Ezra Klein on the Public Option, Insurance Paperwork and Counting the Uninsured

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Ezra Klein
Washington Post Business Blogger
Thursday, September 10, 2009; 12:00 PM

Ezra Klein writes a Post blog about economic and domestic policy, and he was online Thursday, Sept. 10 at Noon ET to take your questions about collapsing banks, cap and trade, health-care reform and pretty much anything else you can attach a chart to.

A transcript follows.

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Ezra Klein: Good morning folks. I have no idea what we're going to talk about. None. The news is just so slow. I just don't know what I'll do with all this free time.

I'll stop now. Questions!

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Princeton, N.J.: I am a mathematician and the inability of smart people to face facts on "tort reform" is driving me nuts. These facts are clear. States with tort reform not only have no lower health costs, but the frequency of tests and treatments is similar to those states without tort reform. Tort reform, caps on malpractice suits, does not save money. If you go to page 150 ff of this document, you will see much of the data.

But look at Texas. Although health costs did not go down, the number of malpractice suits did go down. Attorneys must put up hundreds of thousands to contest a malpractice case. This is true of any civil suit against a wealthy doctor or a big corporation. Read "A Civil Action" or see the movie. The lawyers do not want to recoup this money from the funds needed to treat the victim or from the part for pain and suffering. They take these funds from the punitive damages. Cap the punitive damages, and attorneys cannot afford to take the risk. The main result of tort reform is that injured people cannot seek redress for their ills. This is madness.

Is there any way I can get people to face facts besides going to the Mall, pouring gasoline over myself, and lighting a match?

Ezra Klein: Not really. But I'd also recommend people read "The Malpractice Myth" by Tom Baker. Or this article I wrote on the topic. The great lie of the medical malpractice debate is that the crisis is in our courtrooms. It isn't. It's on our operating tables. Interestingly, Obama and Clinton once coauthored a pretty good article on this stuff. I summarize it in the piece.

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Washington, D.C.: Ezra,

I've been reading (especially from commenters to these chats) that a majority support a public option, somewhere upwards of 75%! However, in the latest issue of The Week, they present those poll numbers, but also an accompanying poll that showed that less than 40% of those surveyed could select the correct description of what the public option actually is. Comment?

Ezra Klein: Depending on how you ask the question, the public option gets majority support, plurality opposition, or totally ambiguous responses. Which is pretty much true for any question you ask on any policy issue. The public option would be very popular if it passed and it worked. It will be less popular, in theory, if it's derided and dropped from the bill as an example of liberal overreach. I'm not an absolutist on keeping the public option in the bill, but I have a post going up in a few minutes expressing disappointment with the way the president sold it last night.

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Baltimore: Ezra, Obama said "My guiding principle is, and always has been, that consumers do better when there is choice and competition. Unfortunately, in 34 states, 75% of the insurance market is controlled by five or fewer companies. In Alabama, almost 90% is controlled by just one company. Without competition, the price of insurance goes up and the quality goes down."

But isn't it true that we could solve this problem by allowing all the insurance companies to operate in all the states? In other words, let them compete with themselves? If Obama really believes in competition, why not allow competition?

Ezra Klein: The issue here is regulation: states regulate insurers, so they can't just compete nationally. Some conservatives want to allow insurers to compete across state lines, which would just mean that the bottom would fall out of the regulation, as all insurers would headquarter in the least regulated state (this has happened in credit cards, incidentally). A better solution would be to make regulation federal.

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Charlottesville, Va.: Ezra, the Democrats and their sycophantic media (meaning: you) have been trumpeting the "47 million uninsured" line for months. But last night Obama suddenly changed to "30 million uninsured".

One of two things happened: either 17 million people miraculously got insurance overnight, or Obama realizes that the "47 million" line was always a lie.

Republicans have long maintained that the "47 million" included those temporarily between jobs, illegal immigrants, and millions of people who can afford insurance but choose not to buy it.

Can you tell us what the talking points are today? Who are these 30 million and how are they different from the 47 million?

Ezra Klein: Obama said his plan will cover 30 million, not that there are only 30 million uninsured. The issue here is that a bit less than 10 million of the uninsured are illegal immigrants, so they wouldn't be covered, and a few million more wouldn't be able to afford coverage, or would choose to go without. So you'll still have about five percent of legal residents uninsured, and a bit more of the country lacking insurance. Better than the current situation, but not fully universal.

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Deland, Fla.: Ezra: I'm simply interested to hear your response to Paul Krugman's blog entry from 9/8/09 Why the Public Option Matters.

Thanks.

