The Washington Post’s Ezra Klein asks: “One of my frustrations with the cost-control discussion is that people set this up like a choice between this bill and a bill with more cost control. In reality, it seems more like a choice between this bill and nothing. And this bill does a lot more cost control than nothing.”
MIT’s Jonathan Gruber answers: “Here’s how I think about this: Do you know Pascal’s wager? Why not believe in God? I think of health-care reform similarly. We don’t know if we’ll really bend the cost curve. But if we do this and we don’t do anything, we still go bankrupt in 100 years. We don’t lose much. But if we do it and it works, then it’s a savior.”
Three thoughts:
1) The House bill does bend the cost curve … up.
2) Pascal’s wager is based on the assumption that there is no (or minimal) possibility of a downside to the proposed action. That is not the case with the House bill.
3) Yes Minister nailed what Gruber/Klein are really thinking years ago:
In response to yesterday’s PriceWaterhouseCooper’s study showing that the Senate Finance bill would raise, not lower, health insurance premiums for Americans, M.I.T. economist Jonathan Gruber told the New York Times that the opposite was true.
But think about it for a minute. Imagine if the federal government announced that car insurers had to provide car insurance for any American that applied. Now imagine that the federal government also forced car insurers to charge everyone the same price for car insurance regardless of their driving history. So a texting teen with no driving record would pay the same car insurance rates as a 40 year-old accident-free housewife. A man with two drunk driving accidents would pay the same as … you.
Do you think these new regulations would cause your car insurance to go up, or down? Gruber says down. His reasoning:
Mr. Gruber, who helped Massachusetts with its effort to provide universal health insurance coverage, said that the industry report failed to take into account administrative overhead costs that he said will “fall enormously” once insurance polices are sold through new government-regulated marketplaces, or exchanges.
Insurance companies are gonna make up the difference, and more, in overhead savings? When was the last time a company had to comply with a completely new federal regulatory regime and at decreased overhead costs?
And speaking of Massachusetts, which enacted the same health insurance reforms that Gruber says will now reduce costs for the rest of the country, what happened to their insurance premiums.
Oh yeah … they skyrocketed.
Common sense wins again.