Does Better Health Care Coverage Reduce Abortion?

In his most recent column, T.R. Reid posits a connection between the absence of national health coverage in the United States and the unusually high number of abortions. Comparing the U.S. to other industrialized nations, Reid points out that the U.S. has a substantially higher rate of abortion than countries that have adopted national health care systems. The author uses this as evidence to suggest that opponents of abortion should be more willing to accept national health care as a way to advance their cause.

However, Reid’s argument ignores at least two other important points.

First, Reid fails to acknowledge the wide range of abortion rates among countries that have adopted national health care systems. The variation among states with universal health care is far greater than the variation between the United States and the United Kingdom. In Germany, for example, the number of abortions for women ages 15 to 44 is 7.8 per 1000 women, compared to 17 per 1000 women in the United Kingdom. (The rate in the United States is 20.8 per 1000 women.) This suggests that, when it comes to abortion rates, the health care system may not be as important as more subtle forces like culture.

Second, Reid does not take into account national teen pregnancy rates, which are far higher in the United States than in other industrialized countries. Because higher rates of teen pregnancy are likely connected to higher abortion rates, it seems plausible that there is a third variable – perhaps some measure of social responsibility – contributing to both the absence of a national health care system in the United States and the higher rates of teen pregnancy and abortion. Isn't it possible that American couples are less responsible about pregnancy because they have less of a sense of responsibility to society? Wouldn't this lack of social responsibility also make Americans less concerned about the uninsured?

Unfortunately, Reid chooses not to even consider this possibility. He simply asserts that there are “various reasons” why universal health care reduces the rate of abortion, acting as though correlation automatically implies causation.

As a supporter of national health care and abortion rights, I wish Reid’s contention were true. But wishing does not make it so. In his eagerness to connect national health care with lower rates of abortion, Reid overlooks essential details and relies far too extensively on testimonial evidence.

What's the Deal with CBO's Scoring?

There's been a lot of wonky discussion about the CBO's scoring methods lately. The other day, Ezra Klein defended the CBO against conservative critics, insisting that the agency's costs estimates represent the "best guess of the town's most rigorous guesser."

Ezra writes:

[B]e very careful with any criticism of CBO that seems to be merited by a particular score rather than a particular methodological difficulty. To put that slightly differently, does anyone think that conservatives would be squawking if CBO had disappointed Democrats by saying the bill would save less money than either the House or Senate incarnations? If not, then keep in mind that this is a political, not technical, dispute. To establish my own credentials on this, here's the post I wrote defending the CBO when liberals were arguing that it was underestimating health-care reform's savings.

I think Ezra is a bit disingenuous when he pretends that he's never engaged in partisan attacks of specific CBO cost estimates. (See here, for example.) But there is a much bigger criticism of Ezra's point, which Greg Mankiw articulates very well here.

By convention, the CBO uses something called "static" budget scoring to determine a bill's impact on the federal budget. This kind of scoring essentially disregards the macroeconomic implications of federal actions.

Here is how former CBO director Douglas Holtz-Eakin explained it:

For every piece of legislation . . . the budgetary impacts are estimated using the same, unchanging baseline projections of overall gross domestic product (GDP) and its aggregate income components. Specifically, the estimates do not include the effects of legislation on the supply of labor or on saving (and hence on overall economic growth); they do not include effects on income that might result from the influence outlays and taxes, say, may have on technological progress; they do not include the increases or decreases in output that are caused by the way subsidies or taxes reallocate resources among various activities; they do not include the effects on national saving and other incentive effects that result from the government’s financing of the budget change; and they do not include the income and employment effects that arise from the impact of fiscal policy on aggregate spending in the economy in a recession.

To steal a premise from Paul Ryan, this means that the CBO's current scoring methods would assume no macroeconomic impact if the federal government increased spending by, say, 50 trillion dollars . . . just as long as that new spending was offset by 50 trillion dollars in tax increases.

The alternative to static scoring is some kind of "dynamic" budget analysis, which would account for macroeconomic feedback effects rather than simply holding baselines GDP estimates constant. This would give us a much more accurate cost estimate for large policy changes.

