Relevant and even prescient commentary on news, politics and the economy.

Cost Sharing Reductions and the Constitution

Republican Representatives who sued the Obama administration, Judge Rosemarry Collyer who decided they were right, Donald Trump and lawyers representing the Trump administration argue that the Department of Health and Human Services (HHS) can not compensate insurance companies for the expence of cost sharing reductions (CSRs) for people with income under 250% of the poverty line who purchase silver plans on ACA exchanges. The argument is that compensation for CSRs might be good policy, but the Constitution makes it clear that only Congress can choose such good policy.

I’m not an lawyer but I do not understand how anyone can make such an argument. Following Mark Joseph Stern, I quote from the ACA

(3) Methods for reducing cost-sharing
(A) In general
An issuer of a qualified health plan making reductions under this subsection shall notify the Secretary of such reductions and the Secretary shall make periodic and timely payments to the issuer equal to the value of the reductions.

(3) Payment
The Secretary shall pay to the issuer of a qualified health plan the amount necessary to reflect the increase in actuarial value of the plan required by reason of this subsection.

Tnat seems very clear to me. The whole case seems to rest on the fact that the ACA never says funds are appropriated for this purpose. My (non lawyer’s) understanding of precedent is that the Constitutional requirement that funds be disbursed only as appropriated by law by Congress has not been interpreted as requiring the approriate use of the appropriate “appropriated”.

Just to cut and paste a bit from Stern

When Congress passed the ACA, after all, it instructed HHS to make these payments. And in doing so, it effectively appropriated the necessary funds. As Georgetown University law professor David Super explained to my colleague Jordan Weissmann in 2015: “The Supreme Court has been very clear that you do not have to have a law that says ‘appropriations’ across the top. You just need a law directing that the money be spent.”

I don’t see an arguable case against paying the money.

Certainly, I don’t see how anyone can argue that the payments are not allowed and required without addressing the bits of the law which I cut and pasted.

It seems to me that to pretend they don’t exist is to lie by omission, and that lying to a judge is contempt of court, even if one isn’t under oath.

Lawyers help me. I sure wouldn’t want Trump administration lawyers to be disbarred.

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New Bill to Restore the ACA CSR

Senate Health Committee Chairman Lamar Alexander (R-TN) “Unless they are replaced with something else temporarily, there will be chaos in this country and millions of Americans will be hurt.”

Twelve Republicans and 12 Democrats signed on to the bill, which would continue ObamaCare’s insurer subsidies for two years and give states more flexibility to waive ObamaCare rules.

Senator Alexander is talking about the impact of Trump canceling the CSR which pays for deducible and co-pays directly to insurance companies for the insured between 138% and 250% FPL. And no, neither the CSR or the Risk Corridor Program bailouts for insurance companies. All of these are lies and misconceptions coming from the mouths of Republicans and the President.

Here is what will happen:

– Premiums for benchmark plans sold on the Affordable Care Act exchanges will rise about 20 percent next year and about 25 percent by 2020. The cost to consumers, however, would stay the same or even decline.
– People with lower incomes who buy insurance on the exchanges get a tax credit (subsidy directly to the insurance company), so their costs remain stable as a share of their income. When premiums rise, those government subsidies rise as well.
– For people with incomes below 200 percent of the federal poverty level, the out-of-pocket cost of insurance would remain about the same because of the bigger tax credits (subsidies offsetting premium increases to the insurance company).
– For those with incomes between 200 percent and 400 percent of the federal poverty level, the cost to buy insurance could actually get cheaper. Some Gold plans may be cheaper than the Silver plans. 85 percent of people who bought Obamacare insurance got a tax credit.

Kaiser Family Foundation Vice president Larry Levitt: “The CBO analysis makes it clear. The ending cost-sharing subsidies would be a perfect example of cutting off your nose to spite your face. Premiums would rise and the government would end up spending more in the end through tax credits that help people pay their premiums.”

The CBO report confirms earlier analyses, including this one by Kaiser and this one from the consulting firm Oliver Wyman suggested eliminating the cost-sharing payments could make policies cheaper for some individuals.

