Monday, May 07, 2012

The Great Experiment

If you read only one book about state and federal health care policy, it should be The Great Experiment: The States, the Feds and Your Healthcare.  Published by the Boston-based Pioneer Institute, it is the most articulate and rigorous presentation of issues that I have seen, a stark contrast from many papers, articles, and speeches that slide by as “informed debate” in Massachusetts and across the country.  I learned more about health care policy from this book than from anything else I have read in the last decade.

While the book is constructed as a number of chapters by experts in field, it has a consistent voice and and is highly readable.  There is an engaging explanation by Jennifer Heldt Powell of the politics and substance of how the Massachusetts health care reform bill came into being; and there is also a data-rich analysis by Amy Lischko and Josh Archambault of how it is working.  But the book is quick to point out that what has happened in Massachusetts is unlikely to be an appropriate model for the nation.  Indeed, a strong theme of the book can be drawn from that conclusion:  State specific experiments in health care reform, guided by general federal principles, will be more successful over time than a single national approach that is likely to get things wrong for the whole country.

Liberal readers may shy away from this book, for the Pioneer Institute has a reputation of being a conservative think tank and advocacy group.  I suggest you judge the content on its own merits rather than applying political biases to the question of whether or not you should read the book.

With exhaustive and thoughtful arguments, the authors argue that the national health care legislation should be modified.  Notably, the book does not just take potshots at the federal law.  The authors offer specific policy alternatives that are natural extensions of the existing mix of employer self-insurance, employer purchased insurance, individual non-group policies, government provided coverage through Medicare and Medicaid, and, of course, the uninsured.  They recognize the traditional state role in many of these matters but also concede that a federal presence is necessary.

Here is an excerpt from James Capretta’s concluding chapter:

The key federal and sate actions that will advance affordable insurance and high-quality care include the following:

Convert the federal tax preference for employer-paid premiums into a refundable tax credit; this initiative should start with workers in small firms and individuals who are not in stable medium or large employer-based plans today;

Establish a federal-state partnership to protect those with pre-existing conditions, which takes the form of state administered high-risk pools financed by the federal government; and

Reform the significant portion of the Medicaid program covering the non-elderly poor, allowing states to integrate these program participants into the same insurance arrangements which cover other working age Americans.

I don’t have the space here to give the rationale for these prescriptions, but let me focus on one area.  The discussion I found most persuasive was the argument made by Tom Miller that the individual mandate contained in the new federal law is not the most effective way of guaranteeing coverage for all.  He summarizes, “Solving the problem of covering Americans with pre-existing conditions does not require a massive transformation of America’s health care system.”  He explains how the problem of adverse selection -- the rationale given for the individual mandate -- can otherwise be accommodated for.  He also notes that the mandate, as constructed, will fail in that it “charges a much smaller penalty to almost everyone who fails to comply . . . than their far greater cost to purchase qualified insurance coverage [with the result that] too many young and healthy people will still choose to stay out of the system . . . particularly when the [law] will allow them to enroll later as needed, without any additional restrictions on their access to coverage.”

Read the text for yourself and see if you are persuaded.  If the conclusion is correct, by the way, it could have implications regarding the legal basis for inclusion of this mandate at the federal level, which is currently being reviewed by the Supreme Court.

Jeffrey Flier, Dean of Harvard Medical School, offers a preface to the book.  He hearkens back to a November 2009 Wall Street Journal op-ed in which he argued that a successful effort to fix the health care system “would require an accurate diagnose of the elements that produced the problems” and that those who crafted the federal law “failed almost entirely to make that diagnosis, with the consequence being a failure to produce an effective remedy.”  I recall that many politically correct Cantabrigians were appalled by Jeff’s article at the time.  But The Great Experiment provides support for his proposition. Whether you like that view or not, you will be a better informed participant in the US and state health care debates if you read this book.


Anonymous said...

Hi Paul

Is it worth a foreigner - Australian getting this book?


Paul Levy said...

Only to understand the issues facing the US and the states. I don't think it offers much for your setting.

Anonymous said...

Thanks Paul

Very much enjoy your blog. The thing that caught my eye was the comment about state experimentation being a good thing. I work for a state bureaucracy (and yes self-interestedly) believe having a diverse system that enable experimentation is a good thing. However the trend is for much greater Federal control of many traditional state areas of responsibility (health, education etc).