Under the current assumptions, we're virtually guaranteed to get an faulty score.

Saletan Makes a Strange Argument

I love Will Saletan, but this doesn't make any sense to me:

Democracy isn't about doing what might sell in the next election. It's about doing what you promised in the last one. If you're in Congress, and if you think this bill is good for the country, vote for it. Even if it costs you your job.

Losing your job is a scary idea. It's natural to look for a way out. It's also natural to rationalize your self-preservation. You aren't really caving; you're just serving the public by heeding the polls. Isn't that a legislator's job?

No. It isn't. Your job description is in the nation's founding documents. The Constitution specifies representative democracy, not direct democracy. The Declaration of Independence explains that to secure citizens' rights to life, liberty, and the pursuit of happiness, "Governments are instituted among Men, deriving their just powers from the consent of the governed." The consent authorizes powers, not bills. And it precedes the exercise of those powers. Your job now is to use your powers wisely.

This is the only time I've ever heard anyone use the phrase "deriving their . . . powers from the consent of the governed" to justify passing legislation that flies in the face of public opinion. By Saletan's logic, "consent" must only be given at the ballot box. Once the voters have chosen a representative, public involvement becomes immaterial. Representatives should be ruled by their individual consciences, not the whims of the people.

But if that's true, why did the the Founders see fit to draw up a Bill of Rights which - among other things - guarantees the right to petition the Government for a redress of grievances? And why has the Supreme Court repeatedly interpreted this clause to mean the right to lobby your legislators? Further, why is this right considered among the "fundamental rights" which have been selectively incorporated to the states through the Due Process Clause of the Fourteenth Amendment?

I think Saletan's argument is a little silly. We have a representative democracy, sure, but that doesn't mean that it shouldn't be a participatory democracy. People should be involved at every stage of the process because the decisions that their government makes affect their daily lives.

Krugman on Health Care Myths

Paul Krugman had a good op-ed in yesterday's NYT.

He rails against what he deems the three big "myths" about the health care bill, namely: that it's a government take-over of the the health care sector, that it does nothing to control costs, and that it's fiscally irresponsible.

I agree with the first two points, but the third is kind of a bait-and-switch. It's true that the bill would not be anything like a "government take-over." And certainly there are some cost-control measures in the bill, even though it's unclear whether the most important measures will really be inserted into the final version.

In regard to fiscal responsibility, Krugman argues that even some of the more cynical projections show that reform would only raise total health care spending by about one percent, while expanding coverage to tens of millions of Americans. This, he suggests, is a "good deal."

Covering tens of millions of Americans while only adding one percent to total health care spending does sound like a pretty amazing bargain. The problem is that, if the projections are even remotely accurate, we're already on an unsustainable path. What we need to do is bend the cost curve down dramatically.

One percent would be fine if health care spending weren't expected to envelop the federal budget and substantially weaken our economy over the next several decades. According to CBO's intermediate projections, health care spending could reach nearly 50 percent of GDP by 2080.

Telling people that, after reform, health care spending would only reach 50.5 percent of GDP is not very comforting.

An Open Letter to Andrew Sullivan

Andrew,

You recently wrote:

The explosion in medical costs since 2000 or 2003, along with the brutal recession, and a greater awareness of the real suffering this has created, has also convinced me that systematic reform is necessary, as long as it is fiscally responsible.

This comes after a long string of posts in which you've encouraged Congress to "pass the damn bill." I understand the sentiment, but it still seems like you’re missing the point.

I agree that any genuine conservative should support a “fiscally responsible” health care reform plan that expands health coverage to millions of Americans. You’re right to criticize congressional Republicans who – in spite of their protestations to the contrary – seem to be aligned against any kind of meaningful reform.

But there are legitimate concerns as to whether this bill would actually be deficit-reducing or even deficit-neutral. Many of the key cost-saving provisions will likely be excluded (or diluted) if the bill is pushed through in reconciliation. And even in its current form, the Senate bill seems to contain an awful lot of cost-saving gimmickry that was thrown in to achieve an attractive score from CBO.

I’m not sure how you can read David’s latest column without at least pausing to consider whether the kind of systematic reform that we’re likely to get is truly going to control costs or simply create another large, unsustainable entitlement.