In the end, the elimination of the CSR may cause a cumulative deficit of $194 billion from 2017 through 2026, CBO and JCT estimate. While it may be chaotic in the beginning as people will not know what to do, premium subsidies paid directly to the insurance companies will pickup the difference, and the CBO assumes the chaotic conditions will level out over a period of 2-3 years.

Giving states more control over the ACA in areas such as the 10 essential benefits or cheaper than Bronze plans would spell the end for the ACA and we would be back to garbage healthcare polices.

If you are prone to do so, it would be helpful to write your sponsoring Senator and tell them you are opposed to this bill by Senator Alexander. The  Democratic co-sponsors include Sens. Jeanne Shaheen (D-NH), Joe Donnelly (D-IN), Amy Klobuchar (D-MN.), Heidi Heitkamp (D-ND), Al Franken (D-MN), Joe Manchin (D-WVA.), Tom Carper (D-DE.), Tammy Baldwin (D-WI.), Claire McCaskill (D-MS), and Maggie Hassan (D-NH).

There will be issues; but, the greater issue is with Republicans and states tampering with the ACA offerings.

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WA Senator Murray Thinks She has a Deal to Save the CSR

Sen. Lamar Alexander (R-TN), chairman of the Senate health committee, said he hopes to release a bill this week, in collaboration with Sen. Patty Murray (D-WA), the senior Democrat on the committee, to fund the cost-sharing reduction payments and give states more leeway on insurance rules.”

Not sure why Senator Murray feels the need to go down this avenue when the preceding Executive Order already wandered into greater flexibility for states, states rights, and who decides what. As has been explained by the CBO, Drum, other pundits, and myself; the loss in out-of-pocket subsidies will result in increased premiums which are “still” paid for by the ACA between 138% and 250% FPL. In some cases, Bronze plans can be had for free, Silver plans become cheaper, and Gold plans offering better care and lower deductibles attainable.

Senator Murray is giving away the store if what Senator Alexander says is true. “Alexander said Murray agreed to a deal giving states ‘meaningful’ flexibility on coverage rules. Asked what the stumbling blocks to the deal are, Alexander replied: ‘The definition of meaningful.'”

We have already seen what the word meaningful means with regard to the expansion of Medicaid in some states . . . it never happened. I am hoping Senator Murray has second thoughts and decides not to go farther with her thoughts on negotiating with the Republicans as she is off base and we will be better off by not altering what is law already and it is the ACA.

Premiums will go up in 2018 as no one is going to trust Trump regardless of any deal reached with the Republicans.

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States Can, In Effect, Make The Treasury Pay For Cost Sharing Reductions

Many have noted that Trump has the strange idea that he can destroy the US health care financing system & people will blame Obama. I actually think he is wrong about this — many polls show that a solid majority of US adults say they will Republicans responsible (yes I know it’s unfair to think they have the responsibility just because they have all the power).

But before that comes the question of whether Republicans can destroy the ACA without repealing the bill. I think there is a weak point in their strategy (and there is no doubt this is the the Trump administration’s strategy). The Federal Government does not regulate the premiums insurance companies may charge if the participate in the exchanges. Even if only very sick people buy insurance on the exchanges, state regulators can allow insurance companies to make a profit by charging gigantic premiums. If only very sick people with income less than 4 times the poverty line buy insurance on the exchanges, then the Federal Government will pay the huge increase in premiums due to adverse selection. I don’t see any way the Trump administration can stop this without changing the law (or how they can change the law having repeatedly failed).

Already states including Oregon, California and Alaska have allowed insurance companies to raise premiums to compensate for Trump’s decision to welch on CSR payments (who would have thought Trump would refuse to fork over money that is owed ???). In particular, they are allowing increases of the premium on silver plans — the premium which determines the subsidies.

I should cite @xpostfactoid https://twitter.com/xpostfactoid who has been making this argument on Twitter.

I don’t see a limit on what state insurance commissioners could do if they decided to play hard ball. In particular, they can allow gigantic premiums without hurting people with income over 4 times the poverty line if the market segregates and some insurance companies sell only on the exchanges (to people getting subsidies) and some only directly (setting market insurance rates).

