The Agenda

The Limits of the Wyden-Brown Approach to State Innovation

My main problem with the new Wyden-Brown proposal is that it requires that states offer their citizens insurance as comprehensive as PPACA requires. Conservatives need to press for more room for experimentation. Ezra Klein describes the bill as follows:

The legislation would allow states to develop their own health-care reform proposals that would preempt the federal government’s effort. If a state can think of a plan that covers as many people, with as comprehensive insurance, at as low a cost, without adding to the deficit, the state can get the money the federal government would’ve given it for health-care reform but be freed from the individual mandate, the exchanges, the insurance requirements, the subsidy scheme and pretty much everything else in the bill. [Emphasis added.]

Later in the post he writes:


It allows the liberal states to go their way, the conservative states to go their way, and then lets the country judge the results. If Vermont’s single-payer system provides universal care at a low, low cost, then maybe that nudges California — which is facing massive budget deficits — off the fence. After all, if the state spends less than the government sends it, it gets to keep the remainder. It’s a nice incentive for cost control. And if it works, how long will more conservative states wait before they decide to take part in the savings, too?


But conservatives don’t believe that will happen. They think a consumer-directed system will offer higher-quality health care at a lower price, and with more choice. If Tennessee takes that route and outperforms Vermont, it’ll be their system that spreads across the land. [Emphasis added.]

My understanding is that a consumer-directed system by suggests something like catastrophic coverage, modified by first-dollar coverage for preventive services, let’s say. Would that fall under the “as comprehensive” rubric? I’m guessing that the answer is no. 

And so Vermont is allowed to go for a more comprehensive and centralized approach, while Utah and Indiana and Texas will not be allowed to embrace an HSA-driven catastrophic approach. I could be wrong, but I fear that the deck is stacked. Given that Sen. Scott Brown represents Massachusetts, it’s not surprising that he’d embrace this idea. But again, I think conservatives should ask for more. Let’s not dismiss this proposal out of hand, but let’s see if Sens. Wyden and Brown are open to a more level playing-field.

If they are open to a more level playing-field, here’s what might happen: Vermont and Hawaii and perhaps California will yield some savings through single-payer, and the money will then be spent on other public services. Utah, Indiana, Texas, and Louisiana might embrace a consumer-directed system that lowers the burden on taxpayers while leading residents of those states to spend somewhat more  out-of-pocket on medical expenditures while restraining cost growth. These states, however, will also be in a position to lower taxes, thus increasing disposable income overall. It is easy to see how the “as comprehensive” provision would short-circuit this outcome.  


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