“It’s not the age bands,” writes Harold. He’s right. It isn’t.
I have no disagreement with what Harold wrote. However, I may be more open to additional modifications to community rating in the individual market if the Affordable Care Act’s current structure fails. I am not predicting failure. I am not supporting failure. I am hoping things turn out just fine.
But, what if they don’t? Then, I welcome all ideas on the table, including those scholars offered recently at AEI, and about which Harold and I have already gone back and forth (here and here). That we evaluate some ideas in advance of the possibility (and by no means certainty) of trouble doesn’t bother me in the least. I think that’s entirely appropriate. With this, Harold agrees.*
The value of the plan is three-fold. First, it affirms many of the health reform principles held by most progressives and many (most?) conservatives. Second, it demonstrates that scholars of varying political persuasions can commit themselves to addressing an important set of problems with the U.S. health system. In large part, a lack of such a commitment as the first principle is what gives rise to the acrimony over the ACA and its implementation. Third, with respect to risk (or “experience”) vs. community rating, it encourages us to expand our view of the possible, as well as, perhaps, contract it, all on the merits.
For example, it encouraged me to seek and be receptive to research relevant to risk rating, as cited in my post. What I found and reported was that it empirically isn’t about the age bands. Even loosening them up all the way to year-specific risk rating would not go very far toward encouraging young people to enroll. Consequently, should selection into marketplace plans prove to be an issue, one must consider alternatives, or accept whatever market failure may result. One idea is some additional risk rating in another dimension. Another is a more stringent mandate. Indeed, Handel, Hendel, and Whinston do demonstrate that cranking up the mandate penalty would encourage enrollment of young people, as one would expect.
My point is that I want to see more evidence and analysis like this. Harold agrees. So, let’s have at it!
Still, as I wrote, I do not believe the full AEI plan would ever be implemented, and Harold suggests some reasons why. It may be some Americans’ way without being the American way. If I recall correctly, even at the unveiling event itself, it was acknowledged that consideration of partial movement (whether by age or otherwise) toward full risk rating might be useful, and it might be more broadly acceptable. Indeed, as we all know, the ACA is not a full community rating scheme as it is. Is smoking status the only non-age dimension of risk on which we might agree to rate (conditional on selection being a problem in need of a solution)?
Where I think Harold and I may disagree is that he’s more confident than I am right now that solutions other than additional risk rating would be better, apart from whether they’re politically or culturally acceptable. Where we probably agree is that other solutions, like a larger mandate penalty or some alternative inducement, than additional risk rating are far more likely to be implemented, whether better or not. I should point out, even if that is the case, such solutions may be an improvement over doing nothing. On those grounds, if not others, we might both support them.
This is an often overlooked nuance in health policy debate. In our confidence on what would be ideal or a blunder, we can agree to disagree. But at the end of the day, we can agree to move forward with something that’s nobody’s ideal but better than the status quo. We can share a principle of ambition that motivates compromise on the details. Harold and I already share that, as do, I think the authors of the new proposal we’ve been discussing. How refreshing it would be if this were a broadly shared cultural value, especially inside the Beltway where it is, I’m afraid, dead on arrival.
* Indeed, the frame that this is an argument is incorrect. Harold and I are having a very valuable and enjoyable discussion. You get to watch.