You continue to assert that the bill is “fiscally responsible” without – as far as I can tell – seriously addressing the concerns of those who suspect otherwise.

What's the deal?

Update: Is Andrew becoming an ideologue on this issue?

This response to Megan McArdle's criticism makes absolutely no sense to me. Are we looking at the same scatter plots?

Maybe I'm missing something . . .

Ezra Klein v. Paul Ryan

Ezra Klein and Paul Ryan recently had an excellent back-and-forth on the health care bill.

f you're looking for some seriously wonky discussion of Paul Ryan's comments at the Blair House Summit, see Ezra's critism and Ryan's response.

Ross Douthat also offers his thoughts here.

Belated Thoughts on the Health Care Summit

FactCheck has a rundown of some of the more egregious errors and distortions here.

I think the president came off looking pretty bad in his dust up with John McCain. I was particularly taken aback by this response:

We can have a debate about process or we can have a debate about how we're going to help the American people at this point. And the latter debate is the one I think they care about a little bit more.

I don't know whether the "American people" concerned about product more than process at this point, but the president's snarky dismissal of McCain's point set me on edge.

One of the reasons that I voted for Senator Obama was because he seemed to actually care about the process. Transparency was one of the central planks in his platform. He continually railed against special-interests and backroom deal-making. He called for honesty and integrity in politics. And he eschewed the Machiavellian tactics of the Clinton campaign.

For him to now play the world-wise pragmatist is a bit disconcerting. Process is, in my view, just as essential as product.

And McCain is right -- there was no justification for provisions like the "Cornhusker Kickback" or any of the myriad of exemptions and special privileges that Democratic lawmakers carved out for their individual states.

But it's not just the sweetheat deals. I also have to agree with Ross Douthat here:

I look at liberal commentators and see a group that’s intent on being on-side against Republicans, and that’s willing to downplay significant weaknesses in major legislation (be it the stimulus, cap-and-trade, or now health care) in the quest to get things done.

I understand the frustration that most progressives feel. This has been a long, drawn-out debate, and many of the Republican attacks have been unjustified and unsportsmanlike. John Boehner's remarks toward the end of the Summit -- which seemed to begin magnanimously, but quickly descended into fear-mongering -- perfectly illustrate why so many on the left want to see health care reform forced through in reconciliation.

But I fear that, while Republicans appear to be balking at everything, Democrats remain single-mindedly focused on passing something -- regardless of whether it's good policy. Both parties deserve immense criticism here. The Republican antics are despicable, but the response from Democrats has been shameful . . . and politically troubling to those of us who actually care about how things get done.

It's just as dangerous to be overzealous as obstructionist.

Incremental Reform and Path Dependency

Ross Douthat has a brilliant piece in today's NYT:

Under Franklin Roosevelt and Lyndon Johnson, liberals created a federal leviathan that taxes, regulates and redistributes across every walk of American life. In the process, though, they bound the hands of future generations of reformers. Programs became entrenched. Bureaucracies proliferated. Subsidies became “entitlements,” tax breaks became part of the informal social contract. And our government was transformed, slowly but irreversibly, into a “large, incoherent, often incomprehensible mass that is solicitous of its clients but impervious to any broad, coherent program of reform.”

In other words, the problem with big governmental reforms is that earlier decisions create public interest groups that dramatically constrain later decisions. This ultimately leads to path dependence. Large public interest groups that benefit from earlier decisions become resistant to change. So, bad public policy decisions that affect large groups of people -- like the deduction for employer-based health insurance -- become nearly impossible to reverse.

This isn't a new theory, but Ross lays the argument out very well.

For anyone who's interested in this subject, I'd recommend reading Rauch's book, Government's End, as well as Jacob Hacker's The Divided Welfare State.

What's Going On?

Is health care reform dead on arrival?

Perhaps the most important question about the game-changing election returns in Massachusetts is how they reflect on the Democratic-controlled Congress and on the president.