Ezra Klein: I think Paul makes some good points that I don't fully disagree with. My point is that there is more to this bill than the public option, and the public option as composed isn't going to be the policy panacea some of its more ardent supporters suggest. I don't want to be painted, however, as an opponent of the policy. I'm not. I support it. But I'm also trying to be realistic about it, as I think a lot of people are blowing it out of proportion and misinforming folks as to its potency.

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Brooklyn, NY: Are we gonna get a public option?

Ezra Klein: Maybe!

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Dallas, Tex: When the President said that this plan would not cover illegal immigrants, who have free ER privileges (as mentioned), is it safe to assume that you would HAVE to have an insurance card to go to the ER? Or not? And what would happen if someone showed up to an ER without one, would they not be taken care of?

If so, why bother getting one, and if not, how would that impact the commitment of an ER?

I'm so confused, please help!

Ezra Klein: When he talks about coverage, he's talking about insurance coverage, which is what this plan subsidizes. The health system will continue to care for all people who show up in emergency rooms. But this bill will not subsidize the insurance premiums of illegal immigrants.

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Boston: Has the President privately given up on getting more than 1-3 Republican senators on board a bill? Who is his biggest concern on the Democratic side of the Senate? How do you negotiate with the Blue Dogs in the House when they aren't really a well coherent block?

Ezra Klein: Yep. If the bill gets three Senate Republicans, the White House will be ecstatic. As for the Democratic side, his biggest concerns in the Senate are Nelson, Bayh, Lincoln, Landrieu, and a few others. In the House, the Blue Dogs really are a very coherent bloc, so you negotiate with whoever they appoint as negotiator (Mike Ross, most recently).

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Richmond, Va.: As a moderate Virginian (Voted for Obama...with some regret now, and will probably vote for the (R) Governor candidate, but did vote for our current Governor (D)) I think what bothers people the most about health reform is:

First, the cost. We are trillions of dollars in debt and now we are going to add more. The retort of "it will cost us more to do nothing!" isn't winning. It MAY cost a lot to do nothing, but will cost MORE to do health care reform.

Second, the personal meddling. There is the fear that one may want a certain treatment and the government-heath-department will say NO.

Third, while there are problems with private insurers, there is still the fear this will be managed with the effectiveness of the Post Office or a Pentagon $25 screw drivers.

Fourth, and this is a testy one I admit! We are bothered that slackers and illegals will get insurance off our dime. Fine with the single mother of four getting a subsidized COBRA during her sudden unemployment! But me paying for lazy people or illegals' health care? Nope.

Ezra Klein: I really think you should meet some uninsured people.

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Woodbridge, Va.: There was a quote in today's WP from a guy who said that the bureaucracy and recordkeeping required with this health care reform would essentially run him out of business. And the government is OKAY with putting these burdens on business?

I mean, no one wants 46M Americans to be without health care, but for God's sake - is this what we're in for? More paperwork and less coverage?

washingtonpost.com: Health-Care Events Offer Both Sides (Post, Sept. 10)

Ezra Klein: I think you mean more paperwork and more coverage. As the more coverage part isn't in dispute. But the more paperwork bit is. If you want less paperwork, go Medicare-for-All, or some other form of single-payer. The paperwork comes from a fractured insurance system where one doctor's office will deal with dozens of different plans. Medicare, conversely, is simple and clean to deal with.

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Washington, D.C.: What did you think of Obama's plan to enact automatic spending cuts if the health care plan doesn't end up being deficit neutral? Couldn't that be pretty damaging if we happened to be in another recession? I know the determination of whether the deficit was increasing would fall to the OMB, but what if that OMB was operating under the Romney administration or something?

Ezra Klein: I think it's broadly as good idea, though I'd like to see automatic tax increases built into the system too. As it is, you do need a credible threat for deficit reduction included to get CBO to score the proposal. But I don't understand why the administration didn't negotiate the trigger in response for better subsidies: i.e, you give us real affordability (subsidies to 400 percent, etc), and we'll put into place real spending controls. We'll spend a bit more, in other words, but also guarantee that it won't add to the deficit.

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Washington, D.C.: Aren't you exhausted yet?

Ezra Klein: You have no idea.

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For Richmond: I am 71 years old and have had 11 different private health insurance plans. ALL of them restricted my choice of physician. ALL of them interfered with my physician's choice of treatment. Now I have Medicare. I have complete freedom to choose my doctors; I have never been turned down. Medicare never comes between my physician and me. I would never, never go back to what I had before Medicare.

I like Medicare so much, I want every man, woman, and child to have it. I support HR676 which would give an improved Medicare to everyone at no more cost than we now spend because of the waste of the high overhead and compliance costs of private insurance.

Ezra Klein: YOU LIE! Just ask Joe Wilson.

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Baltimore, Md.: Paperwork? I'll show you paperwork! My 3-physician doctor's office has an admin staff of 5 simply to handle the bewildering array of forms required by the different insurance companies. Something's out of whack there.

