This is a long post. But if you want to know what’s in the bill, why progressive should support it and why they should not pay attention to Dennis Kucinich or other single payer critics of the bill, this is a good place to start.

In one of the political traditions in which I was raised, one of the more useful epithets was “infantile leftist.” An infantile leftist was someone who took the most extreme left position even though it made little sense as either policy or politics. And they did it, primarily for internal political reasons—to win support on the left—or to show themselves and others that they are more pure or progressive or left than anyone else in the room.

That phrase came to mind when I saw that Representatives Kucinich and Massa had voted against HR 3692 because it was not single payer and even more when I read Kucinich’s rationale for his vote. For his rationale parrots most of the charges made by those single payer advocates who, all along, have seemed to me to be infantile leftists.

I should quickly add that most supporters of single payer are not infantile leftists—many of them are friends of mine, some of them work with me in HCAN, others have been working for single payer with the hope that doing so would drive health care legislation to the left this year and create a bill that down the road leads to single payer. They are are supporting HR 3926 now and hope to use the momentum we are creating to work towards single payer in Pennsylvania or beyond next year.

But some single payer advocates, including those who are now lionizing Representatives Kucinich and Massa are, as I’m going to explain in this post, infantile leftists and what they are doing now in carrying on about how HR 3692 is sell-out to the insurance companies is the equivalent of a temper tantrum.

Three Preliminary Observations

Let me start with three preliminary observations.

Even if Kucinich is right, he’s wrong

First, even if everything Congressman Kucinich says about HR 3692 is true—even if it will enrich insurance companies with government subsidies and even if the public option will be neutered from its inception, even if health care costs will continue to rise—it is a moral abomination to vote against this bill and kill health care reform this years.

We are talking about real lives of real people who desperately need health care and who suffer and die and go broke because they have no or inadequate health insurance. Even on the worst construal of the legislation that just passed the House, thousands of people will not die as a result of it; tens of thousands would suffer less when it goes into effect; hundreds of thousands would not go broke because of it.

HR 3925 will provide quality, affordable health care for quite literally tens of millions of people who do not have it now. How can anyone in good conscience vote against legislation that would help so many people who desperately need help?

It would be one thing if Congressmen Kucinich and Massa had an alternative that could be enacted sometime soon, if, say, there were a serious chance of enacting more progressive reform, or single payer, anytime soon. But, as I’ve pointed out in other writing, single payer has no chance of being enacted in the United States (or in Pennsylvania) now or in the foreseeable future. And handing President Obama a defeat on this legislation, with the result that large numbers of Democrats in Congress are defeated next year, would just delay the time when single payer is on the table, perhaps by a decade or more.

To ask people who need help today to wait is cruel. To have health insurance—as Congressmen Kucinich and Massa, and as almost every supporter of single payer I’ve ever met does—and ask other people to wait until some ideal is attained is worse than cruel. It is a moral abomination.

If it’s a bail out, why don’t the insurance companies want it?

Second, if this legislation is such a bail out for health insurance companies,
if the public option is so meaningless, why are insurance companies fighting so hard to defeat it? Why are they spending almost three quarters of a million dollars a day, to stop it in its tracks? Why are the defender of the insurance companies, the Chamber of Commerce and the Republicans in Congress so united against it?

A bill with this kind of opposition must have some good features from a progressive point of view.

Single payer is not necessary

And, third, while single payer supporters constantly say, truthfully, that the United State is the only advanced country that does not have universal health care, it is not the case, as they often imply, that United States is the only country that does not have single payer health care. That is simply not true. In fact, almost the opposite is true. Canada and Taiwan are the only two countries that do have single payer health care. France, Germany, Switzerland the Netherlands and many other countries have one or another variant of a hybrid public / private systems of the kind HR 3962 aims to create in the United States. In all of them private or non-profit insurance companies compete with one another under heavy regulation with premiums paid by a combination of individuals, employers and the government, and with government subsidizing the costs of insurance for those with low and moderate incomes.

So single payer is not, in fact, necessary to have a good and just health care system.