It's true that Martha Coakley was a rather uninspiring candidate, and if she were running in any other state -- or for any other Senate seat -- her failure may be explained away fairly easily. But the pre-election polling seemed to suggest that many Massachusetts residents were deeply opposed to the health care reform bill, worried about the cost of health care reform generally, and doubtful that Coakley would have shown any political independence in representing her constituents.

Even as Scott Brown charged ahead of Coakley in the polls, Coakley's positives continued to outweighed her negatives. This suggests that Coakley's lackluster campaign was not her only electoral problem. National issues likely had a large influence on the final results.

So, what's really going on here? Was this a referendum on the president's agenda?

Hard to say. It's true that President Obama still maintains majority approval in Massachusetts, but many aspects of his platform are rapidly losing support in the Bay State and in the country as a whole. Nationally, the president's approval ratings are slipping as Americans on both sides of the political divide seem to be disillusioned with his performance.

(Although, it's still important to look at Obama's approval ratings in historical context.)

Conor Friedersdorf considers the reasons why President Obama seems to be losing support:

On the campaign trail . . . Obama didn’t campaign as an establishment pragmatist. He didn’t say, “Health care reform is important, so I’ll hold my nose, cut deals with a lot of special interests, and get more Americans covered in a very imperfect way.” Nor did he try to communicate that message in more politically palatable language. Instead he made being a change agent the foundation of his appeal. He talked, as they all do, about a broken system in Washington DC, noting that issues like health care reform were too important to be addressed in the same old way. Again, I didn’t particularly believe any of this, but having my cynicism justified isn’t winning President Obama any points.

Perhaps a down economy is the biggest reason that President Obama’s numbers are down, but I cannot help but wonder if his slip isn’t also due to a lie at the heart of his campaign. This man is calculating politico, as comfortable as anyone we’ve got at navigating Washington DC as it exists today. It’s a style of leadership that is perfectly defensible. But he sold himself as an idealistic agent of change whose special contribution would be fixing a broken status quo.

When you’re talking approval ratings, overall impressions like this one are far more important than most specific issues, and Obama supporters who took the man’s rhetoric seriously have reason to feel misled on everything from Gitmo to gay rights to bank bailouts to health care deals cut with industry players to courting special interests generally. That they’d still prefer him to McCain/Palin, Rush Limbaugh or Glenn Beck eventually begins to register as damning with the faint praise that it is. Obama defenders are perfectly within their rights to point out that sane alternatives to the president’s agenda haven’t many GOP champions. But let’s raise the bar a bit. Is there anything President Obama has accomplished that we couldn’t have expected from a President George H.W. Bush or a Bill Clinton?

Exceptional rhetoric + mediocre performance = falling approval ratings. So it goes.

I think Conor makes a good point. But I also believe that the problem is much larger, and has a lot more to do with human psychology.

Ross Douthat argues that President Obama's aggressive pursuance of a liberal agenda has turned some Americans against him. But on any given day, a Daily Kos blogger will argue that the President's conservative agenda -- or, at least, his deference to conservatives -- is what's causing all our problems.

Many party-line Democrats with whom I talk are extremely frustrated with the president for failing to deliver on what they viewed as his promise to transform the United States into a more progressive country. Meanwhile, conservatives seem convinced that President Obama is the most liberal president in history, and is actively transforming the United States into a more progressive country.

So, what's the real issue? Why do Americans on both sides seem to be rebelling against President Obama? Is all of this hostility toward the president really just a reflection of intellectual biases run wild?

As Morton Hunt once wrote in The Universe Within:

Most human beings earn a failing grade in elementary logic. We're not just frequently incompetent [in thinking logically], we're also willfully and skillfully illogical. When a piece of deductive reasoning leads to a conclusion we don't like, we often rebut it with irrelevancies and sophistries of which, instead of being ashamed, we act proud.

In my view, it's not just logical reasoning that we need. It's the ability to tell ourselves that we are biased creatures. The world is far more complex than our perceptions allow us to grasp.

I think we need to stop convincing ourselves that our intellectual opponents have nothing to offer but discredited ideals. We need to stop convincing ourselves that we're always right.

Is Ezra Missing the Point?

