An Alternative to the Public Option I Could Live With
The folks who read my blog posts might be surprised to learn that there is an alternative to the public option I could live with (besides single-payer, of course, that being my preferred option from the beginning). I have been an advocate for a very hard line on the public option, as I discussed here yesterday. But there is one other alternative I would feel okay about, and Bob Creamer outlines it today in his great post, Three Reasons Why a Strong Public Option is Likely to Be Part of Health Insurance Reform. Here's the part of Bob's post I'm referring to:
Once everyone is required to buy insurance, the companies can have a field day raising prices and profits using the government to guarantee they are paid -- either through subsidies or the imposition of fines. You can see why, from an insurance company perspective, this would be a great deal.But from the point of view of the taxpayers -- and the insurance ratepayers -- it would be a disaster. It would be like giving the insurance companies a license to take your money -- with no regulation -- all enforced by government edict.
This, of course, is basically what happened with the prescription drug benefit -- Medicare Part D. But there is a big political difference. A huge percentage of the money used to pay the insurance and drug companies in Medicare Part D comes from the taxpayers (or deficits). Most of the money that will go to pay for health insurance in a new system will come from ratepayers -- individuals and companies who will feel the sting of rate increases directly.
What politician in his right mind would pass a law that requires individuals and businesses to buy products from companies who can then charge whatever the traffic will bear -- especially in an industry where premiums have increased three times faster than wages, and profits keep heading skyward even in the worst recession in 60 years? Once government requires you to purchase a product, it has to provide some means to assure that the price is fair.There are only two real practical solutions to this problem. On the one hand, you could set up a public health insurance option that does not have the same incentives to increase profit or CEO salaries and would compete against the private insurance companies and keep them honest. That is what President Obama has proposed. Or you could regulate health insurance rates.
Now rate regulation is not a crazy idea. It's been done for years in segments of the insurance market at the state level. But if you think the private health insurance industry is fighting tooth and nail to stop a Public option -- wait to see what they would do to stop rate regulation.
So to my esteemed colleagues in the insurance industry, how's this for a compromise: we'll give up the public option but we will regulate health insurance rates instead. We will institute a system of strict price and rate controls, just like utilities have to live with where they weren't deregulated. That would do more to cut health care cost increases than any other thing we could do. So what do you think, guys?
This is the amazing irony of this whole debate, as it was by the way of the last one (1993-94). Insurance companies are happy to support universal coverage, but they are dead set against anything that would either control their prices or provide them any real competition or accountability.
This is why so many of us who know the health care issue are so determined to not give in on demanding a public option. Look, I am a pragmatist and an Obama loyalist. I want this president to be successful, and having fought a searingly painful fight in the Clinton health care war room a generation ago, I want health care form like I would want a drink of cold water in the middle of a hot desert. But without either a public option, or the kind of strong rate regulation Creamer is talking about, health care reform is a nightmare for the public and for the federal budget. It is not "the good" in the sentence "Don't let the perfect be the enemy of the good," it is a plain and simple disaster. That is why I don't agree with another good friend and ally of mine, Paul Begala, in his op-ed comparing health care reform and Social Security. I respect the argument he is making, and if it were another issue less fundamental to whether the whole thing works, I might agree. But keeping the insurance companies honest, as Barack Obama likes to put it, is too central to everything. That's only possible with either tough rate regulation or a public plan, because this co-op thing is a jumbled mess that clearly is a non-starter.
Health care is something everyone has to deal with in their and their families' lives and it is at the heart of our federal deficit problem. If the Democrats don't get it (at least mostly) right, we are done as a governing party in spite of all the other demographic and political advantages we have. It's time to face the music and tame the insurance industry dragon.
On an action note, my good friends Howie Klein, Jane Hamsher, Darcy Burner and the Atkins brothers, along with DFA, have put together an action to thank progressive Democrats for standing firm on the public option. Thank them here, and donate to your favorite one or five here. As you can see below, many of our fellow activists who think this is critical have.
