The trillion-dollar tedium of health reform

Medieval barons ruled by the edge of the sword; Chinese emperors by the mandate of heaven. In modern America, power goes to those with the greatest capacity to endure boredom.

Right now, Congress is haggling furiously over the final shape of a health reform proposal. Unimaginably huge amounts of money are at stake: your money. You may gain or lose hundreds of thousands of dollars over your lifetime depending on the outcome of the next few weeks. And yet you probably have only the vaguest idea of how your life, health, and money will be affected. Congress' work is obscured from public view not by secrecy, but by the mind-crushing tedium of the detail necessary to understand who will get what.

It's exciting to accuse your political opponents of scheming to murder the elderly. But the real question before the Congress is the design of a new system of healthcare marketplaces, called healthcare exchanges. What will be offered? Who will be allowed to purchase? How much will those purchases be subsidized?

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The details are technical. Yet the big choices before us can be reduced to plain English. Here are just three:

1) How much should the young subsidize their elders?

Should the new coverage charge the same price to all comers, whether 25 or 55? Or should the young get a discount and the middle-aged pay more?

"Community rating," the technical term for the one-price concept, offers a handsome windfall to 50-somethings. The windfall is even more handsome since today's 50-somethings were allowed to take advantage of the cheaper 20-something price when they were young. Today's 20-somethings on the other hand will face dramatically increased insurance costs. These are the same 20-somethings who face the worst job market for young workers since the Great Depression.

On the other hand, 50-somethings vote in congressional elections—like 2010—and 20-somethings don't. The only recourse that 20-somethings have is to drop coverage altogether—which is why community rating will probably have to be backed by a mandate to compel everyone to buy insurance like it or not, and an array of subsidies to support that mandate.

The windfall for some carries a very considerable price for others.

2) How competitive should insurance exchanges be?

Conservatives want the new exchanges to offer the widest possible selection of policies, including very low-cost policies that cover major heath care expenditures only.

Liberals would require all the plans on the exchange to offer more or less the same coverage: no cheap substitutes allowed.

Under the conservative approach, health insurance companies would be forced to compete for customers on price. They would have to learn to act like Wal-Mart, ruthlessly pursuing efficiency.

Under the liberal approach, health insurance would come to look like the cable TV industry, with every provider lobbying government to include his service in the compulsory basic package.

The conservative approach could leave customers who guessed wrong dissatisfied with their bargains. The liberal approach is a formula for corruption and an endlessly expanding government role. How to decide? It depends—which are you more afraid of? Ever growing government and greedy interest groups? Or the likelihood that some individuals will choose badly, and suffer for their choice?

3) What do citizens owe aliens?

It's hoped that the exchanges can extend coverage to the tens of millions of uninsured. To achieve that, the coverage offered by the exchanges will be subsidized by government. How far-reaching should those subsidies be?

About one in four of the uninsured is foreign-born. Some are legal residents, some naturalized citizens, but regardless of current status, they originally migrated to the U.S. with skill levels insufficient to earn a wage that enables them to afford America's high insurance costs.

The Obama policies would extend coverage to these newcomers by allowing them to buy subsidized care for themselves through the new exchanges. Those subsidies will have to be paid by somebody, however, which implies higher taxes down the road for native-born taxpayers. At the same time, the Obama administration is proposing an immigration reform that will legalize illegal aliens (thus qualifying them for subsidized insurance)—and continue the migration of waves of low-wage workers into the United States.

Health reform puts a dollar value on the previously hidden cost of these migration policies. How high? Like all the other provisions of this legislation, that's up to you: You pays your money and you takes your choice. Only with public policy, there's a very real risk that others will take advantage of your tedium and inattention to take that choice for you.