How HR 3962 Works: Regulation, Employer Responsibility, the Exchange, and Affordability Credits

In their criticisms of HR 3962, Congressman Kucinich and single payer advocate fail to describe the main features of the bill. They focus on the mandate that individuals purchase health insurance—as well as the mandate that business provide health insurance for their employees—and claim that this means that individuals and business will be forced to pay paying premiums to insurance companies that will act as rapaciously as they act today. And make no mistake about, the health insurance industry is, today, a predatory industry that seeks to make money by denying people coverage or charging them more for insurance if they might actually need health care and by denying them care.

Changing the business model of private insurance

But while HR 3962 doesn’t eliminate private insurance companies, it will radically change how they do business.. Under the legislation, insurance companies will not be able to deny people coverage if they have pre-existing conditions or charge them more for insurance. Nor will they be able to charge women in childbearing years more. And higher rates for older people will be strictly limited. This modified community rating will force insurance companies back to an older, socially progressive model of insurance, in which companies sell insurance as a means of spreading the burdens and costs of the bad things that could happen to all of us.

The exchange and the risk pool

In addition, individuals and small businesses, who pay much higher rates than big businesses, because the risk to insurance companies of insuring them cannot be spread over a large pool of people, will be able to come together in what the legislation calls a health insurance exchange to buy insurance as a group. This will reduce the extraordinarily high premiums individuals and small businesses now pay to the levels paid by large businesses.

The insurance exchange will reduce some of the administrative costs Congressman Kucinich complains about. For administrative costs are far higher in the individual and small business market than in the large business market, because insurance companies design separate policies for each small business, because the administrative costs for small businesses can’t be spread among a large pool of people, and because so many bureaucrats are needed to determine what an individual is covered for under each policy. The exchanges will have two or three levels of benefits and all companies that offer insurance in the exchange will have to provide insurance at all levels. This radical reduction in the number of insurance policies offered by insurance companies will make comparison shopping easier and will reduce the administrative burden on doctors and hospitals, too.

Affordability tax credits

And for individuals and small businesses that still cannot afford health insurance, HR 3962 provides affordability tax credits that subsidize the cost of insurance and limit both the percentage of income people pay for premiums and the out of pocket costs they pay for deductibles and co-pays. Subsidies are gradually phased out as family incomes increases, but people up to 400% of the federal poverty line, or $88,000 for a family of 4, will receive some subsidy.

So, yes, many people will buy private insurance under HR 3962. And the insurance they buy will not be cheap—just as the taxes required by single payer will not be low. But HR 3962 will dramatically change the health insurance market. While it will not necessarily eliminate all of the dangers that comes with the profit motive (or for that matter, the non-profit motive since not for profit insurance companies in America don’t act all that differently than for-profit ones), the insurance companies will have to modify their current practices in almost all respects. For the first time in decades, they will be forced to make money the old fashioned way. Instead of limiting the number of people they insure they will have an incentive to expand insurance coverage. And instead of trying to cut care to the minimum and drop people from coverage when they get sick, they will have an incentive to figure out how to keep people healthy over time.

How HR 3962 Work: The Public Option

Why we need the public option

That’s not to say that insurance companies will not try some of their old tricks. They probably will. The will, for example, do more advertising in magazines read by young people and lose the paper work of older people who apply for insurance in the hope of creating a pool of insured people whose health care costs are likely to be low. And, given how concentrated the health insurance market is in so many localities, they will also be inclined to pass on rising health care costs instead of controlling them.

Regulation, Competition, Risk Adjustment

There are three ways to stop these practices. One is further regulations on the way insurance companies conduct their business or even on their levels of profit. This is effective in other advanced countries but can slow certain kinds of innovation and is, anyway, politically very difficult to create, and even harder to sustain, in America. The other two ways to deal with these issues are enhancing competition and risk adjustment. And both are found in HR 3962.

Competition with a public insurance company is the most important way in which HR 3692 will hold down insurance company premiums, profits and perks.
Congressman Kucinich and single payer advocates deny that competition will work because the Congressional Budget Office (CBO) has estimated that only six million people with join public health insurance plan because it’s rates might be higher than that offered by private insurance companies.

In response, I want to begin by pointing out that competition can be effective in controlling insurance company practices and profits even if the public insurance plan is small. The threat of a growing public plan is all we really need to create competition that creates the ends we seek.

Moreover, what Congressman Kucinich does not tell you is that the way CBO “scores” legislation is not by any means realistic. It is a highly conservative process that has one and only goal, to provide a very conservative forecast of the consequences of policy changes for the federal budget. And that process, as I show below, has biased the CBO project in a number of ways.

