Thursday, October 16, 2008

McCain's health insurance plan

One of the central tenets of McCain's health insurance plan is to let Americans buy insurance from any state, regardless of the state they live in. This might be a good idea if health insurance were a fully free-market commodity, but it guts the power of any state to set its own regulations or subsidize policies. Any state that tries to set minimum coverage or cap prices will be undermined by policies in states that don't, and any state that subsidizes health insurance policies will suddenly find itself paying for the whole country with the tax revenue of only its own residents.

Here in Massachusetts, we're embarking on an interesting plan to provide nearly universal coverage. It's by no means a fool-proof plan, and it looks to me like it'll probably fail. Not just that, but I knew even back when it was still being proposed that it would probably end up failing; the bar was incredibly high, and the state had no precedent from other states that it could learn from. Still, I always supported the plan, because I'm confident that even if it fails, what we'll learn from it will be invaluable as we set up its successor. My hope is that, in a couple decades, Massachusetts will hit on an iteration that really works.

Given America's current health insurance system, there's no way any state — or the federal government, for that matter — will get it right the first time. What the country needs is 50 independent laboratories, each trying its own way to provide the best coverage to the most people. Some states will go the free market route, and I can only hope that at least one or two try to nationalize (state-ize?) health care, taking as their model some of the very successful Western European countries.

Here's the crux: McCain's plan would eradicate those 50 laboratories. We'd have just one place to try policies, and it would be at a level so high — the federal government — that any experiment would be politically and economically impossible. Health insurance policy would fester under McCain's plan.

Of course, Obama's plan also works at the federal level; that's what a president's plan does. But he wouldn't strip power from local governments. His plan would largely keep regulation in the states' hands, except for the mandate to insure all minors — a reasonable floor to set, I think. At the core of it, Obama is proposing to set up a parallel health insurance system: if the regulations set by your state don't provide you a good option, you can go for the health insurance that federal employees get, which by all accounts is a very good one.

In other words, McCain's plan would strip states of their ability to control health insurance; Obama's would set a minimum bar for them, and in doing so would create an upwards pressure for them to create an environment that begets even better policies.

I would actually like Obama's plan more if it gave states more control. If a state provides a health insurance policy that's roughly equivalent to the federal government's, it should be able to petition the federal government to have it (the federal government) withdraw its coverage from that state's citizens. This would increase the state's pool of insured, allowing it to provide cheaper plans with better coverage, without undermining the minimum coverage that the federal plan was meant to provide.

States' rights? What states?

In some optimistic corner of my mind, I still cling to the idealized notion that the GOP is a small government, states' rights party; I like to think that its current policies represent a temporary if horrible corruption of their real position.

Of course, I know I'm deluding myself. Republicans today aren't about small government, and they're certainly not about states' rights. What's mildly interesting is that the party actually still pretends to be in favor of states' rights when it suits it: specifically, with the abortion issue. But McCain's insurance plan is a great example of the GOP's complete comfort with trampling over states in nearly every other matter.

1 comment:

fleuve-souterrain said...

good posts, Yuval! I like your blog. This post gives me a better window to the issues discussed in the current campaign than many talkng heads on cnn or elsewhere. I mean it! This is independent analyst's voice (unembedded if you like!)... Good work.