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Observation: A Quick Primer on Health Reform August 2009

A Quick Primer on Health Reform

By Richard P. Nathan
Co-director, the Rockefeller Institute of Government

Richard Nathan

Got two minutes? Here are six terms that define what the health reform debate is about.

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Richard P. Nathan is co-director of The Nelson A. Rockefeller Institute of Government and distinguished professor of political science and public policy at the State University of New York at Albany. Nathan has written and edited books on the implementation of domestic public programs in the United States and on American federalism.

1. Guaranteed issue, which means that everyone can obtain health insurance coverage because there is no ban based on pre-existing conditions.

2. Community rating, which means there is a uniform rate structure for everyone in a geographical region so that costs can be spread out for people who are sick and people who are not.

3. Mandate, which refers to the requirement that everyone in the country must have coverage. Along with community rating, this requirement is viewed as necessary to lower the cost of coverage for everyone.

4. Subsidy, which in this context refers to providing financial assistance to people who can’t afford coverage that is available in their region.

5. Market creation, which refers to building regional coalitions called “exchanges.” (Under Hillary-care, they were called “alliances.”) The purpose of these organizations is to assure that there is competition in the provision of health care, which will assure its availability and also help to lower its cost. This is where the issue of a public plan comes into play; are private and non-profit plans enough, or does a public option also need to be available?

6. Cost control via something like an IMAC. An IMAC is not a big-screen movie. The term refers to the Obama administration’s proposal for an Independent Medicare Advisory Commission that has the power to achieve health care cost reductions, particularly for Medicare. Reimbursement rates for Medicare influence reimbursement rates in all other health insurance programs.

All six parts of the puzzle are hotly controversial and intrinsically complex.

Moreover, if any one of them — or worse than that, two or three of them — isn’t in the mix (or is highly diluted), this will mean that grand planners will be foiled.

Historically, the great strength of the American political system has been its capacity to bargain out competing values, goals and interests, and reach a workable compromise. This time around, at least to this observer, there does not appear to be a workable compromise in view, either for a comprehensive solution or for the more typical next-step, incremental or interim solution.

So there it is. My two minutes are up.


The Nelson A. Rockefeller Institute of Government, the public policy research arm of the State University of New York, conducts fiscal and programmatic research on American state and local governments. It works closely with federal, state, and local government agencies nationally and in New York, and draws on the State University’s rich intellectual resources and on networks of public policy academic experts throughout the country.