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HALF OF WORLD WEALTH --- OWNED BY U.S. RICH
Here we give our rich nobility a powerful military to protect their multinational corporations, now give them 12 trillion of tax payer dollars to bailout their high finance, and they won't even give up one trillion of profit over ten years to give us healthcare.
The height of ingratitude if you ask me, surely we should all go on strike. Only thing is we must be careful not to gather in one area, for bless their darling hearts they would nuke us for sure.
Or, here's another alternative: since free-market conservatives and libertarians are so freakin' concerned about socialism, and government competing with private industry, why not just have government get out of healthcare completely and stop getting between the sick and the poor and their pursuit of life, liberty and happiness? Everything about healthcare smacks of protectionism, from the insurance industry to hospitals to crooked, lazy and just plain incompetent medical professionals, to a bloated pharmaceutical industry that doesn't even have to compete. Why not just make all drugs legal, foreign and otherwise, don't enforce patents, don't require prescriptions, don't have an FDA, just an FA, don't require a license to practice medicine (imagine the mewling from Ron Paul if a non-obstetrician had set up shop next to him and delivered babies for ten bucks), and let everyone do their own diligent research and make their own choices about the level of care they get? Betcha then "we'd" need the government getting "taking over our healthcare", real quick. Guess who would be screaming the loudest?
Well spoken, so why is it our self-absorbed majority so thought controlled as to think that capitalist medicine must forever be free of regulation? And if the answer is greed, how are we to effect progress with a majority so in love with greed?
Certain individuals have focused their hate on insurance companies, yet they don't think things through. Take away the 10% profit from insurance and you still have over $6,000+ cost per capita for insurance once everyone is included by mandate. This compared to less than $3,000 cost per capita in EU countries. Insurance is a SLIVER of the problem.
So where's the beef? You've got a HUGE mountain to climb to get the cost containment below the EU average. So, what do you want rationed? Why are you so comfortable letting Uncle Sam do the rationing? Or do you think everything will be the same, but that just everyone will be covered under the government run plan? Now that's stupid as Bill Maher might say.
Focusing hate on insurance is pointless and foolhardy. Talent can be used within the insurance industry to supply an important function, being arbiters of costs, they'll do it better than the government can; this in conjunction to using some of the ideas already discussed in this thread, greasing the skids to competition by allowing better interstate commerce and breaking up monopolies with regulated rates.
Funny math aside, I don't necessarily trust the government, as much as I absolutely don't trust the guys with the profit motive who I don't get a vote on.
Much of your argument rests on a bedrock assumption that private industry is ALWAYS more efficient than elected government. Reality is much more complex. One of the necessary conditions for competition to lower consumer costs is consumers having complete information (see Adam Smith). This is very difficult to do with medicine. There's a reason why medical school is really hard. The other big item is that a national government almost always enjoys a pretty big economy of scale over any private enterprise (see Abraham Lincoln). Hence the lower per capita costs of the other developed nations.
The disadvantage of government tends to lie in poor on the spot information. Of course, you get the same thing with any private institution large enough to have an economy of scale. And government can always be done badly, such as when the people running want it to fail, as we've recently witnessed. That doesn't mean the concept is inherently flawed.
"One of the necessary conditions for competition to lower consumer costs is consumers having complete information (see Adam Smith)."
Another would be the willingness to cap profit at a reasonable level and return savings to consumers--and that simply is a matter of faith that only a f00l would embrace in light of the performance of US free market fundamentalists over the last thirty years or so.
The premise is a false one that is never brought to fruition, as the demand for ever increasing returns for shareholders and ever higher bonuses for CEOs completely eliminates any benefits to the consumer.
If there's a cap on the consumer side then the only way insurance could increase profit margin would be negotiating for lower costs, it has nothing to do with faith. Mandates that require disclosure by providers for contracted fees would insure that rates are kept in the open. There's no incentive for a provider to cover for the insurance entities. If insurance is allowed to keep some percent of the negotiated rate and return the remainder to the consumer it's a win win.
