There is the substance of health care reform, and there is the politics of it. David Brooks ably addresses the latter in today's column in the New York Times. Even with a single party in power in Washington, it has become clear to all that the President cannot deliver on his promised "access-choice-lower cost" trio. So now the aim will be to claim political victory with a bit less expanded coverage, cuts in Medicare payments to providers and minor tax increases, while also using accountable care organizations to reduce choice. At the bill signing, Mr. Obama will assure us that we have obtained the full three-part package, even if the total is less than the sum of its parts. It will be years before the full implications are understood.
Along those lines, for those concerned about the long run, beware the modified public plan option that uses the benefits of government ownership and the federal supremacy clause to underprice private insurers, in part by avoiding the costs and regulations of state jurisdiction. This taxpayer-supported plan will, in time, become dominant. It will start by drawing off two categories of people: Low-risk, young healthy people who will be required to have insurance but who will want a lower-cost plan; and higher cost, less healthy people who will be happy to join the new public company at rates lower than they can obtain from private firms. The actuarial facts of life of the latter group will force the government to give greater and greater subsidies and preferential treatment to the new GM, which will in turn make it ever more attractive to a growing base of the population. Instead of this plan, as I have mentioned, why not use the approach of the Netherlands to ensure access?