Philosophical Differences Actually Do Exist

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It’s been very easy to dismiss the entire health care debate as empty rhetoric, mischaracterizations and political posturing. But, as some summit attendees just pointed out, there are actually ideological differences between what Republicans and Democrats want for health care reform.

A conversation at the summit about the exchange, pooling and small businesses just crystallized this. At the risk of wading into some complicated and arcane policy, I’d like to explain.

The Democrats want to set minimum standards for insurance sold to individuals and small businesses in the exchange. This will increase spending because individuals and small businesses often now buy cheap insurance that doesn’t provide comprehensive coverage. This insurance tends to have high deductibles, high co-payments and annual and lifetime caps on coverage. Under the Democratic bills, this insurance would essentially get phased out; insurers would only be allowed to sell actual comprehensive insurance in the exchange. This would be better insurance and it would cost more. This insurance would have to cover, at minimum, around 65% of an individual’s total health care costs.

The Republicans want to keep the market open without this layer of federal regulation. This will not raise costs, but less comprehensive insurance will continue to be bought and sold. Some of these cheaper plans cover around 40% of total health care costs. But, in the current system, there is more room for variation in insurance and, therefore, more competition among insurers, say Republicans.

The question, according to summit participant Republican Sen. Jon Kyl, is “Who should be in charge?”

Should the federal government decide what insurance is available to consumers? Or should insurers and state regulators decide what’s sold and should consumer be free to buy whatever they want?

(An important caveat here is that, under the Democratic plans, the federal government would provide billions in subsidies to individuals and small businesses purchasing insurance in the exchange to temper the effect of more expensive, better insurance.)