There is one thing to which the CBO points that will indeed drive up premiums for the public plan: the public insurance plan will not try to “game the system” and discourage people who are or are likely to become sick from getting health insurance or deny them health care when they need it. Because private insurers will, despite the new regulations, try to ‘cherry pick” people who are least likely to get sick, the public plan will be stuck with them. This “adverse selection” is however is not a bug but a feature of the public option. One reason we need a public option is to guarantee that everyone, no matter how likely they are to need health care, has health insurance. The public option is the ultimate safety net in the health insurance market.
But there are ways in which the public option can compensate for not engaging in bad practices to lower its costs and premiums.

A genuine non-profit

To begin with the public health insurance option will not have to make a profit and will not pay its executives obscene salaries.

Administrative cost savings

And precisely because it does not try to deny people coverage and care, because the public option will offer only a small number of insurance plans in the exchange, and because it will be able spread costs over a large pool of insured, the public plan will have lower administrative costs than private insurance.

Lower reimbursement rates

In addition, the public insurance plan, like Medicare, will use its bargaining position to pay doctors and hospitals at lower rates than private insurers. Now this is a controversial claim because, after receiving opposition from rural representatives, Speaker Pelosi jettisoned the idea of initially basing rates for the public plan on Medicare rates plus 5%. The legislation now calls for “negotiated reimbursement rates” somewhere between Medicare and the average rates for private insurers.

Eliminating Medicare plus 5% from the legislation forced the CBO to dramatically raise its estimate of the rates that the public plan would pay. For by legal requirement and tradition, the CBO can only base its estimates of government costs on what is explicit in the proposed legislation not on its estimate of how the legislation would work out in practice. So with legislation saying that the rate would be set in a range between Medicare and average private rates, the CBO had to base its projections on rates set in the middle of that band.

But the legislation also directs the Secretary of Health and Human Services to set reimbursement rates as low as possible in keeping with the goal of access to good health care. And there is no reason to doubt that this is what the Secretary of Health and Human Services will do. Low reimbursement rates save the government and citizens substantial amounts of money. If health care providers are willing to accept Medicare rates, we know that they will accept rates close to Medicare rates in order to gain access to the large pool of potential patients in the public plan. So that is where rates in the public option are likely to wind up.

Nor will the process of negotiating be a nightmare, as a prominent single payer supporter, Walter Tsou, has said. Medicare, after all, negotiates rates now and what that means in most cases is that Medicare sets the rates—it offers doctors and hospitals reimbursements at a certain level and then makes adjustments as necessary to guarantee that enough doctors and hospital are willing to serve the patient population. That is what is going to happen under the public option as well. And while the law does not require Medicare plus 5%, there is every reason to believe that this is roughly where “negotiations” are going to start, and in most cases stop, once the public plan goes into effect. Doctors and hospitals, perhaps backed by their members of Congress, will, as they do with Medicare, argue for more than this. And sometimes they will get it. But that won’t happen the time. And they aren’t likely to get much more. than Medicare plus 5%.

Risk Adjustment

The public option will be also be able to keep its costs and premiums low because it will be protected from adverse selection by “risk adjustment.” The Secretary of Health and Human Services is directed to devise a scheme by which insurance companies that insure a pool of healthy people have to compensate companies, including the public plan, that insures a pool of people who are less healthy. How this will work is not clear. But one solution would be a reinsurance pool in which a portion of all premiums paid to insurance companies in the exchange are sent to a reinsurance company that then pays each insurance company in accordance with its estimate of the likely costs to provide health care to the people insured by each company.

Risk adjustment is not a new idea. In the Netherlands, a system of private insurance companies covers everyone at basically the same premiums because a risk adjustment scheme keeps cost roughly the same for each company. Here in the United States, risk adjustment will be used to guarantee that the public option is protected from the cherry picking of private insurance companies and adverse selection. It is the final means by which to insure that the public plan is actually cheaper than private plans and thus is able, by means of effective competition, to hold down their premiums, profits, and corporate salaries.

