Friday, May 4, 2012

I Think This Is Important

Henry Aaron, the brains behind the R plan for Medicare (ie, the Paul Ryan plan which Rominee also loves), has changed his mind. Maybe he got tired after hitting all those home runs. In any case, he no longer thinks the plan will work. This, of course, means Rs will love it even more, since things that haven't ever worked or mathematically won't work are what they cleave to most; but I think it's important to listen to what he says. It cuts both ways:

The basic idea is simple: let people pick their health insurers in the private market, subsidize the premiums, and competition will drive down costs...


"In the years since Bob Reischauer and I put this Idea forward, I've changed my mind," Aaron said at a hearing of the House Ways and Means Committee last week.


The big reason is that Aaron has seen no evidence since the two men came up with the idea that their assumptions have been borne out. A key assumption was that the insurance industry or government would figure out how better to adjust risk among companies so that if one insurer suddenly was saddled with an unusually expensive population, it would share the costs with other insurers or the government. That would keep costs down because it removes some of the incentive to cherry-pick healthier customers or shun sicker ones.


"The evidence to date is not encouraging," Aaron said...

Aaron has not abandoned the idea of premium support for Medicare, if it can be figured out. He argued that rather than trying to do it right away, as Ryan and other proponents insist, policymakers should first see how it works for younger people -- as it is beginning to be applied in the health care reform law.

"The passage of the Affordable Care Act means we have put in place a key element of the premium support idea for the rest of the population, namely health insurance exchanges," Aaron said. "... We should prove that the health insurance exchanges work, get them up and running before we take seriously, in my view, calls to put the Medicare population through a similar system."


Aaron also argued that there's another problem with trying to ensure a premium support model works -- it requires stringent regulation to make sure companies don't game the system. Aaron said he can't see that happening with a Congress fired by anti-regulatory zeal.

I take a couple of points from this: first, the ACA is creating some innovations that need time to be assessed, good or bad. Second, the very idea of "premium support" has been suspect from the beginning, which is among the reasons I've never much liked the ACA.

Since this isn't just some guy on the street who's changed his mind, but the one behind the whole damn thing, you'd think it'd be given a certain amount of credence by Ryanites, give them pause, send them back to the drawing board.

You'd think.

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