Ezra Klein: Yep. It's called "the health-care system."

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Jessup, Md.: Ezra, can you tell me how non-denial for pre-existing conditions is supposed to work?

Suppose, due to family history, I choose a plan with good benefits for dialysis treatments. Someone else has an employer plan with less benefits. So, after learning they have the disease, they switch to my plan. So I pay the same rate as a bunch of people who already have it?

Ezra Klein: The answer to this is something called risk adjustment: basically, the government -- or someone -- creates a pool that insurers with overly healthy enrollees pay into and insurers with unhealthy enrollees get money out of. It stops being profitable, in other words, to risk select. The Finance Committee framework has three different types of risk adjustment built in, and this is something that Germany and the Netherlands does with great success.

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Falls Church, Va.: Ezra, prohibiting illegal immigrants from participating in a reformed health insurance system seems to be self-defeating in terms of controlling costs. If those folks are excluded they're still going to go emergency rooms and leave the rest of system holding the bill. It seems to me that whatever would be spent on subsidies to get them into the system would be more than offset by the savings of not using the ER as primary care. What do you think?

Ezra Klein: It probably will save some money. But the downside is that a lot of non-illegal immigrants will get sick. For instance: a LOT of illegal immigrants work in the food production facility. If they're wiping germs on your chicken, you're going to get ill. Bacteria isn't interested in your citizenship status.

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Norfolk, Va.: Ezra, you're wrong about the 47 million vs 30 million issue. Obama said last night "There are now more than 30 million American citizens who cannot get coverage." He didn't say his plan would cover 30 million. Are you blinded by your leg-tingling love of Obama?

Ezra Klein: Same answer, then (you hadn't provided the quote originally). 46 million uninsured. Eight to 10 million are illegal immigrants. So the number of American citizens is a bit above 30 million. I don't understand what's difficult to comprehend about this.

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Reston, Va.: Ezra,

What details are available about the so-called "public" option? Any estimates on premiums? Co-pays? Deductibles?

Ezra Klein: The problem is that there isn't a "public option" on the table. Lewin, as I remember, estimated that a public option using Medicare rates would be 20-30 percent cheaper than the average insurer and a public option using normal rates would be about nine percent cheaper. Obviously, the sort of risk pool it signs up matters here, as does the workings of the exchanges and the nature of the risk adjustment.

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Princeton, N.J.: Explain how this pre-existing plus individual mandate thing will work. If they just require you have some insurance, people will get cheap $500,000 deductibles until they get sick. If they try something fancy like actuarial value of a minimum plan, all they will do is provide jobs for actuaries to beat the system just as in the "reasonable and customary" scam. (Why haven't we heard more about that?)

Why doesn't the government write a basic plan and require every company to carry it and charge what guidelines allow? Like the Swiss and the Dutch.

Ezra Klein: The type of insurance that satisfies the regulation is regulated.

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Charlottesville, Va.: Ezra, will you re-answer the question about the number of uninsured? It's an article of faith among Democrats and the media that there are 47 million uninsured.

But Obama said CLEARLY that "There are now more than 30 million American citizens who cannot get coverage."

How do you reconcile that? Is the President wrong? Or are you wrong?

Ezra Klein: The key words are American citizens. About 46 million people residing in America are uninsured. About eight million, if I remember, are illegal immigrants. Abut five million are eligible for Medicaid or S-CHIP and don't know it, or haven't signed up for some reason. That leaves 30-some million "American citizens" who "cannot" afford coverage.

In other words, the president is right and I am right. He's just measuring a more specific population than I am.

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Washington, D.C.: I found it interesting that the subsidies, which is the bulk of the $900 billion, didn't receive a whole lot of attention and detail last night from Dems and Republicans. Is the general agreement on both sides about the subsidies?

Ezra Klein: I'm continually surprised by this too. I don't know if there's agreement on it -- no House Republicans are likely to vote for this bill -- so much as neither side really sees a margin in shouting about it. A lot of Republicans attack the cost of the bill, which is an indirect attack on the subsidies, but they're not interested in assailing the general concept of health care for poor people.

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Philadelphia: Hey Ezra, Would it be too optimistic to think that once/assuming this Congress passes health-care reform that they will less fearful of tackling climate change and immigration? I mean, if this ends up going well maybe they'll look for another victory.

Ezra Klein: I sort of feel the opposite, and worry Congress will have had its fill of difficult votes, particularly in advance of an election. But we'll see.

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Lanham, Md.: Ezra, the President said that obtaining a plan individually costs three times what an employer group plan does. Is that primarily because low-risk people don't buy them, so they have to charge high rates to the self-selecting high risk people?

