The Agenda

Austin Frakt on Unknown Unknowns in Health Reform

One of the reasons I was so enthusiastic about Harold Luft’s call for a publicly-chartered Major Risk Pool is that it offered an effective way to spread information about the price, quality, and effectiveness of various medical procedures. 

Austin Frakt, an economist who has paid careful attention to the Massachusetts reform and has been a staunch advocate of the president’s health reform law, has written an insightful and honest post about the limits of what we really know about how the Massachusetts plan has fared so far. 

My attention to Massachusetts’ individual mandate and the extent of “gaming”* thereof raises another issue, one on which I haven’t yet explicitly focused. The reason we do not know how much gaming of the Massachusetts mandate occurs or the implications of it for premiums is that the relevant data aren’t available to researchers. I know this from two e-mails from academics who study Massachusetts health reform (one of which I quoted earlier).

Frakt’s post is particularly impressive because he’s been involved in a lively debate on the relative strength of the individual mandate in the Massachusetts law and in ACA, and whether gaming is a pervasive phenomenon or not. 

As just one example, the one I’ve been writing about, will the Affordable Coverage Act’s individual mandate penalties be sufficient to discourage gaming and limit the adverse selection associated with it? Much of the evidence from Massachusetts and my own analysis suggests they will be. But recent industry reports of gaming give us pause. If only we researchers had the data to judge for ourselves we might be able to draw more solid conclusions.

Frakt asks:

In a few years, when national health reform is implemented questions such as this will be raised on a national scale. Will we have the data to answer them? Or will we be at the mercy of the industry (again)? 

Of course, I would argue that this reflects the fact that the legislation was excessively tilted to the interests of industry. As Ezra Klein (channeling Ron Brownstein) suggested, the conservative opposition was primarily ideological and political in motivation.

For all that liberals think the GOP is owned by insurers and pharmaceutical companies, this battle has been proof positive that they are owned by their base and they represent industry only when convenient. Imagine the concessions Pharma or the hospitals could have gotten by bringing three Republican senators onto the bill. They could’ve written the thing. But no such luck. Partisan incentives proved far stronger than industry interests.

Note once again how the conversation has changed now that ACA has become the law of the land. 

Suzy Khimm offers a somewhat more sanguine interpretation, and she suggests that advocates of the legislation will have to make a moral case resting on the idea of individual responsibility. Some of us, of course, believe that legislating a vast expansion of the federal welfare state when we’re not paying for current expenditures is in itself deeply irresponsible, and so the idea that we all have a collective responsibility to pay for comprehensive insurance won’t really resonate.  

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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