For people, like, well, me, who think that the health insurance exchanges have a real shot at lowering health-care costs throughout the system, the graph above is difficult. For conservatives who believe that the key to constraining health-care costs is to encourage competition between insurers and give individuals the opportunity to choose, the graph above is difficult. Because what the graph above shows is that neither of those strategies has worked terribly well, at least as of yet.To believe something in spite of evidence to the contrary is what we call blind faith. This is not the first time evidence has been published showing that exchanges will not work at reducing cost. If this new piece of evidence does not convince Ezra Klein that his theory about health care exchanges without a public option reducing cost is wrong, I don't know what will.
It seems his support for them is based on faith, and faith can't be changed with logic. I suspect the only hope there is that he will convert to acknowledging a robust public option is what is most important to controlling costs, will only come from a moment of pure blinding revelation. Someone should book him a ticket to Damascus.
On the other hand, I've never put much stock in the health care exchanges as being able to drive down cost on their own. There has never really been the evidence to support that. Whether it is the Federal Employee Health Benefits Programs, the California Public Employees' Retirement System, or state-base purchasing co-ops, health care exchanges just do not have a strong track record. When looking at the matter, exchanges just did not seem like the answer to the issue of cost.
What does have a strong record of cost control? Medicare. Medicare rates have raisen much slower than the cost of insurance or the FEHB program or for employer-provided insurance. That is the main argument for a strong public option.
The CBO stated a robust public option would have premiums roughly 10% cheaper than typical private insurance companies. The CMS concluded a robust public option could provide health insurance for 18% less than private insurance companies. It is for these reasons that I and others have concluded a robust public option similar to Medicare is critical for reducing health care costs.
There is an argument based on facts that a robust public option would bring down cost for average Americans. There is another argument based on a general faith in the markets, and contradicted by facts, that competition among private insurance companies on an exchange without a public option would bring down cost. I don't support a public option based on Medicare (and oppose creating an exchange without a public option) for ideological reasons--I support it because there is strong evidence that it would work to extend coverage to more Americans and succeed in "bending the cost curve" in a way that these other proposals would not.