Health insurance

Who Is Pretending to Fight Insurers: Obama or Me?

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The New Republic's Jonathan Chait says the benefits that Obama's health care plan would provide to insurers are all in my imagination. Apparently I have let my emotions cloud my judgment on this matter. You see, "libertarians really like to think of themselves as scrappy underdogs and are far less comfortable [than conservatives] with the idea that they're aligned with powerful economic interests." That's why "libertarians have an unusually strong emotional investment in the idea that their opposition to health care reform is a way of standing up to powerful interests like the insurance industry."

By contrast, progressives like Chait have no emotional investment whatsoever in the idea that their support for health care reform is a way of standing up to powerful interests like the insurance industry. They are not at all reluctant to admit that an ideologically simpatico president could be doing favors for an industry while pretending to fight it, or that the reform process might be twisted to favor special interests.

Chait is right that America's Health Insurance Plans (AHIP) opposes the latest version of health care reform. But AHIP is completely on board with the two elements of Obama's plan that he presents as sticking it to insurers: the requirements that they cover people with pre-existing conditions and that they stop setting rates based on customers' health. The industry is happy to follow those rules as long as it has enough young, healthy policyholders to subsidize care for older, sicker ones—something Obama has promised to deliver through a requirement that everyone buy insurance. Not surprisingly, AHIP also supports Obama's goal of preserving the anti-competitive system of employer-provided health benefits.

As Chait puts it, "it's certainly true that insurers were negotiating in good faith with Democrats for a long time." To the extent that insurers have turned against Obama's plan, it is because they do not think it will do what he says it will. They worry, for example, that the penalties for failing to buy health insurance are not high enough to conscript the new, unwilling customers they need. But if Obama's plan worked as advertised—bringing insurers "30 million new customers" while supplying all the revenue necessary to cover people who currently can't afford insurance—it would hardly represent a threat to insurers' bottom lines.   

Although I think it's important to make the point that libertarians are pro-market, as opposed to pro-business, I am happy to take the side of "powerful economic interests" when they are right. That is not the case with insurers who are willing to endorse a major expansion of the government's role in health care, including an unprecedented federal intrusion into individual decisions about medical coverage, as long as their interests are accommodated.