Code Red: Two Economists Examine the U.S. Healthcare System

December 21, 2009

Legislative Minimalism

Filed under: Health insurance,Health Reform,Medicaid,Tax deduction — David Dranove and Craig Garthwaite (from Oct 11, 2013) @ 10:17 am

The great minimalist architect Ludwig Mies van der Rohe described the virtue of his unadorned high rise steel and glass boxes by coining the expression “less is more.” Compositions by John Cage, Steve Reich and Philip Glass bring the same aesthetic to minimalist music. And the lines and boxes of Barnett Newman and Mark Rothko breathe life into minimalist art. Less is more indeed.

It has taken a half century for our government to catch up, but yesterday Harry Reid and the Senators gave us the first pure expression of minimalist legislation. Here is what we get:

  • Restrictions on insurance industry practices such as preexisting condition exclusions. Many states have these. This will help those with chronic conditions but will drive up insurance costs for first time purchasers.
  • A health insurance exchange. This could help individuals and small businesses, but only if the subsidies for joining and penalties for opting out are large enough to create a meaningful risk pool. Otherwise the exchange is just another version of the existing marketplace.
  • “Savings” from reductions in Medicare provider payments. We will never see these. Similar reductions were written into legislation last decade. Every year Congress has passed legislation to increase Medicare payments and wipe out any savings.
  • A tax on expensive health insurance plans.

That’s about it. The feds nationalize widespread state insurance regulations, reimagine the private market, provide some financial incentives to increase coverage, and take baby steps towards eliminating the insurance tax subsidy. I can’t imagine enacting anything less and still calling it health reform. It is the purest expression of legislative minimalism.

When I compare the Senate and House bills, I tend to agree with Mies. Less is more.

A side note: I was bored over the weekend so I spent a few minutes watching the Fox News channel. I could swear they were reporting that the Senate plan would double Medicaid enrollments and, to win the vote of Senator Ben Nelson, exempt Nebraska from having to contribute more dollars towards Medicaid. Was I dreaming? Did they make this up? It sure seemed like political suicide. Maybe it was wishful thinking.

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