There has been considerable blogospheric discussion of what should constitute the bare minimum when it comes to the actuarial value of insurance coverage that “counts” under the provisions of PPACA. As of now, the minimum benefit package amounts to 60 percent of expected medical expenditures in a given year. (The CRS has produced a useful report clarifying how to think about the actuarial value of various insurance plans, which I found via Ezra Klein’s blog.)

My sense is that most policymakers, on the right or left, accept the premise than the actuarial value of insurance coverage should be very high for the poor. Yet I think it’s fair to ask whether relatively affluent individuals and households should be required to purchase policies that cover 60 percent of expenditures rather than, say, 50 or 35 percent. Perhaps it makes sense for federal legislation to offer a benefit floor that gives state governments more flexibility when it comes to covering middle income citizens, many of whom will prefer lower-cost alternatives. There is, of course, a real danger of income shocks, and this ought to restrain state policymakers as well as individuals choosing coverage. But the case for flexibility in this space seems fairly strong.

Matt Yglesias offers an interesting thought:

If you define the minimim benefits package more generously, you need higher taxes. Conversely, if you want to cut taxes for the rich, you need the non-rich to have stingier health care plans. This kind of debate—left wants high taxes to offer generous benefits, while the right wants stingier benefits to make lower taxes affordable—is very much “normal” politics and you never see an end of it. Here, suddenly, apocalyptic rhetoric about socialism and pulling the plug on grandma is gone. You just have a basic taxes vs spending, progressive vs regressive debate of the sort that exists on tons of other issues.

This, of course, is true if you want to cut taxes for the rich or if you want to keep taxes low and stable for everyone. The higher taxes we’d need to offer less-stingy plans would go far beyond higher marginal taxes on the rich and near-rich, as such taxes don’t deliver much revenue bang for the buck. Rather, we’d have to move in the direction of less economically damaging flat consumption taxes, which would have a fairly significant impact on American life up and down the distribution. All that said, I like Matt’s framing of the issue: higher taxes for all plus stiff requirements on the kind of subsidized insurance we must own, or lowish taxes plus more risk and more choice.