What if a regulator approved a premium of $ 1,000,000 a month ? This would create no problem for people with income under four times the poverty line — they would pay the same function of their income as now and the Treasury would pay the rest. No one who didn’t get a subsidy would come close to the exchange (or that company which is required to charge the same if it sells directly to prevent blatant fraud). Now the insurance company wouldn’t be able to keep the money — the minimum medical loss ratio of 80% means they get only 25% what health care providers get. However, unless I am confused, the excess is sent to policy holders not the Treasury.

I may be confused, but I think the only things which has been preventing this raid on the Federal Treasury are norms of fairness and a desire to not inconvenience unsubsidized upper middle class consumers by forcing them off the exchange. I’d guess the second factor is more important.

But if the alternative is a collapse of the individual market *and* Trump is, as usual, ignoring norms by not paying what is owed, then I think neither barrier will hold.

I am sure they won’t go to the blatant million dollar raid on the Treasury. But I am also sure that state regulators can (and some will) make the Federal Government bear more than 100% of the cost of Trump’s stunt.

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Healthcare News; ACA and CHIPs

Trump’s Healthcare Executive Order

Trump Signs Executive Order relaxing ACA health insurance rules. About a week or so ago, I had read this elsewhere, mentioned it, and was told there was no way this would happen. Similar to the three attempts to defund the ACA, Trump is doing what he says the Senate could not do and that is to take healthcare insurance away from the citizenry.

More of Trump’s Executive Order down the page.

Children’s Health Insurance Program

Also if you did not know this, the Children’s Health Insurance Program is being held hostage by the House. Rather than pass a clean bill, the House Republicans added provisions to the passage of new funding. 2017 CHIP Program funding was used up during the time period when Republicans were spending inordinate amounts of time trying to defund the ACA rather than attending to other needs of the country. Some states such as Minnesota have already run out of funds to pay for the 9 million children in the US who are dependent on this program; however, nothing appears to get in the way of the House working on a Tax Reform Budget Resolution giving $billions to 1% of the households making >$500,000 annually.

One provision put in place by Michigan Congressman Fred Upton is nonsensical and strictly for show. Mind you, Fred Upton was one of two Congressmen who tampered with the Risk Corridor Program causing premiums to rise for those in the individuals market place with incomes > 400%, Coops to go bankrupt, insurance companies to lose money, and insurance companies to withdraw from the exchanges. Today Mr. Upton proposes to increase Medicare payments for those making >$500,000 annually saying it will help offset the cost of CHIPs, these oldsters can afford it, and if they do not like it . . . do not sign up for Medicare.

Upton’s statement is cold hearted and mean except for the extra $135/ month means testing the “few” would endure. In the US there is ~1 million household with incomes in excess of $1 million annually. Few of them are old enough for Medicare and the return from the Republican proposed tax reform would more than outweigh the additional $135/month.

The Impact of Trump’s Healthcare Executive Order

President Trump’s Executive Order “directs the departments of Treasury, Labor and HHS to consider expanding healthcare coverage through low-cost, short-term health plans that are exempt from Affordable Care Act insurance market rules.” The plans would:

• Be Short Term and up to 364 days as opposed to the ACA’s 90 day limit.

• Would not have to comply with the 10 categories of minimum essential benefits or accept all applicants at the same rates without regard to pre-existing medical conditions.

• Expand access to so-called association health plans allowing employers to band together in healthcare plans and cross state lines.

• Allow the expanded association plans to market to individuals across state lines.

More than likely, the impact of the Executive Order will drive up premiums for those left in the ACA, increase premiums for those with pre-existing conditions, and increase premium costs for older citizens. Much of the increase could be covered by ACA premium subsidies; but, those with incomes > 400% FPL (~10 million) in the individuals market would bear the full cost increase.

Kaiser’s Larry Levitt said; “ Association plans exempt from the ACA can cherrypick healthy people and make coverage unaffordable for those with pre-existing conditions. Insurers will leave the ACA marketplaces as soon as they can or hike premiums a lot.”

The only thing standing in the way of Trump’s Executive Order “easing the ACA’s statutory insurance market rules” from taking place is the legal challenges. As one legal expert posited; “I do not believe you can solve this problem without changing the law. It has to be done by statute, not regulation.”

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Trump Ends CSR Payments Immediately

According to Modern Healthcare:

“In a brash move likely to roil insurance markets, President Donald Trump will ‘immediately’ halt payments to insurers under the Affordable Care Act.

