Ezra Klein describes the “six Republican ideas already in the health-care reform bill.”

(1) “Let families and businesses buy health insurance across state lines.” This is a long-running debate between liberals and conservatives. Currently, states regulate insurers. Liberals feel that’s too weak and allows for too much variation, and they want federal regulation of insurers. Conservatives feel that states over-regulate insurers, and they want insurers to be able to cluster in the state with the least regulation and offer policies nationwide, much as credit card companies do today.

So far, this is a fair characterization, though one can also imagine insurers clustering in the state with the best regulation (i.e., regulations that help improve cost and quality) rather than the least regulation per se.

To the surprise and dismay of many liberals, the Senate health-care bill included a compromise with the conservative vision for insurance regulation. The relevant policy is in Section 1333, which allows the formation of interstate compacts. Under this provision, Wyoming, Colorado, Arizona, Utah, and Idaho (for instance) could agree to allow insurers based in any of those states to sell plans in all of them. This prevents a race to the bottom, as Idaho has to be comfortable with Arizona’s regulations, and the policies have to have a minimum level of benefits (something that even Rep. Paul Ryan believes), but it’s a lot closer to the conservative ideal.

It’s unclear how this is remotely close to the conservative ideal. States will presumably create compacts with other states that don’t pose a competitive threat. This is an almost entirely cosmetic measure, which should be obvious to the dismayed liberals. One gets the impression that the dismayed liberals are simply confused.

(2) “Allow individuals, small businesses, and trade associations to pool together and acquire health insurance at lower prices, the same way large corporations and labor unions do.” This is the very purpose of the exchanges, as defined in Section 1312. Insurers are required to pool the risk of all the small businesses and individuals in the new markets rather than treating them as small, single units. That gives the newly pooled consumers bargaining power akin to that of a massive corporation or labor union, just as conservatives want. It also gives insurers reason to compete aggressively for their business, which is key to the conservative vision. Finally, empowering the exchanges to use prudential purchasing maximizes the power and leverage that consumers will now enjoy.

This is a reasonable point, though it’s worth noting that there remains a disagreement as to whether the exchange should be national or state-based. This is not a trivial distinction, as conservatives are wary of creating a single exchange that could become the basis of a unitary health system defined by institutional isomorphism.

(3) “Give states the tools to create their own innovative reforms that lower health care costs.” Section 1302 of the Senate bill does this directly. The provision is entitled “the Waiver for State Innovation,” and it gives states the power to junk the whole of the health-care plan — that means the individual mandate, the Medicaid expansion, all of it — if they can do it better and cheaper.

This would be a terrific bill on its own. But Section 1302 is rather ambiguous, as Ezra has written in an earlier post.

The waiver was inserted by Ron Wyden and it gives states considerable flexibility to walk away from parts of the bill if they believe they can better address cost and coverage on their own. The legislative language itself is complicated, but during the Senate Finance Committee’s mark-up, Wyden clarified it with the committee’s counsel. “My reading of what we have in the bill now,” Wyden said, “is if a state can demonstrate that they can meet the criteria — particularly on cost containment, improving the delivery system — they can do it without an individual mandate. And can I ask, counsel, is that a correct reading of the Waiver Amendment that I offered?”
Counsel’s reply was one word: “Yes.”
Reading the waiver, I could imagine some fearing it’s too strongly worded. It forces the state to show that compared to current law, a similar number of people would have insurance and the federal deficit would not be adversely affected. But insofar as one of the fears in this debate is that insurers will jack up prices and make insurance less affordable and available, and insofar as one of the positions in this debate is that a fairly similar level of coverage could be achieved through subsidies and regulations, then this may be appealing.

Coverage is the key issue. One can imagine reforms that would make policies more accessible, yet that wouldn’t cover two-thirds of the uninsured, the estimate for the Senate health bill, in the absence of a mandate.

(4) “End junk lawsuits.”

Here Ezra suggests that there is no real need for malpractice reform, but he notes that the bill allows states to experiment with tort reform.

(5) The tax break for employer-sponsored insurance

Here he suggests that the Cadillac tax does virtually the same thing as President Bush’s effort to cap the exclusion for employer-provided healthcare.

(6) This is a private-market plan.

And finally, Ezra reminds us that this is not a single-payer plan and that it doesn’t include a public option.

By my count, (1) bears no substantive resemblance to the original idea in question, (2) and (3) and (4) do bear some resemblance to a good Republican proposal, albeit in a form that weakens their impact. On (5), the point is well taken, though it is so compromised and poorly designed already that it raises the question of whether scrapping the proposal and starting with a new one wouldn’t be preferable. And (6) strikes me as a non sequitur, insofar as private markets are not, I hope, an exclusive province of Republicans.

I have to say, this doesn’t strike me as a compelling indication that this is a “substantively bipartisan” bill, though I am impressed and pleased that Ezra didn’t include transitional measures as part of his post. The essential conservative objection to the bill is to the premise that central direction is the way to lower costs rather than more robust competition. Many conservatives also object to a federal mandate that compels individuals to purchase a product from a private entity. A bill that included elements (2), (3), (4), and (5) while also federalizing Medicaid or otherwise improving its incentive structure to finance an expansion of coverage would be great. Let’s start talking about it.