Health Insurance Exchanges: Something Both Liberals and Conservatives Could Love?



In an opinion piece in the Harvard Business Review today, Henry Aaron (the well known economist, not the Hall of Fame baseball player) argues that conservatives and liberals should both support the health insurance exchanges that form the core of the Affordable Care Act (aka Obamacare.)  He notes that conservatives decry the tax and mandatory provisions of the act and that liberals prefer “Medicare for all”, but concludes that both groups fail to see that the core elements they desire are contained within the act.

For conservatives he posits the following:

Conservatives want people to be free to choose the insurance plan that best matches their preferences. They want insurers to compete with one another based on price and service. They are convinced that if individuals can shop freely for the plans they want and insurers must compete actively for their business, everyone will gain: customers will get coverage that matches their preferences, and insurers will become more cost- and quality-conscious than they now are. Conservatives also recognize that many people will need financial help if they are to afford health insurance, and they have embraced such aid.

For liberals he argues:

Liberals want universal coverage. While they accept competition, they believe that regulations are also necessary to hold down the growth of health care spending and promote the adoption of improved modes of delivering care… By design, the exchanges will intensify competition by requiring insurers to offer the full range of plans to customers. By providing software and counseling, the exchanges will help consumers make informed comparisons among these offerings…To do a good job the exchanges have at hand a number of important regulatory powers along lines that liberals have long endorsed.

He concludes that if the exchanges become open to all and do a reasonable job of encouraging informed choice then

…most businesses may well be glad to rid themselves of administering a vexatious form of compensation that has nothing to do with their main business activities. If and when that happens, the exchanges will have become the instrument for realizing the conservative dream—free individual choice and tough, head-to-head competition among health insurers.

Yes, there are numerous “ifs” in the story, but what’s the alternative?  J.D. Kleinke put it best in his 2001 book Oxymorons: the Myth of a U.S. Health Care System:

There is no U.S. health care system.  what we call our health care system is, in daily practice, a hodgepodge of historic legacies, philosophical conflicts and competing economic schemes.  Health care in America combines the tortured politicized complexity of the U.S. tax code with a cacophony of intractable political, cultural, and religious debates about personal rights and responsibilities.  Every time policymakers, corporate health benefits purchasers, or entrepreneurs try to fix something in our health care system, they run smack into its central reality: the primary producers and consumers of medical care are uniquely, stubbornly self-serving as they chew through vast sums of other people’s money.