Before sunrise Friday morning, Trump went on Twitter to urge Democrats to make a deal:

‘The Democrats ObamaCare is imploding, massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!’

The Department of Health and Human Services had made the announcement in a statement late Thursday. ‘We will discontinue these payments immediately’ said acting HHS Secretary Eric Hargan and Medicare administrator Seema Verma. Sign-up season for subsidized private insurance starts Nov. 1, in less than three weeks, with about 9 million people currently covered.”

This could be devastating to those with incomes less than 250% of the Federal Poverty Limit. It is a direct attack on US citizens by a president who can not get his way politically and is meant to punish citizens and politicians alike for not following his dictates. Let me assure you, the ACA was not imploding and most of the cost issues with it were caused by Republicans such as former Alabama Senator Sessions and Michigan and Colorado Representatives Upton and Kingston tampering with the Risk Corridor Program.

However, what will happen is the differences will be picked up by increases in premium subsidies as I have said previously for those in this category of 138% to 250%. Indeed as the CBO has pointed out, it becomes cheaper in some cases to bump up to a Gold plan for some. See Tables 1 and 2. Net cost of the ACA increases by $31 billion over 10 years.

Trump asserted: “Obamacare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves.”

The only thing broken today is the Presidency as it is occupied by a madman. One has to wonder if this is Trump’s last hurrah before indicted.

At this time, I have no polite words I can print on AB.

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Oxfam America President Abby Maxman Questions Slow Aid Response to Puerto Rico

Oxfam is a global organization working to end poverty. Its goal is to help people build better futures for themselves, hold those responsible accountable for the failures of people in power and/or government, and work in disaster areas. Their mission as stated is: “ To create lasting solutions to poverty, hunger, and social injustice.”

Earlier in the week Oxfam acknowledged the ongoing tragedy in Puerto Rico. Oxfam President Abby Maxman said:

“Oxfam has monitored the response in Puerto Rico closely, and we are outraged at the slow and inadequate response the US Government has mounted in Puerto Rico. Clean water, food, fuel, electricity, and health care are in desperately short supply and quickly dwindling, and we are hearing excuses and criticism from the administration instead of a cohesive and compassionate response. The US has more than enough resources to mobilize an emergency response; but, it has failed to do so in a swift and robust manner. Oxfam rarely responds to humanitarian emergencies in the US and other wealthy countries; but as the situation in Puerto Rico worsens and the federal government’s response continues to falter, Oxfam has decided to step in to lend our expertise in dealing with some of the world’s most catastrophic disasters.”

And still what Trump thinks about during a visit to the island is the debt owed Wall Street. “They owe a lot of money to your friends on Wall Street and we’re going to have to wipe that out. You’re going to say goodbye to that, I don’t know if it’s Goldman Sachs but whoever it is you can wave goodbye to that”. Trump was and is holding Puerto Rico hostage to getting aid on behalf of Wall Street.

Abby Maxman continues:

“Oxfam will join forces with Puerto Rican leaders to appeal to Congress and other federal agencies in Washington to dedicate resources to the response and remove barriers that are keeping aid out, and to commit to long-term support to help Puerto Rico build back better. We’ll also engage policy makers about the roles inequality and climate change are playing.

In addition, Oxfam has sent a team to San Juan to assess a targeted and effective response. We are currently determining how best this response could benefit from our expertise, such as meeting the needs of rural communities who face increasing risks of disease like cholera without clean water, providing shelter and meeting other immediate needs.”

Where are our Congresspersons and Senators? The population of Puerto Rico are US Citizens. I would urge people to write your representatives and senators pushing them to pressure the President to move quicker and forget the banking and financial sector Main Street bailed out. If this were a white population, no one would stand for this type of treatment.

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Republicans’ Refusal to Understand Insurance Still Matters

When attempting to repeal and not really replace Obamacare, various Republicans demonstrated opposition to the idea of insurance. They objected that healthy people shouldn’t subsidize the health care of sick people — that is their honest view of health insurance is that they are against it.

I didn’t keep track of recent examples, googled, and have old examples

Paul Ryan (paraphrased — listen to him if you must — I can’t force myself to listen)

“The conceit of Obamacare,” he said at his press conference on Trumpcare, is that “young and healthy people are going to go into the market and pay for the older, sicker people.” That’s why Obamacare is in a “death spiral,” he noted.

