The Agenda

Not Quite Universal

Last month, David Rivkin and Lee Casey argued that the individual mandate at the heart of most Democratic reform proposals is unconstitutional. Their argument has been strongly challenged from the left and from the right, and my sense is that the Roberts Court would never dare overturn health reform legislation, regardless of the merits of the originalist argument made by Rivkin and Casey. The op-ed did make me think about what health reform might look like if we put aside achieving the goal of universal or near-universal coverage. In 2006, Katherine Swartz, an economist at the Harvard School of Public Health, published Reinsuring Health, a case for an interim step that would preserve the broad architecture of our current health system, dominated by employer-based coverage, while making coverage far more accessible to those in the small-group and individual markets. 

If you follow the health insurance debate, you know that while the federal government offers generous tax subsidies for employer-based coverage, it does not offer the same subsidies to coverage purchased by individuals. Using numbers from the mid-2000s, Swartz estimated that this subsidy amounts to roughly $850 per person covered. If you are self-employed or if your employer doesn’t offer coverage, you see none of this subsidy, which seems more than a little arbitrary. Part of the reason why small firms tend not to offer coverage is because they don’t have the scale adequate to smooth risk across older, sicker employees and younger, healthier employees. Small-group insurance is tough, and the individual market is in many respects even worse.

To address this problem, Swartz proposed a government reinsurance program, financed by general revenues or a dedicated tax or by trimming the subsidy for employer-based coverage at the high end, that would ease the burden on private insurers who offer small-group and individual insurance policies. The top 1 percent of individuals generate 28 percent of medical expenses,  but it’s very hard to tell who will belong to this 1 percent. Understandably, insurers spend a great deal of time and effort trying to avoid covering people in the top 1 percent. This is very expensive. A government reinsurance program would agree to take on the expenses of these outlier patients and in return it would ask for cost-saving measures and that the private insurers charge lower premiums that reflect their reduced risk. And these lower premiums would sharly reduce the number of uninsured, even without an individual mandate. This is far from a flawless solution, as Swartz would acknowledge, but it does represent a less sweeping and more importantly less expensive alternative.

This is not my preferred approach to reinsurance. For example, I don’t think it does enough to contain costs, as Swartz would readily acknowledge. In a better economic climate, it might serve as a decent stopgap. My worry is that we actually need to do something far more dramatic to slash costs, and that means rejecting the status quo and Obamacare as currently conceived in favor of an approach that (yes) emphasizes delivery system reform.  

Reihan Salam is president of the Manhattan Institute and a contributing editor of National Review.

Most Popular

The Secret Life of Joe Biden

In a classic episode of Seinfeld, Jerry is accused by his new girlfriend, a police officer, of being a fan of the tacky 1990s soap opera Melrose Place. When Jerry lies and denies it, she suggests putting him on a polygraph to find the truth. In an effort to beat the machine, Jerry seeks the advice of his ... Read More

The Secret Life of Joe Biden

In a classic episode of Seinfeld, Jerry is accused by his new girlfriend, a police officer, of being a fan of the tacky 1990s soap opera Melrose Place. When Jerry lies and denies it, she suggests putting him on a polygraph to find the truth. In an effort to beat the machine, Jerry seeks the advice of his ... Read More
National Security & Defense

Jared Kushner Was Right

Over the past several years, a new certainty was added to death and taxes: Jared Kushner would fail in his role as the administration’s Middle East point man. It caused considerable merriment among President Donald Trump’s critics (and even some of his well-wishers) when he put his son-in-law in charge of ... Read More
National Security & Defense

Jared Kushner Was Right

Over the past several years, a new certainty was added to death and taxes: Jared Kushner would fail in his role as the administration’s Middle East point man. It caused considerable merriment among President Donald Trump’s critics (and even some of his well-wishers) when he put his son-in-law in charge of ... Read More

The Consequences of Biden

If you have decided that another four years of Donald Trump would be intolerable, and the prospect of four more years of the dysfunctional Trump circus in the White House fills you with dread, fine. But approach the prospects of a Joe Biden presidency with clear eyes and no illusions. Electing Biden would move ... Read More

The Consequences of Biden

If you have decided that another four years of Donald Trump would be intolerable, and the prospect of four more years of the dysfunctional Trump circus in the White House fills you with dread, fine. But approach the prospects of a Joe Biden presidency with clear eyes and no illusions. Electing Biden would move ... Read More
Media

How American Journalism Died

In 2017, the liberal Shorenstein Center on Media, Politics, and Public Policy at Harvard University found that 93 percent of CNN’s coverage of the Trump administration was negative. The center found similarly negative Trump coverage at other major news outlets. The election year 2020 has only accelerated ... Read More
Media

How American Journalism Died

In 2017, the liberal Shorenstein Center on Media, Politics, and Public Policy at Harvard University found that 93 percent of CNN’s coverage of the Trump administration was negative. The center found similarly negative Trump coverage at other major news outlets. The election year 2020 has only accelerated ... Read More

The Last Days of Robin Williams

After Robin Williams hanged himself in 2014, the media speculated that financial troubles or depression related to drug or alcohol use might have been the cause. Without discussing those topics, Williams’s widow, Susan Schneider Williams, is eager to set the record straight and does so in Robin’s Wish, a ... Read More

The Last Days of Robin Williams

After Robin Williams hanged himself in 2014, the media speculated that financial troubles or depression related to drug or alcohol use might have been the cause. Without discussing those topics, Williams’s widow, Susan Schneider Williams, is eager to set the record straight and does so in Robin’s Wish, a ... Read More
Elections

Is the Biden Campaign Struggling?

On the menu today: a long, long list of Democrats warning that the Biden campaign may not be as strong as it looks in key states and among key demographics; another former White House staffer comes out and denounces the president, offering a hard lesson about how personnel is policy; and a long look at the ... Read More
Elections

Is the Biden Campaign Struggling?

On the menu today: a long, long list of Democrats warning that the Biden campaign may not be as strong as it looks in key states and among key demographics; another former White House staffer comes out and denounces the president, offering a hard lesson about how personnel is policy; and a long look at the ... Read More