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11.08.09

The Holes in Health Reform

The legislation just passed by the House builds on a deeply flawed system, rather than fixing it. Conor Friedersdorf on how the Democrats missed the boat—and why the GOP is partly to blame.

Neither Republicans nor Democrats adequately acknowledge that it is deeply weird to tie health insurance to one's job, and even stranger to discuss health-care reform as though it is primarily a matter of getting everyone insured.

These two dysfunctional features are preserved in the legislation just passed by the House. Employer- provided health care distorts labor markets by incentivizing workers to stay put. But voters are risk-averse. They’d prefer to keep the insurance they have. Thus President Obama and Democratic leaders pushed reform that built on the employer-provided health-care system, rather than improving it.

The present pace of inflation in the health-care sector is unsustainable. Bettering the situation requires price pressures driven by consumers. The present legislation doesn't bring us closer to that reality either.

The focus on insurance is even weirder. Voters overwhelmingly agree, for example, that a person who already has cancer—or is very likely to develop it—should get the medical care they need to save their life without being bankrupted or put into lifelong debt. That is certainly my position. But the situation I’ve described isn't one best addressed by insurance, a tool used when outcomes are unknown. If we want to cover folks with pre-existing conditions or those genetically predisposed to certain ailments, let's do so directly, rather than layering that requirement onto insurance companies as if it is part of a coherent scheme of pooling risk.

A final necessary reform: addressing costs. The present pace of inflation in the health-care sector is unsustainable. Bettering the situation requires price pressures driven by consumers. The present legislation doesn't bring us closer to that reality either.

It is increasingly likely that we're going to wind up with a relatively expensive Democratic health-care bill that doesn't fix the fundamental problems with the current system. Blame for this failure is partly the fault of Republicans who've abdicated responsibility for advancing a positive agenda on the calculation that obstructionism is more politically advantageous. The whole ordeal makes me sick.

Conor Friedersdorf, a Daily Beast columnist, also writes for The American Scene and The Atlantic Online's ideas blog.