insurance Exchange.
. . . The vehicle for that promise [of health care reform] is the Health Insurance Exchange. Imagine that you decided you didn't like your current health insurance and you wanted to change it. Your employer very likely doesn't offer any alternatives. If you do have a choice, it's almost certainly not between more than three different plans.
. . . The Health Insurance Exchange gives you another option. Unlike your employer, it will have a wide array of competing providers offering different plans with varying benefit levels, emphases and price tags. Unlike the individual market, insurers won't be able to discriminate based on your health history or your future risk. Plans will have to be certified as meeting a minimum level of comprehensiveness. Plans that routinely screw over members will lose customers to competing insurers. The Health Insurance Exchange, combines the benefits of choice that are theoretically available on the individual market with the bargaining power and scale that's generally accessible only in large employers (and the exchange will, in theory, have more bargaining power than even the largest employers, as it will have a much larger base of customers). . .
And what happens when you introduce productive competition, efficiencies of scale, more innovation and increased consumer power into a market as dysfunctional as the current situation for health insurance? In theory, you get lower prices and higher quality. And if the Health Insurance Exchange has lower prices and higher quality, more individuals will use it and more companies will buy into it. And if that happens, then the efficiencies of scale should increase, and so should the pace of innovation (as the rewards will be greater with more customers), and so the Health Insurance Exchange should further outpace the other markets, thereby attracting yet more customers, thereby further accelerating the virtuous cycle. Eventually, it could become the country's primary insurance market.
Under this theory, the magic of the market, as embodied by a Health Insurance Exchange, will fix health care and insurance. This seems fanciful to me and there is absolutely no evidence that supports this theory.
Here is the basic problem - it requires immense and rigorous regulation of the insurance industry. In the end, the absence of a public option means you are counting on the government regulatory apparatus to do a good job on insurance.
This is unrealistic in my opinion. But I think there is clarity now from Ezra Klein. He really does not care about much else but the exchange idea and, to a lesser extent, subsidies. That's a fair position to take. I think it is wrong and that it would lead to disaster. Respectful disagreement.
That said, then Ezra should NOT object to the stripping of the mandates from health care reform. Let "reform," for now, be exchanges and increase in Medicaid coverage. Let's leave the "real reform" to a different bill. In other words, no public option, then no mandates.
Speaking for me only
