Hillarycare redux.

Ezra has the low-down on the Clinton health care plan unveiled today, which turns out to be quite ambitious, similar to the Edwards plan. (One minus is that it does through tax credits what Edwards' plan does through subsidies. My view is that tax credits are fantastic for middle class folks like me who've been eyeing that $400 pair of shoes and find out - yes!!! - they don't have to donate that extra cash to Stephen Harper this year. For poorer people, typically without buffer stocks of saving, there's a much higher utility gain (or smaller current utility loss from being forced to purchase health care) from not having to pay as much in the first place than from getting money back as a refundable credit at some future date.)

One thing that strikes me with all these plans though is Ezra's observation that:

And if you don't go through the newly expanded FEHBP or the public option, preferring to keep your current insurance, you'll still be dealing with a heavily-regulated and reformed insurance industry, which can no longer price discriminate based on preexisting conditions or demographic characteristics, refuse you coverage, or deny renewal of your policy -- including if you change your job. So if you like your current insurance but quit your cubicled existence at MegaCorp, your insurer can't drop you. All this matters because it keeps the private programs from having too much capacity to undercut the risk pools of the other options. It also destroys the elements of the insurance industry's business model that rely too explicitly on screwing you over.


Doesn't it basically destroy the insurance industry's business model, period? How does a private insurer who can't deny anybody coverage, or charge anybody extra for their coverage regardless of their current condition or mortality, survive? Particularly if it has to compete with a public plan that can, and should, run at a serious operating loss?

I'm not Jonathan Cohn (or Ezra Klein), but it seems to me that either the Clinton or or the Edwards plan - introducing a heavily subsidized public option to compete with a newly regulated private market - is basically the death knell for widespread private insurance. Private plans can likely still appeal to the very wealthy and to those who want insurance for non-core services. But if they pass (and as a political note, I think Edwards is probably more likely and willing to go down swinging tyring to pass his plan that Clinton is) either plan as proposed is a gateway to socialized medicine.