Ezra Klein: A bit of that. It's also because admin costs hit 30 percent, as opposed to 6 percent in the large-group market. And because individuals have no bargaining power, so they get terrible deals. That said, I'd not actually heard the 3x number before. The number I know is that an equivalent policy on the individual market costs about $2,500 more than its large-group cousin.

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6 percent in the large-group market.: Come on Ezra, that would imply a 94% loss ratio. Go to CA PIRG list of plans and the loss rations and see how many have them that big.

Ezra Klein: Those are CBO numbers from the 1,000+ group market. They're pretty good.

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Clifton, Va.: Have you ever worked in real world? No academia, journalism or politics doesn't count! But in the real world or are you just the typical young ignorant liberal living in major urban center who doesn't have a clue about folks in flyover territory! They don't like Congress or the Executive Branch because they haven't proven they can be trusted by Joe Six Pack!

Get out and go work as a honey dipper in TN or KY! And you find out what real Americans think not leftist slackers like yourself!

Ezra Klein: This reads like a keyboard macro. I'm always amused by this stuff, though. Washington isn't some fake world. And expertise comes in many different forms. I don't build my own cars, for instance. I trust people with car building expertise for that. Similarly, I don't try and write electrical engineering manuals. I trust electrical engineers for that. I don't remove my own appendix. I trust surgeons to do that. And I'd imagine our archetypal KY honey dipper doesn't want to try his hand at writing a health-care reform bill. He probably wants health care experts to do that.

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Chapel Hill, N.C.: I was quite frustrated watching (mostly not) you on Dylan Ratigan's show this morning. He kept trying to stir up fights rather than provide information. I was hoping to hear more of your reading of how you see the dynamic in the Senate after the developments of the past few days. When do you think Senate Finance will actually send out a bill?

Ezra Klein: I actually thought his show was really good today, with some great guests. It was one of the few times when I was content to sit quietly in a dark room waiting around for cracks. For instance, Conrad was on in the first hour, and he actually knew the Senate Finance timetable: chairman's mark (draft) next week. Discussion and amendments for a week or two beyond that. And Conrad expects a floor vote on a full bill in October.

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Alamosa, Colo.: Do you have much time for cooking anymore?

Ezra Klein: Less than I'd like. I ordered Chinese food last night. Great Szechuan Wall House. Mala mapo tofu and mala beans threads. Really delicious.

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Cleveland: Hey Ezra, the new Kid Cudi album leaked on the net. Its good stuff.

Ezra Klein: I'll check it out.

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London, UK: You want no paperwork? Move to Britain. When I joined the NHS, needing an urgent appt for eye issues, I had to answer 4 questions, 2 of which the nurse who phoned me already knew: Name, phone number, address, and primary care physician. (I didn't have an answer for the 4th one, but they let me come anyway.)

That was it. Zero paperwork. No ID whatsoever. Appointment the same day. What could be more lovely?

Ezra Klein: It's true that the NHS has very little paperwork. One of the oddities of the debate is that a lot of the critic's concerns point directly at a single-payer solution. Worried about deficits? A monopsony buyer is the quickest path to savings. Paperwork? Same deal. Choice of doctors? Uh huh.

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Bettendorf, Iowa: I've always wondered--are you contractually obligated to do this? While I do benefit from it, I can't imagine it doing much for you beyond making lunch all the more difficult.

Ezra Klein: They ask me to, and I'm happy to. The fact that you all actually ask questions is proof that somebody is deriving benefit from this. And getting this much direct feedback helps sharpen my thinking on what I need to explain better, what I need to start thinking about, and what I might be getting wrong. So I like these chats! I do wish I wasn't scheduled for lunchtime, though.

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Silver Spring, Md.: "He probably wants health care experts to do that." And that includes you? How so? You went to college, worked on a Presidential campaign, and blogged. All in about 5 years. That makes you an "expert" on health care?

Ezra Klein: Nope. But you'll notice that I'm not writing the bill. No one will have to live in my health care world. And anyone who reads my blog chooses to do so of their own volition. Free country and all that. But as I often get attacked for lacking expertise, I'll say that I agree: I'm not an expert. My job is to talk to lots of experts and rewrite what they say in more accessible terms. It's of course up to my readers to decide whether I succeed in that.

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Washington, D.C.: The key line I heard in Obama's speech last night...

"But I will not back down on the basic principle that if Americans can't find affordable coverage, we will provide you with a choice."

What alternatives does Obama have to accomplish this without a public option linked to mandates?

It is fine to keep the door open, but what are the options?

Ezra Klein: I don't really know. The co-op option? I thought the bigger problem with that line is that most people won't even be able to access the exchange, much less the new options on it. It was one of Obama's few truly false notes, and I mean false in the sense of being untrue.

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Ezra Klein: Thanks, folks!

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