If, for all these reasons, the public option can charge lower premiums private insurance, as I believe it can, then it will grow larger, and its administrative costs will then be further reduced. And it is going to grow larger over times because, as few people other than the insurance companies (and fired dog lake) seem to recognize, it will be open to larger numbers of people over time. Initially the exchange and thus the public option will open only to individuals and small businesses with 25 or fewer employees. In 2014, businesses with 50 or fewer employees can join the exchange. By 2015, business with 100 employees or fewer can join the exchange although the exchange commission could allow larger businesses to do so as well. So either by administrative action, or by further legislation, the public option can grow.

The pressure for reform

And I think it certainly will grow if, as seems likely, the public option provide more secure insurance at lower prices. The political genius of HR 3926, like that of social security before it, is that it will build its own political pressure for expansion. People forget that when it first went into effect, social security covered roughly 17 people. Ok, maybe 25. Government and agricultural workers and many others were excluded. But the program was popular and pressure to expand it—and raise social security payments— kept growing.

That, I believe is what is going to happen with the public option. The process may be slowed if it is initially more expensive relative to private insurance than I believe it will. But it will continue and more and more pressure for expanding the public health insurance plan will be created as the public plan is seen to be a better option for most people.

Conclusion

Given all these feature of HR 3692, there is no reason to see it as a sell-out to insurance companies or as likely to be ineffective. It is not a perfect plan. It certainly is complicated. But is a bold plan that means to dramatically change how health insurance is provided in America.

So why, the do Congressmen Kucinich and Massa and their single payer acolytes continue to criticize this bill in such harsh terms?

Part of the answer is that single payer advocate have worked so hard and so long to push their ideas forward. And they are, quite naturally, distressed that health care reform is moving forward without them. Not only is the Obama / HCAN alternative the wrong approach from their point of view, it is a rejection of that for which they have worked for so many years.

Another part of the answer however, can be seen in an experience I had today at a health care rally organized by public health students. A woman who evidently was a doctor took one of the “Big Insurance: Sick of It” HCAN posters from me to carry on our march. But she insisted on tearing off the bottom part of the poster where the “healthcareforamericannow.org” URL was found.

It was an odd, but very telling gesture. I have a more and a less charitable reading of it. The more charitable reading is that this woman is a middle class, liberal, do-gooder who thinks that political change comes about when you have the best ideas and get all your commas in the right place in your fliers. Single payer is a plan designed in the first instance by doctors. It is a system that appeals to people who believe in rational planning and science. People like this think that their training in scientific disciplines puts them above self-interest and so they find the political negotiation distasteful. They also find competition messy and unpredictable. (They should study Darwinian evolution more.) And so a complicated approach to reform like the one embodied in HR 3692; an approach that is a product of political calculation; that respects the interests of various constituencies and the unwillingness of citizens to move too quickly (and to learn the details of public policy); and that devises complicated mechanisms to balance competing goals and interests is thoroughly distasteful to them.

The less charitable readings is that his women—and many other single payer supporters including Congressmen Kucinich and Massa—arenot really doing political work to bring about change that benefits other people. She and they are doing it to show themselves and others that they are good, rational, progressive idealists unlike those of us who are part of a corrupt political system. And that’s why the gesture of cutting off the URL of the hated, compromising health care coalition was so important to this woman just as distancing himself from HR 3692 was so important to Dennis Kucinich.

I can understand this sentiment. I’ve been involved in politics for a few years now and there are days when I feel I the need for a good bath to cleanse myself of the rampant self-interest and greed that is part and parcel of our political life.

But I’ve also seen grandeur in this political system, in the extraordinarily talented and dedicated organizers I work with and in a few politicians who have stepped up to the moral and intellectual demands of health care reform. What all of them have in common is that they are focused not just on abstract ideals but on the real men and women whose lives and well being are at stake in our debates and actions. What motivates the best activists and politicians is not a desire to be the smartest or most rational or most progressive or most left person in the room but the stories of pain and distress that they can never forget.

The difference between those progressives working within the political system to reform health care and those who, even if they serve in Congress, want to place themselves at a distance from politics and criticize those of us who have worked so hard to move health care legislation this year, is the difference between the adults who a ready to accept the responsibilities of caring for other people and infants who care only about expressing themselves.

This is not say people should stop working for single payer. I’ve no problem with that. But anyone who says that we should ditch the bill that just passed the House and start over, is not doing politics right now. He or she is acting out.

It’s long past time for all progressive to grow up.