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Mike Lux

Mike Lux

Posted: August 27, 2009 04:22 PM

The "We Can Do Health Reform Without Taking on the Insurance Industry" Argument


There are a lot of folks in the conventional wisdom, establishment-oriented Democratic circles that are trying the sell the argument that reform without a public option is still big, important, transformational health care reform. I totally get why they are doing it, and even have some sympathy for what they are trying to achieve: worried that we can't get a public option bill out of the Senate, they are scrambling to make it seem like whatever passes isn't a failure or disappointment.

The latest example is Third Way's Roll Call op-ed, "Don't Pass on the 'Next New Deal'". The folks at Third Way know how to make an argument -- and what they say sounds reasonable enough -- that if we regulate insurers to stop the worst things about our current system, that will still be a big improvement in health insurance rules.

What I fear instead is another bill like Kennedy-Kassebaum which, as I have written before, was supposed to solve some of the same insurance problems like people losing their insurance when they switched jobs, or being deprived for pre-existing conditions -- all of which continues to happen.

Another bad outcome would be that we get something like the Massachusetts health plan, which passed with a lot of hype a few years ago. It's not working very well, though, as way too many people can't afford to sign up for coverage, and the costs are quickly spiraling out of control.

These two pieces of legislation are failing because of the same problem: neither one took on the power of the insurance industry. These two bills, both passed with great fanfare in the thoroughly bipartisan fashion, are not working because they provide no check on insurance industry power, no competition and no reason for insurers to control their costs -- which, by the way, is exactly why they passed so easily with such big bipartisan support.

Remember, insurance companies are granted exemption from anti-trust laws by the McCarran-Ferguson Act. A very small number of them have overwhelmingly market power in huge parts of the country. Their rates are unregulated by the federal government. And they have enormous political power to go along with their massive market power.

What my friends at Third Way don't mention is that the insurance industry has happily signed off on all the regulatory changes mentioned above, just as they supported Kennedy-Kassebaum and the Massachusetts health bill. They know that with all the market and political power they have, without anti-trust or federal rate regulation to worry about, without competition from a public option, they can raise rates as much as they want and probably write loopholes into the regulations that they agreed to so that they will be easier to slide around.

This is the simple fact that has made progressives in the House draw a line in the sand in terms of keeping a public option in the final bill: without the public option check on private insurance, there will be no check on insurance company power to set whatever rates and rules they want to, and health reform will not work. A bill with no check on insurance company power, with no competition for insurers, will drive health care prices higher and will fail to solve the real problems we have in how insurance companies treat people.

So don't give up on a health care reform bill that keeps insurance companies honest, my friends at Third Way and my other friends in the DC establishment. In spite of all the doom and gloom of the conventional wisdom spinners, we have a path to victory, as long as we don't give up and decide we don't have the courage to do what needs to be done and take on the insurance industry. If we do what the President wants, and have competition and choice so that we keep them honest, we really will have accomplished something that can be compared to Medicare and Social Security.

 
 
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BartRoberts
Vita canis, tum mors.
02:10 PM on 08/28/2009
The "health" insurance company executives are frightened that they might have to actually go out and make an honest living if we pass universal healthcare in this country. Here's why. If you take the cost of Obamacare for ten years at one trillion dollars and divide it by ten for each of the ten years, then divide it by the number of workers in this country (I heard 170,000,000) and then divide that by the number of days in a year, 365, the cost per worker per day for ten years works out to a little over $1.60 per day.

Now, if you consider that a basic health plan costs a family of four on average $12,000 year, then you'll understand why the "health" insurance companies have their knickers all in a knot. Their making fists full of money leeching off of the American public.

Americans need to see the breakdown of these numbers. Additionally, it would be cheaper for businesses other than those in the "health" insurance industry not to have to be bled dry offering their employees health insurance as a benefit.
04:12 PM on 08/29/2009
Crazy. I honestly didn't believe you, but here's a source:

http://www.usnews.com/articles/opinion/2009/04/03/average-family-healthcare-premiums-jump-more-than-25-percent-since-2004.html

This is from a survey by the Kaiser foundation of employer provided health care plans. On average, plans cost $12K or so, but employees only contribute $3K. I'm not sure characterizing the full value of the plan as a cost to the family is accurate. The family only sees a little under $300 a month going out of their paycheck.

The $1.60 a day seems like a steal. However, it would be in addition to the $300 a month we are already spending. $48 (1.60*30) extra a month is a 15% increase in the average family's out of pocket health care expenses.

Actually, if you look at it on a monthly basis, $50 a month for the next 10 years sounds pretty hefty too. I guess the bottom line is, $1 trillion is a lot of money no matter how you break it down.
09:16 AM on 08/28/2009
Citing the McCarran-Ferguson Act is a canard that's been used to support the public option as the only way to provide competition to regional monopolies.

The operative phrase in the act "as long as states regulate"; if the federal government would develop a governing template of rules for insurance providers that eliminates the 50 individual states worth of onerous disparate mandates it would open up the U.S. to interstate commerce for healthcare providing plenty of competition, similar to what was done with interstate banking. The bigger point is that this act can be overhauled with legislative support, that's why it's a canard to hold it up as inhibiting competition.