It's not complex at all, government never works more efficiently than the private sector. Not even officials in the EU that you hold up as a template would boast that, it's a constant struggle. The cost for inefficiency in private enterprise is going out of business, unless of course government is bailing them out.
And no funny math has been used, simply deduct the amount of money that insurance posts as a profit, keeping in mind that 90% of their revenue is paid out in claims. Subtract this amount from the per capita cost, then add back in the amount it will cost to insure everyone and you're right back at twice EU per capita costs.
The government has no "economy" of scale, it does not run anything without beaurocracy, which comes with it's own exorbitant cost, look at Medicare.
Sorry Mike, but is one of the problems many on the left have with making any progress--LACK OF FOCUS!
There is also the issue of effective bargaining, but if the dems sputter about flipping from this option to the next option in the complete absurdity of appeasing the idiot right, all so that Chocolate Jesus can claim a bi-partisan victory, well then this entire exercise has been pointless, and only serves to show the idiot Right that indeed liberals are as weak and unfocused as they've always believed.
We need to fight FIRE with FIRE, and not another attempt at getting the GOPers to play along.
Lack of focus? Like what has happened to medicare? Medicare has inflated something close to 50,000% since its inception in the late 60's. This is the kind of focus American's don't want. If costs are contained with a balance, using some of the ideas presented on this thread, then there's no "weasel" room for a different administration to change without the ire of constituents.
Lobbyists have power, but not as much as the weight of voters that know when something is working. Americans know how the government runs things, they want change, but they want to "believe in" it too. This vitriolic "idiot right" nonsense will get you nowhere. There's a myopic goal from many on the far left for single payer, these individuals generally know nothing about running a business, which is what health care is whether you like the notion or not. It's just not going to fly.
In the end if cost achievement is attained and everyone is covered then what difference does it make who's ideas are used anyway? Pointing to certain systems that work at varying levels in the EU, that are much smaller in scale than the U.S., is foolhardy. These EU systems have a great deal of reliance on U.S. innovation too that augments what they provide. These are the types of things that aren't factored into the debate.
Germany, France, and the UK are not that much smaller than the US. Less than an order of magnitude almost never produces scaling issues. The EU also produces just as much medical innovation as the US. I think you may be thinking of the old Soviet system.
Where are you getting this 50,000% inflation figure from? Are you talking about overall costs (which expand simply because membership expands) or per capita costs? That 10% profit figure also stinks of statistical manipulation. The most commonly accepted measure is that for-profits spend at least 30% on "administration".
As I stated in a previous post, nothing you have to say on the matter can possibly point towards a solution, as you and your ilk are perpetrators of the problem.
The false argument of a free market/competition model as a solution will fail as it has in every single instance where such has been touted as a solution--it does not work, and worse yet it is besides the point of WHY the US needs UNIVERSAL coverage.
UNTRUE -- UNTRUE -- UNTRUE
(1) "Medicare was inflated" not by government, but by capitalist medicine. Now how in the world can you argue that Medicare inflated medical costs when most doctors say that Medicare pays far to little?
(2) "Lobbyists have power, but not as much as the weight of voters." To the contrary, for lobbyists are all-powerful because voters are disorganized, unorganized and isolated to the point that they have no weight.
(3) "EU systems have a great deal of reliance on U.S. innovation
I think we should have a public option along with price regulations.
Mike--can you address the problem of complexity in health insurance regulation?
Here in Canada, we still have price regulation for a fair number of utilities. In order to allow for public input and due process for the regulated companies, the process of regulation includes hearings in front of a panel.
The process isn't simple, but it does do the job reasonably well.
However, there is a crucial difference between utility regulation and health insurance regulation--the complexity of the goods or services being regulated.
A utility usually offers delivers only one good or service--e
An health insurance company pays for hundreds of different goods and services. Very few of them are a standardized commodity. The cost of each one would have to be considered by the regulator.