Mo Brooks (very blatantly)

Their immediate problem is to explain why they don’t think health insurance should be eliminated entirely. Their much more serious problem (which I hope will be fatal to their ideology) is that they have to explain why it is reasonable to want there to be health insurance, want there to be community rating and coverage of treatment of pre-existing conditions, and oppose equalitarian redistribution in general.

They ususally understand that they must carefully avoid trying to explain how they are for insurance but against community rating (or for community rating but against welfare) because people might decide to support community rating (and universal basic income and who knows what else) if they understood why Republicans oppose them.

Republican logic is that due to the will of the market or God (to the extent that they distinguish Them at all) people get what they deserve, so the poor deserve to be poor and so do the sick. Most grownups (hell most 4 year olds) have noticed that the world doesn’t work that way.

AFter the jump, I will try ot make an honest to God the market effort to make sense of Ryan et al. I hope this shows how dangerous the discussion is to them.

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Will October 1 Bring Another Repeal Effort?

It could . . .

With the Senate vote tomorrow canceled on the Graham – Cassidy ACA defunding bill, the effort to defund and repeal the ACA will cease for the rest of this budget year ending September 30, 2017. With the passage of a new budget and a new resolution the effort could go onward in an attempt to repeal the ACA.

As I have said, there can only be one resolution per year. Let me clarify the one reconciliation per budget year statement. Unless the Senate passes more than one budget resolution, there can be only one Reconciliation per year for each of three subjects; spending, revenues, and debt limit in one or multiple bills. Since there was no budget passed last year, the Republicans had a unique opportunity to do two Reconciliations . . . one to defund the ACA and the 2nd one to do Tax Reform. The present Reconciliation affected Spending and Revenues thereby killing those two subjects for Reconciliation in 2017.

If one bill covers spending and revenue, Reconciliation using a budget resolution is expended for those two subjects. Budgets end September 30 of each year.

2018 is a different year and again Congress could take up the repeal of the ACA. And why not when they can get 49 votes to pass it any time they wish to do so. Maybe one of the remaining three Republican Senators will side with them or a Dem may have a weak moment. Since Republicans want to do tax reform, they will use Reconciliation again as it only requires a majority vote and defund the ACA to provide the revenue for it. The opportunity to do two Reconciliations due to two budget resolutions will not be available for Republicans. It may end up being both ACA and Tax Reform in one Reconciliation of just one meaning the ACA or Tax Reform.

Martin Longman at Washington Monthly does a good job of explaining Reconciliation. I believe I beat him in predicting a new run at Reconciliation which can be found in the comments section in early September. I was happy he did write on it as few people have done so till the very end. If still interested, here is a detailed primer on the topic also.

Did the effort to repeal the ACA hurt it going forward? Trump’s threats to kill the CSR which funds out-of-pocket expenses for those between 100% FPL and 250% FPL would not be impacted by this move. For those between 100% and 250% FPL, healthcare insurance premium increases would be picked up by the ACA. Those above 250% to 400% FPL would have premiums limited by the a ratio of ~9% of income. Above 400% FPL, some of our readers and everyone else would take on the full impact of the premium increase. Trump has done everything possible to cause issues with the ACA and this would include lying to the public as well.

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Healthcare Insurance History

Last 21 Days ACA Healthcare History

On September 7th and shortly after Pelosi and Schumer decided to be nonpartisan and help Republicans who still had an ounce of decency to pass hurricane Harvey aid and set a new National Debt Limit, I wrote about the inherent dangers of being so magnanimous. Lets face it, during the Obama 8 years, Republicans made it a vow even before he took office to oppose everything coming from the other side of the aisle even refusing to participate in committee meetings. The ACA passed by Democrat votes only.

The danger with being nonpartisan with Republicans and passing good things which are beneficial to the constituency is you allow Republicans afterwards to concentrate on issues which will not favor the constituency or Democrats. Passing hurricane aid and a new debt limit did allow Republicans to get back to the more partisan effort of defunding the ACA and more money for the already rich through tax reform. The two are interlinked. The repeal passes funding for tax reform.

