Conrad’s health care regionalism: wimp-out or Jeffersonian?

Fencesitting Senator Kent Conrad (pale D, N.Dak) gave an interview on health reform to Ezra Klein, blogged June 11). Interestingly, Conrad pushed a regional model for his preferred health insurance co-ops:

I offered the G-11 group three models. One is state-based, so every state has one. I don’t think that works frankly. In states like mine, the pool wouldn’t be big enough. The second would be a national entity. That’s probably too limiting as well.

What you probably need is a national entity with state affiliates, and the further flexibility so those states can have regional pools. So in our part of the country, you might have North Dakota, South Dakota, Montana, and Wyoming go together. Out east you might have Maine, Vermont, and New Hampshire together. We’re consulting with experts tomorrow about that.

The co-op idea is of course just wimping out and progressives have to fight this “compromise”. Universal coverage requires compulsion through law – on employers, citizens, and taxpayers. An “iron rice bowl” as the Chinese say.

But what about Conrad’s regionalism? You could apply it to Obama’s genuinely public, iron rice-bowl, health exchanges. Give the governors a say in appointing the boards, and the agencies some real autonomy within a legislated mission.

There’s a big divide between European and American progressives today in their default biases for and against decentralisation. The advance of progressive causes in America has depended for 150 years on federal – that is, central – power ever since the Civil War and the incomplete victory of the North over Southern reaction. Civil and social rights are still the unfinished business of Reconstruction. Most European leftists are Jeffersonian: the national state is the fount of reaction, repression, and war, so decentralisation and federalism are a Good Thing, like international and supranational organisations, because they create a countervailing power. It’s no accident that the enlightened Allied proconsuls of defeated Nazi Germany endowed its successor with a federal constitution, and that it was Tony Blair not Margaret Thatcher who devolved power to Scotland and Wales. So instinctively I’m more sympathetic than my fellow RBC bloggers to regional solutions. What of the more pragmatic arguments?

There clearly are diseconomies of scale that count against giant national structures in the USA. The VA is generally thought to work better than the much bigger Medicare and Medicaid; the English NHS to be unresponsive. A federal (in European terminology; i.e. decentralised) approach would create structures on a more human scale, and allow competitive innovation. It’s also clear that the 51 existing US states vary too widely in population to offer a sensible basis, and as Conrad says you need to regroup the smaller ones. The Red state groupings will move more slowly, and federal pressure may be needed to make them do their job. If that’s so terrible, why have a federal constitution at all?

I part company with Conrad over the minimum size of pool. He thinks 500k is enough, but then he’s thinking of nice, genteel little organizations than just reimburse and don’t threaten any vested interests. What’s needed are well-fanged organisations that can credibly threaten to set up their own hospitals, labs and clinics if the existing providers won’t cut their fees. (The hardball negotiations with Big Pharma have to be national in any scheme). For now, I’ll stick with my first cut of a 3m minimum pool size – the NHS population of Wales. With a guessed 25% market share, this translates into regions with at least 12m population. Here’s a map I doodled last July that shows that this criterion is feasible:

My doodle certainly makes more sense than the ludicrous pseudo-regional map the Bush Administration created for Medicare Advantage, which allow Louisiana and Colorado to stay as regions (here, page 9).