If each one had to be reviewed, wouldn't that drive the cost of regulation up, and make the process too cumbersome to work?
I believe this assumption is wrong..."T
• First, by addressing the problem relative to competition, break up monopolies, similar to what was done with Ma Bell.
• Second, level the playing field for interstate commerce by streamlining the rules each of the 50 states have as mandates for health care, substituting these for federal rules. Currently the morass of states rules is onerous for insurance companies to compete, this has created regional monopolies and little competition.
• The develop regulations to be inclusive of all, and everyone must pay for insurance.
• Cap premiums to increase no more than standard inflation.
What this will do is force pricing concessions inward since profit and excess inefficiency can't be forced on the backs of the consumer, instead hospitals and insurance comps (arbiters), are forced to negotiate, let them battle it out. The government can just stand back and be a referee, protecting the consumer. We don't need excessive "panels". Insurance companies have the skills and business acumen to force streamlining the process.
How long will gullible US citizens listen to snake oil salesmen like you? The free market fundamentalist NONSENSE you push as a solution via competition is sham and and a lie and has NEVER produced the results that you nitwits always claim it will.
Believing that competition will provide any solution whatsoever is belief of a f00l who hasn't been paying attention for the last thirty years or so....
BTW, The reason insurance companies play an important role is precisely because of the comment you made:
"If each one had to be reviewed, wouldn't that drive the cost of regulation up, and make the process too cumbersome to work?"
This is also the reason why government running health care will lead to a miserable outcome. Government isn't capable of building anything without layers and layers of bureaucracy that breeds the very inefficiencies through bloat so many are decrying. I guarantee you the money wasted would be more than the 10% margin insurance companies are making. You also end up having individuals making decisions that have never run a business in their lives, and by putting too much authority in panels of "experts" that are opinionated, which cuts off broader debate.
By increasing competition this will allow Insurance companies to do what their best at, acting as arbiters of the system. All this can have proper oversight and eliminate excessive micro management.
From this approach the government could allow test beds of ideas to happen on a state level.
I think treating health care somewhat like a utility has a great deal of merit, although there would need to be enough breathing room to not stymie innovation.
YOU are a pro-insurance shill, and NOTHING you have to say is of any value whatsoever.
Amplifryer,
I do not agree with anything you've said. The private sector has screwed up health insurance so bad that 22,000 people die each year because they cannot afford insurance and do not seek medical care until they're too sick to get better. Then they turn up in an ER and cannot pay their bills.
This is the marvelous job the private sector has accomplished and all of us are absolutely dazzled by its efficiency at killing people.
You spew nonsense.
Price controls will remain in effect only as long as we avoid electing people like George Bush.
The best case scenario for the Republican party is to whittle the health care plan down to an unworkable collection of costly half-measures that squeaks by over their collective opposition.
Look at the terrible amounts of money the health insurance executives are putting in their pockets every day by overpricing the premiums to their policy holders, and preventing a person from changing policies because of pre-existing conditions.
What we need is a single-payer system to run these guys completely out of business. A public option is better than nothing.
The problem with health insurance industry price regulation is, who appoints the regulators and where do the regulators come from? If the regulators are former higher-ups from Aetna, Blue Cross, so on, would we get realistic regulation?
Pelosi and other Dems who are paying attention know the line in the sand is the public option. Olbermann reported that a minimum of 60 Democratic House members won't be voting for any health care reform legislation that doesn't include a public option, and that number may actually be closer to 100. That's way more than enough votes to kill any bill without a public option.
The GOP reminds me right now of that prissy girl at the club who keeps sending out signals like she's going to hang out with you, but at the end of the evening she goes home alone. Oh, wait, there's another great term for that: c*wK-teez.
right on! - single payer is far simpler, nips the problem in the bud and creates real competition which is the true capitalist way.
Take it back, Mike! The insurance companies will just save their profits by refusing coverage even more.
It's not just that the insurance companies are overcharging; it's that they are cheating people to death too.