Angry Bear wrote on September 7 about the danger inherent in helping Repubs, wrote again on September 13 about Republicans being confident on defunding the ACA and its impact, again on September 15 about trusting Trump and Republicans with a hand-shake-deal, and last week on September 21 when Kimmel called Cassidy out as a liar and Krugman, other columnists, and blogs finally woke up to the impending danger of the Graham – Cassidy Bill.

Angry Bear called it early in the month on Republican treachery to defund the ACA. The vote will be this week before the 30th. I do not trust McCain. Hopefully, I am wrong on McCain.

Older Healthcare Insurance History

I thought this comment by a blogger was interesting to read as we wait for the Senate to take up the Graham – Cassidy Healthcare Insurance Bill which will defund the ACA if passed this week. I wander the blogosphere and I run into some interesting people from time to time. This particular commenter had a wealth of knowledge on healthcare insurance going back a ways. I have captured the commenter’s words to present them to Angry Bear. Hope you enjoy them.

“When, early in our adventures in managed care, I was marketing for clients like Sisters of Providence, who were attempting to set up their own managed care, non-profit PPO (which ultimately they did not see to completion), in the late 1980s, health care insurance was still non profit.

At that time ‘commercial insurers’ did not refer to health insurers at all. Commercial insurers provided for-profit RISK insurance — which health ‘insurance’ isn’t (and can’t be without defeating its original purpose; to help more people afford care while helping providers maintain expensive facilities and services). Health insurance was created as an additional way, beyond taxes and charity, to socialize increasing health care costs — to assure the healthy, self-interestedly, that the resources to meet their inevitable health care needs would be there when needed. And to ensure hospitals would have a revenue stream to help them maintain the increasingly sophisticated and varied resources to meet the modern care needs of their communities.

Although the first actual, modern health insurance program is credited to a hospital in Texas in the 1920 which contracted with school district employees to provide services to for a monthly premium (it was non-profit); proto-insurance schemes based on the same principle — asking healthy EMPLOYED people to contribute a modest monthly amount to cover care if and when they were injured or ill — were used long before. The Sisters of Providence, for instance, established the first hospitals in my part of the world, the Pacific Northwest, in the middle of the 19th century, offered loggers care for their not-infrequent injuries for a payment of $1 a month (this I understand having cut down trees while gaffing up them). The connection between health insurance and employment did not, as many people believe, just arise as a government idea with favorable WWII tax policies. It arose from a much older recognition of the reality that injury and illness compromise patients’ ability to work, earn and pay — and the recognition the employed, especially those in the more commonly dangerous occupations, had both the income with which to make regular payments and an incentive to make arrangements to provide for themselves, as eventual patients, with care when needed despite the economic vulnerability illness caused — while providing providers with resources that helped maintain facilities and services and workforce to provide that care.

Until the advent of ‘managed care,’ which deregulated the health insurance market in ways giving insurers a greater ability to limit who was covered and what was covered — to their own benefit (but not necessarily to the benefit of our social need for broadly available health care, or increasingly, premium payers’ needs either). In fact, commercial insurers avoided the health insurance market like the plague.

It was understood by everyone that there was no way to make a profit in it While still meeting policy holders actual needs.

Health insurance was created solely as a way to socialize costs for health care consumers.

It did and does not and can not work like a car, flood, or even life insurance where insurers work out, and profit from, fairly reliable actuarial probabilities about what percentage of policy holders are likely to ever make a claim, the likely length of time the average policy holder will be paying premiums before making a claim, and from those probabilities charge — and deny coverage — accordingly. People, the overwhelming majority of policy holders, will depend on health care coverage again and again and again — for services large and small — with more and more needs, and more serious needs, accumulating over time.

Inviting commercial insurers into the market as we did in the late 70s and 1980s, with managed care, was a big mistake.

But many countries, Germany, Switzerland, France, provide excellent, cost-effective universal systems that are not single payer — they rely in different ways on a networks of non-profit and public insurance. Although some countries allow for-profit insurers who provide some limited extra coverage, they are very limited.

I don’t think we should throw their examples out while looking for the best way for the US to provide universal coverage.

Especially considering how many Americans do receive coverage through insurance at work, and are happy with that coverage, and our long history with that method of socialization.”

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