Ezra Klein is continuing to hurl ad hominem attacks at Joe Lieberman, some of which are reasonable and fair and some of which are absurd and speculative. Regardless of how you feel about Lieberman, I think it's clear that there is something missing from this critique:

[T]ake the public option. Lieberman has cycled through a variety of explanations, none of which made the slightest lick of sense. First, he said the public option would increase the deficit. That's flatly untrue. Not only did CBO say the exact opposite, projecting savings of $25 to more than $100 billion, depending on the construction, but the idea didn't even make conceptual sense -- the cost of health-care reform comes from the subsidies, which apply to private and public insurance equally.

Well, sort of.

Regardless of its construction, the public plan would have probably attracted more people who received federally subsidized care. So, while the subsidies would technically "apply to private and public insurance equally," it's unlikely that they would be allocated equally. The public plan would get an unequal share of the subsidies, but this probably wouldn't be enough to make up for the adverse selection problem.

As Ezra himself explained:

[B]ecause the public option is, well, public, it won't want to do the unpopular things that insurers do to save money, like manage care or aggressively review treatments. It also, presumably, won't try to drive out the sick or the unhealthy. That means the public option will spend more, and could, over time, develop a reputation as a good home for bad health risks, which would mean its average premium will increase because its average member will cost more.

The nightmare scenario, then, is that private insurers cotton onto this and accelerate the process, implicitly or explicitly guiding bad risks to the public option. In theory, the exchanges are risk-adjusted, and the public option will be given more money if it ends up with bad risks, but it's hard to say how that will function in practice.

If this is true, can the "level-playing field" public plan really survive in a competitive exchange without a government backstop? If it can't, will the government attempt bail it out? This would undoubtedly increase the federal deficit.

Moreover, despite what the CBO says, some of the cost-saving provisions in the Senate health care bill are unlikely to actually reduce the deficit because they're not going to be implemented.

Here is what David Brooks wrote in today's NYT:

The bill is not really deficit-neutral. It’s politically inconceivable that Congress will really make all the spending cuts that are there on paper. But the bill won’t explode the deficit, and that’s an accomplishment.

Back in September, CBO director Doug Elmendorf acknowledged this point:

These projections assume that the proposals are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation. For example, the sustainable growth rate (SGR) mechanism governing Medicare’s payments to physicians has frequently been modified (either through legislation or administrative action) to avoid reductions in those payments. The projected savings for the Chairman’s proposal reflect the cumulative impact of a number of specifications that would constrain payment rates for providers of Medicare services. The long-term budgetary impact could be quite different if those provisions were ultimately changed or not fully implemented.

There is fundamental disconnect between the CBO projections and political reality.

McCaskill on Costs

Megan McArdle wonders about this statement by Claire McCaskill:

"The whole reason we're doing this bill is to bring down cost, first for the American people in health care, and secondly for the deficit," said Democratic Sen. Claire McCaskill of Missouri. "So until we get the numbers back from the Congressional Budget Office, we're all on hold."

Asked if she would vote against the bill if it raised health care costs
overall, she said, "Absolutely."

As I've said before, I'm a big fan of Claire McCaskill. I think she's sensible and fair-minded -- much like the president. I also think she's absolutely right in this case. What's the point of health care reform if we're not bringing down costs? Certainly, increasing access is a key priority, but expanding health care coverage without addressing health care inflation is a no-win situation:

CBO projects that if current laws do not change, federal spending on Medicare and Medicaid combined will grow from roughly 5 percent of GDP today to almost 10 percent by 2035. By 2080, the government would be spending almost as much, as a share of the economy, on just its two major health care programs as it has spent on all of its programs and services in recent years.

Can We Say Goodbye to the Public Option Now?

It seems like the public option is going to be left out of the final version of the Senate health care bill in favor of some sort of nationally regulated not-for-profit private insurance option. Frankly, I think all insurance should be regulated at the federal level.

Anyway, I've previously been a bit too rash in saying goodbye to the public option, so maybe we should just wait and see how this turns out.

There could always be some last-minute changes . . . .

Misunderstanding the Public Option

As I've said before, it's a bit disingenuous for so many liberal bloggers -- including Ezra Klein -- to assert that the public option is the most popular aspect of health care reform.