We MUST insist on a government-run Public Option, government-run and thus ANSWERABLE to the electorate.
When was the last time the government was answerable to the people? When they handed over trillions to the banks? When they started multiple wars of aggression? When they spied on everyone in direct violation of the limits on their power?
Absolutely, yes, do it. It would not be my preferred path, but totally acceptable. I imagine nobody proposed it because they all assumed, like me, that it would be fought against even harder than a government competitor. If that's not true, then we should think about why.
It seems that the only reason for insurers to prefer regulation over competition is that they expect to be able to weasel out of regulation later, perhaps when a sympathetic President appoints one of their number to head the regulating body. That's absolutely not acceptable, so let's not act to allow it. Any legislation offering this compromise needs to be airtight. Anybody else have a coherent reason not to be skeptical of insurers claiming to be in favor of tighter regulation?
You haven't thought this through, about a sympathetic President allowing insurance to "weasel" out. To weasel out would mean to allow prices to rise which would effect constituents, no matter what party. It wouldn't happen unless there was something set askew that was no benefit to anyone and needed to be remedied. I'm sure some of that would happen in the trial and error of something of this scale.
March on Washington for healthcare reform on Sept. 13th. Pass it along. The people united cannot be defeated.
Here is the problem with your recommendation of price fixing. The cost of providing medical care is not static. Wages for doctors, nurses and other workers change frequently. Costs of living go up. Due to so many new dollars being printed up and used to bid up the prices of goods what cost $4 last year might cost $5 this year. With a rigged system of prices for health care those costs could not be recovered by raising what providers charge the insurance companies of their patients.
Medical care is a business, everyone has to make a living. Doctors won't work for free. If doctors have to pay more in equipment and labor than they get in return for the treatment they will just stop working. Just like if the price of corn was fixed at $1 a bushel and it cost farmers $2 to produce that bushel, there would very quickly be no one growing corn. Price fixing will inevitably lead to shortages of medical care. Unless the fixed price was constantly rising to reflect the actual cost of health care, but then what would be the point of rigging the price in the first place?
I understand what you're saying, but price fixing can be done with inflation allowances in mind. Namely the purpose is to not allow health inflation to outrun general inflation. And fixing wouldn't have to be levied on everything. I obviously wouldn't suggest healthcare workers do anything for free, they should be compensated well. However, if insurance companies only recourse to profits were to be more diligent to how health care dollars were spent it would end up as a win win. The governments role is to watch that things don't go too far and keep the playing field level and competitive.
I don't like the idea of government getting involved, yet something has to happen. Government has a role, just not running the whole enchilada which can only lead to rationing because they can't run a lemonade stand much less heath care. Status quo leads to rationing too.
Bottom line is just that. The industry has to make money or you end up with your mom bringing you chicken soup on your cancerous deathbed.
I'm not sure what the government would do better than private individuals even if the government was entirely well meaning, which I don't think it is (my own opinion, disagree if you want).
The world is finite, so there has to be rationing no matter what.
One thing that could happen without the government getting involved would be for the government to not get involved. Stop subsidizing health care for some. Stop taking our money away from us so that we have less of it to spend on health care. Stop manipulating the industry through regulations and controls and lawsuits.
Its not like we need to look to the government to solve all our problems. We can look to ourselves. It is possible for many people to pay for their own care. Everyone has the ability to take better care of their health so they don't need as much hospital time. Everyone should be more involved with their health care when they get it, understanding their disease and knowing which medicines and tests and surgeries are going to be best for them and which are just a waste of money. There are many many options to consider, not just government take over of everything.
We have rationing now. Based on the employment status and wealth of the patient. Please let's not pretend that we don't.
The insurance industry is OBSOLETE and completely USELESS in regards to healthcare; those who believe otherwise are OBSOLETE to the discussion, and have not care for other human beings whatsoever.
I am sick and tired of we on the Left bending over for you sociopathic people who care for nothing but profit.
March on Washington for Health Care Reform – September13th
pass it on
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