The U.S. insurance model doesn’t work

By Charles LaneHYPERLINK "mailto:lanec@washpost.com?subject=Reader feedback for 'The U.S. insurance model doesn’t work'"r

The left-right battle that erupted over last week’s Congressional Budget Office (CBO) report showing that Obamacare reduces work incentives was, on the surface, yet another argument about the health-care law’s impact on the U.S. economy.

On a deeper level, however, what’s at issue are long-standing American assumptions about government assistance and who deserves it.

In other advanced industrial democracies, especially in Europe, health insurance, pensions and even certain amounts of income support for working-age adults are considered rights, to which everyone is entitled by virtue of their membership in society and their shared vulnerability to life’s vicissitudes.

In the United States, by contrast, there is more emphasis on the duty of the "able-bodied" to provide for themselves and on the idea that government benefits should be earned, or, at least, ultimately traceable to one’s work effort.

Hence the seemingly contradictory spectacle of conservative voters who hate "welfare" but oppose cuts to Social Security and Medicare. In their minds — and, to some extent, in reality — the latter are different because you receive benefits after a lifetime spent working and paying into the programs.

To a large extent, the U.S. health-insurance system rests on this ideological foundation. Other than Medicare and Medicaid, the largest government intervention in health care is the tax break for group health plans that workers get through their employers. Another big item is government health care for military personnel, current and former, and their families — the ultimate "deserving" beneficiaries.

To be sure, Medicaid, the State Children’s Health Insurance Program and other programs for the poor and disabled have grown in recent years. But these expansions confirm the work-benefit link; one reason they’re politically possible is because the intended recipients, children and the disabled, aren’t expected to work.

This helps explain the oddest aspect of the nature of U.S. health insurance: It’s categorical. In the United States, people get coverage based not on membership in society but on membership in a discernible segment of society: elderly, disabled, military, employee, union member, child living below the poverty line and so on.

Everyone else — from relatively well-to-do self-employed consultants to dishwashers at small restaurants, for whom even tax-subsidized insurance is unaffordable — falls into the category of "other." They make do with no insurance or with whatever is available on the dicey market for individual coverage.

Because health insurance works best with a broad risk pool, and because "everyone" is the broadest possible risk pool, the categorical U.S. system is plagued by obvious yet intractable inefficiencies and inequities.

Obamacare’s goal of covering "others" was therefore necessary and proper. In deference to political reality, however, the president did not offer a wholesale replacement of the categorical system; instead, he tried to fill it out with a highly regulated and subsidized individual market.

Nor did he risk a consistent attack on the cherished idea of earned benefits in general or as it applied to health care. Sometimes, as in a speech last September, Obama depicted health coverage as a right. Yet in his first address to Congress as president in 2009, he spoke of it mainly as a means of reducing costs. He balked at a "public option." He opposed an individual mandate in his 2008 campaign, then enacted one as president.

So when the CBO confirmed that Obamacare would enable some people to cut back on their work effort and still qualify for health coverage, subsidized by the taxes of those who continue working, it had the feel of an unmasking.

The whole point of any universal-coverage plan is to break the link between work and insurance. But Obamacare was never clearly advertised in those terms, notwithstanding the administration’s after-the-fact efforts to explain why the CBO report was no big deal.

Republicans were bound to pounce on the CBO report — and many voters were bound to agree with them. Yet this is likely to prove at most a tactical victory for the GOP, and possibly a pyrrhic one. The earned-benefits approach does have advantages; quite often, in fact, as the successful bipartisan reforms that linked welfare to work during the Clinton administration show.

Linking health insurance to work, however, is a bad idea: There’s just no necessary connection between how much you work and your risk of needing care. Eventually, the United States must move from a categorical approach to health insurance to a more universal one, whether through Obamacare or some less-convoluted plan.

That fact will remain long after this CBO kerfuffle is over, and Republicans are going to have to face it. We all are.

Source The Washington Post