While that it may be true that polling data shows Americans respond positively to the term "public option," that doesn't really tell us much about the kinds of reforms that have genuine public support. Calling a government-run insurance plan a "public option" is simply a way of framing the debate. People tend to like "options."

The important question is: Do most people really understand the public option?

Finally, we have a pretty clear answer to that question.

Update: One of Ezra Klein's readers opines (via Andrew Sullivan):

I have a slight problem with the graph in this post. You have biased this graph to over exaggerate the relative size of 'No' response by starting the graph at 20. Thus it appears as if the No's outweigh Yes's by almost a factor of 8. When in reality it's only about 2.5. (66 vs 26)

Sadly the number of Americans incapable of explaining the public option is so large that there was hardly a need to graphically exaggerate it to make your point.

I agree. I hate when people truncate the Y-axis . . . but, in this case, it's still a pretty huge disparity.

Public Issues, Poor Decisions

Tyler Cowen offers some words of wisdom:

Breaking a three-day stalemate, the Senate approved an amendment to its health care legislation that would require insurance companies to offer free mammograms and other preventive services to women.

The vote was 61 to 39, with three Republicans joining 56 Democrats and the two independents in favor.

This happened directly after the release of evidence showing that many mammograms do not pass a comparative effectiveness test. Once the test became a public issue at all . . . well, now you see what happens. CBO, take note.

In fact, as I've noted before, the Congressional Budget Office has already weighed in on the issue of preventative services:

Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.

I'm sure that President Obama sincerely believes in comparative effectiveness research as a vehicle for cost-control. But the president doesn't rule by fiat.

Unfortunately, Members of Congress are beholden to ill-informed, self-interested constituents, who demand ineffective services . . . especially when they don't have to pay for those services directly.

Untruths and Half-truths from the Left on Health Care Reform

First, it's frustrating to hear people on the left continually invoking the public plan as the key to expanding health care coverage.

It's true that a "strong" public option would be able to offer lower premiums than its private competitors. However, a "weak" public option -- one that competes on a level playing field with private insurers -- probably wouldn't. Here is how the Congressional Budget Office describes that public plan that would be set up under the health care legislation that recently passed the House:

[A] public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges. The rates the public plan pays to providers would, on average, probably be comparable to the rates paid by private insurers participating in the
exchanges. The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees.

A public plan does not automatically expand coverage. Federal subsidies expand coverage, and those subsidies are not tied to the public option, unless it is a "strong" public option.

Second, it's not clear that a majority of Americans favor the public option. Unfortunately, polling on this subject is very complicated. Some respondents who voice support for the public option probably couldn't tell you what it is. In fact, many Americans cannot even connect the term "public option" to health care. All we can really say for certain is that people respond positively to the word "option," but less positively to terms like "government-run" or "government-controlled" health care.

Third, as Peter Suderman points out, the health care legislation under consideration is unlikely to "reduce" the national debt, as many on the left claim. The CBO (typically) only makes cost projections within a 10-year period, and the spending in this bill is extremely back-loaded.

Suderman writes:

When the Congressional Budget Office scores a bill, its looks at the budgetary effects over the immediate ten year window. So on the health care bill, the headline cost of $849 billion covers the period between 2010 and 2019. Problem is, it's a misleading figure since most of the new programs don't actually kick in until 2014, and, as a result, most of the spending—99 percent, according to the CBO—doesn't occur until the final six years. That means it's not actually a very good reflection of how much it's going to cost to run the bill's new programs over a decade-long period.

I've given up on expecting honesty from the right . . . but a little more honesty from the left would be nice.

Abortion Amendment

A few thoughts on the recently-passed Stupak Amendment, which limits federally-subsidized abortion coverage . . . .

First, President Obama feverishly (and, at the time, disingenuously) denied allegations that the health care reform bills before Congress would allow for any federal funding of abortions. This was essentially the status quo under the Hyde Amendment and subsequent legislation. No one should be surprised that this amendment passed, since the president had promised as much.

Second, the amendment does not prohibit federal funding for all abortions. There are exceptions for rape, incest and the health of the mother. These exceptions fit with the mainstream view on abortion rights.

