What Makes a Compromise Good?

The health care debate is getting to the point where a large number of the important actors involved are starting to lay down their bottom line. Put another way, they are figuring out what constitutes a minimally acceptable compromise. For what it’s worth, I thought I’d throw out what I see as the fundamental criteria for evaluating whether a compromise is good or bad.

The fundamental point to keep in mind is that this health care debate is not the battle of Armageddon, the health care war to end all wars. It is a large fight in a multi-decade long war. So the question isn’t how to get as much as you can now, because you’ll never get another shot. Health care policy–like all politics–is a game with multiple iterations.

If we think of this as a game with multiple iterations, then it becomes clear that you need to evaluate policy change by two criteria–is the change you’re getting now going to be politically sustainable (that is, will you be able to hold whatever territory you’re gaining) and politically generative (will the changes you’re making now make your side comparatively stronger when the game is played again in the future).

My gut tells me that, when judged by this standard, the real bottom line in health care is the structure of the exchanges, rather than the amount of subsidy or the presence or absence of a public plan. It is relatively easy to imagine incrementally adding to the level of subsidy each year, much as Henry Waxman did with Medicaid expansion in the 80s and 90s. That costs money, but there isn’t a huge amount of built-in organized opposition. So if you’re thinking about living to fight another day, leave the easiest battle for later. In addition, expanding the subsidies is the politics of credit claiming–members of Congress will happily vote to put more money in their middle-class constituents pockets, and the employee mandate will probably put pressure on them to do so.

It is the exchange, however, which seems to me like the thing that you really have to nail right now. That’s true for policy reasons (having to do with cost control), but most important, for my purposes, for political reasons. Consider for comparison purposes the politics of airline deregulation in the 1970s (I’m drawing here on Eric Patashnik’s excellent Reforms at Risk). The strongest opponents of deregulation were the weakest airlines, who most needed regulated prices and routes to stay in business. They fought tooth and nail, and lost. So then the issue was, would deregulation stick? Well, the first thing that happened when you deregulated prices and routes was that the weakest airlines were pushed to the wall, into bankruptcy. Critically, that meant that they were no longer around to fight to undo deregulation–the policy itself shifted the constellation of interests in a way that was supportive of the new status quo.

So the question for health care reform, in my view, is what is the component of the final deal with the greatest capacity to weaken the anti-reform coalition in the future? In my judgment, that’s the structure of the exchanges. The stronger (in the sense of being national and mandatory for the largest number of employers) the exchange is, the more pressure you put on the more marginal, bottom-feeding insurers who depend upon creaming the best risks, or charging huge sums to those who can’t get insurance through large group plans. A strong exchange that gives the upper hand to the largest insurers (whose cost structure is also superior to the smaller firms) will almost certainly kill off a large part of the health insurance industry. Those health insurance lobby groups in Washington will have a smaller constituency, and won’t have the same need to balance the interests of their larger and smaller members. The smaller insurance firms won’t be around to invest (both at the state and federal level) their money in political campaigns.

It may be the case that a public plan will have some of the same effects. But I’m more confident that a properly structured exchange will do so, with less of a risk that the public plan will simply become the dumping ground for the worst risks (thereby driving up budgetary costs). I may be wrong, but where advocates of health care reform are concerned, I think that this is the question they should be asking themselves–if there is a political trade-off between the structure of the exchange and a (already pretty watered-down) public plan, which will get reformers the most bang for the buck where the next battle is concerned.

Author: Steven M. Teles

Steven Teles is a Visiting Fellow at the Yale Center for the Study of American Politics. He is the author of Whose Welfare? AFDC and Elite Politics (University Press of Kansas), and co-editor of Ethnicity, Social Mobility and Public Policy (Cambridge). He is currently completing a book on the evolution of the conservative legal movement, co-editing a book on conservatism and American Political Development, and beginning a project on integrating political analysis into policy analysis. He has also written journal articles and book chapters on international free market think tanks, normative issues in policy analysis, pensions and affirmative action policy in Britain, US-China policy and federalism. He has taught at Brandeis, Boston University, Holy Cross, and Hamilton colleges, and been a research fellow at Harvard, Princeton and the University of London.