03/18/2010 05:12 am ET Updated May 25, 2011

Still Worth Passing

In my view, the bills still in play are still worth passing - even given their obvious weaknesses. Why? Because this entire health care reform episode has been not an exercise in policy analysis, but rather a lesson in politics. The tipoff came right at the start because the plans being offered depended on competition among private insurers to achieve the goals of reform. That was a weak strategy to begin with because insurers have only 3 ways to differentiate themselves from competitors: (1) availability - who they offer their coverage to (preferably, young and healthy people); (2) quality - what they cover and the terms of coverage; and (3) price. In order to keep prices low, they can only adjust the other two; and since we want everyone to have insurance that covers all the services they need, competing insurers don't have much wiggle room. As it has played out, the main way they expect to keep down their costs is with policies that require substantial out-of-pocket spending by patients. One likely result of the new law is the creation of a whole new generation of under-insured.

Instead, insurers could use the terms-of-coverage dimension (#2) to create staff - or group-model HMOs to provide good care at reasonable costs, but that is much too hard and the outcome is too uncertain for them. A strong public option might have forced rational firms that wanted to play to create those kinds of plans, but of course, it has been weakened almost beyond recognition.

The only way to overcome the political influence of the insurers that led to this situation is with a strong public opinion surge.

To determine whether the current bills still merit support, consider what they might accomplish - both substantively and politically. First, 30 million or more Americans who did not already have it will be able to obtain some type of health insurance. Even with the limitations of those policies, that is a major accomplishment. In my view, that is the main substantive reason to continue to support this reform effort.

The remaining benefits are primarily political. First, given what has played out over the last 6 months, not to mention the history of the Clinton episode, the fact that passage of a bill is possible this late in the game is a huge accomplishment. It should not be squandered because of the bill's weaknesses for several reasons, all of which relate to politics.

The only way a better bill will ever become law will be if the public, which after all stands to gain the most, can be mobilized politically. That is always tough to do because their interest in health insurance and health care is intermittent and it is hard to organize them around it - especially in a recession in which keeping or getting jobs is the most critical issue. But with the reforms now being considered, their interest becomes much more salient in two ways:

One is that having 30 million more Americans who owe their health insurance to a public sector requirement that they buy coverage and provides a federal subsidy to help them afford it may change the politics of efforts to perfect the new program. Imagine what people with limited funds who are forced to buy a policy that leaves uncovered 30% or 40% of their medical bills will feel like when they discover they can't afford to use the services they need because of the out-of-pocket costs. They are likely to be upset, not at their employers or the insurers, but at the government that makes them buy such an inferior product (because it is all they can afford). So, they become potential advocates for improving the program. They may even be upset enough to help get improvements on the agenda sooner rather than later.

Another potential political benefit may come from adding large numbers of 55-64 year olds to the Medicare roles. Add them to the powerful Medicare-support lobby organized by AARP and others.

Third, having a public option on the books, even a weak one, is also good. It will be easier to improve an entity that already exists than to create something from scratch.

In the end, the game is a political one, and while the insurers and other special interests tend to have the upper hand, the work I did on my new book on the health care system, the last third of which is about the politics of reform, (Still Broken, Stanford Press, spring 2010) led me to conclude that it is possible to beat them with a carefully designed, multi-pronged, relentlessly pursued political strategy. The changed political landscape created by a new law that includes the elements now being debated, will bring us a few steps closer to more satisfactory reform.