Third, a strong plurality of Americans believe that abortion should be "legal only in a few circumstances." This is reflected in the composition of the House of Representatives, where a majority of legislators supported the amendment. Those who are broadly in favor of abortion rights (myself included) must acknowledge that we live in a democracy where relatively few Americans support a universal right to abortion. Most people have complex views on the subject.

Fourth, a person's stance on abortion is not strongly associated with gender. In fact, most studies I've seen show no statistically significant difference between men and women on this issue. Today, women are more likely to call themselves "pro-life" than "pro-choice."

Update: Ezra Klein makes an interesting point:

[T]he biggest federal subsidy for private insurance coverage is untouched by Stupak's amendment. It's the $250 billion the government spends each year making employer-sponsored health-care insurance tax-free.

That money, however, subsidizes the insurance of 157 million Americans, many of them quite affluent. Imagine if Stupak had attempted to expand his amendment to their coverage. It would, after all, have been the same principle: Federal policy should not subsidize insurance that offers abortion coverage.

This is certainly how economists and policy analysts would view the situation. Although, I suspect most ordinary Americans would recognize a slight difference between providing a direct federal subsidy for health insurance and merely lifting the tax on employer-provided insurance.

I wonder if Ezra shares Greg Mankiw's fears about marginal tax rates . . . .

Marginal Tax Rates and Health Care Reform

In his latest NYT op-ed, Greg Mankiw argues that the current health care proposals will substantially raise marginal tax rates on middle-income earners. This has a lot to do with how economists (and policy analysts) view taxes, which isn't necessarily the way everyone else views taxes.

For example, Mankiw explains:

A family of four with an income, say, of $54,000 would pay $9,900 for health care. That covers only about half the actual cost. Uncle Sam would pick up the rest.

Now suppose that the same family earns an additional $12,000 by, for example, having the primary earner work overtime or sending a secondary worker into the labor force. In that case, the federal subsidy shrinks, so the family’s cost of health care rises to $12,700.

In other words, $2,800 of the $12,000 of extra income, or 23 percent, would be effectively taxed away by the government’s new health care system.

Will this dramatically damaged economic productivity? I'm not sure, but Mankiw's point should be taken seriously.

Will the Public Plan Cost More?

The CBO projects that the public option will likely have higher premiums than private insurance options.

Ezra Klein explains:

[T]he public plan will pay prices equivalent to those of private insurers and may save a bit of money on administrative efficiencies. But because the public option is, well, public, it won't want to do the unpopular things that insurers do to save money, like manage care or aggressively review treatments. It also, presumably, won't try to drive out the sick or the unhealthy. That means the public option will spend more, and could, over time, develop a reputation as a good home for bad health risks, which would mean its average premium will increase because its average member will cost more. The public option will be a good deal for these relatively sick people, but the presence of sick people will make it look like a bad deal to everyone else, which could in turn make it a bad deal for everyone else.

The nightmare scenario, then, is that private insurers cotton onto this and accelerate the process, implicitly or explicitly guiding bad risks to the public option. In theory, the exchanges are risk-adjusted, and the public option will be given more money if it ends up with bad risks, but it's hard to say how that will function in practice.

This also illuminates one of the more problematic inconsistencies in the health-care debate. Insurers have been blamed for, among other things, doing too much to discriminate against bad health-care risks and refusing to pay for care far too often. They've been blamed, in other words, for saying "no." But they've also been blamed for doing too little to control costs.

But that is how they control costs. We saw this in the late-'90s, when tightly managed care brought cost growth down to the 4 percent range but also triggered a public backlash (it did not, however, appear to hurt health outcomes).

I agree with every word of that.

Cowen on Mandates

Tyler Cowen comes out against health insurance mandates:

The paradox is this: Reform advocates start with anecdotes about the underprivileged who are uninsured, then turn around and propose something that would hurt at least some members of that group.

International Health Care Comparisons

A friend (who blogs at Dissection and Introspection) directed me to this article in the WSJ, which reflects on the difficulty of international health care comparisons. Very insightful.

I've commented on this previously here and here.