The essence of the act states:
The McCarran-Ferguson Act does not itself regulate insurance, nor does it mandate that states regulate insurance. However, it does empower Congress to pass laws in the future that will have the effect of regulating the "business of insurance." However, federal acts that do not expressly purport to regulate the "business of insurance" will not preempt state laws or regulations that regulate the "business of insurance." The Act also provides that federal anti-trust laws will not apply to the "business of insurance" as long as the state regulates in that area.
08:58 AM on 08/28/2009
Amen! No "reform" that keeps control of our healthcare in the hands of the PROFIT TAKING PAPER PUSHERS will succeed.
And we mustn't be fooled by the pols who tell us "well, the insurance companies won't be able to cherry pick or deny coverage or retroactively cancel you any more, because we are going to REGULATE them."
WRONG! The PTPP lobby is already gearing up to fight even those regulations, as we see from the WellPoint (Blue Cross) letter writing campaign, in which they say: "· Increasing the premiums of those with private coverage by imposing new mandates and coverage requirements." If they aren't able to stop these regulatory changes, they will wait a year, then threaten imminent bankruptcy and tell the pols that they are "too big too fail" and either the regulations must be thrown out or huge amounts of money thrown at them.
People need to be reminded over and over again that we cannot afford the PROFIT TAKING PAPER PUSHER PROFITS (PTPPP's). We can either pay for corporate profits, fancy office buildings, multi million dollar executive salaries, advertising, private investigators to find a reason to retroactively cancel your policy when you become seriously ill and have a large claim - or we can use that money to pay doctors, nurses, physical therapists, etc.
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castlerider
"A man's home is his castle"
07:58 AM on 08/28/2009
" .. the "public option" would be a drain on our economy"

WRONG...

What many fail to see is that government run Healthcare would be transparent and many-sided. It would HAVE to be... Viewed from every side, because you CAN'T LIE about saving a person's life. You CAN'T LIE about the best medical treatments, & you CAN'T LIE about the best way to prevent illnesses...

To say the government can't run it is wrong, un-American and seriously unpatriotic.

It's such a tired, worn down & useless argument trying to defend the private insurance companies.

They've FAILED. Over-run with greed, they've brought us and our economy to its knees. They don't deserve to remain as industry leaders.
In our present system, insurers are secretive and neurotically controlling.
It's not hard to see how the transparency of government would save our country Trillions over the long term with health care, but this is what our leaders who believe in it have failed to highlight well. It’s up to us… SO OPEN YOUR EYES! ! !

So -too bad private insurers would likely lay off some of their workforce. Not to worry... Savings for employers and average Americans would increase new and even better jobs elsewhere all over our country. Healthcare wouldn’t be a luxury anymore. It’d be a right. Like it should be.

And yeah, too bad CEO's won't be able to pay themselves 300-400 times what their average employees make. Americans could learn to live without that just fine.
,
09:40 AM on 08/28/2009
The sad part of this argument is that you focus so much on the profit of insurance companies.

I despise some of what the insurance companies do, in that sense we can all have agreement on, and much can be done to right wrongs. However, if you take all of just the profits of the insurance companies it amounts to a small fraction of total healthcare costs, this myopic focus drives too much of the debate pushing wrong headed solutions, aka public option.

A middle man is needed as an arbiter of costs, but the only way that costs can go down is with competition among arbiters. The important point is if there's wide and diverse competition then we have the best possible outcome with proper oversight. The government option is doomed to cost more than the "profits" of the insurance companies because of the bureaucracy, bloat, inefficiencies and ham handed effect that the government always brings to the table. The CBO has already weighed in that the costs are way underestimated, and this doesn't factor in the inevitable inefficiencies of government.

Opening up interstate commerce is the only way to go relative to the competition portion of this legislation, private enterprise has to run lean in order to remain profitable, it's even tougher to do with competition.
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castlerider
"A man's home is his castle"
07:43 AM on 08/28/2009
Twilight Druid wrote this:

"Look ,most people without insurance now lost jobs due to the economy brought about by Bush waging war in one country that had nothing to do with 9/11 while claiming it did. So basically the terrorists, through Bush, managed to continue hurting our nation by running up the war debt. So giving people healthcare is really fighting terrorism at this point. If you oppose giving americans healthcare then you support the terrorists.

...You are either with us or against us."

I agree 100%

Right on, Druid.
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floridafun
07:11 AM on 08/28/2009
if every senate member who believes so strongly that public healthcare will destroy private insurance and would ration care and bankrupt america...would come together in the next couple weeks and drop the subsidized public option healthcare they now have as fed employees, i would say they really believe in their reasons for being against public option healthcare for all.
01:17 PM on 08/28/2009
don't hold your breath. they won't even let us get the same policies at competitive prices, or in fact at all. they know a good thing.

The best congress money can buy!
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eclub
яεsτяιcτєd
03:59 AM on 08/28/2009
How come the Government of United States can insure every single bank depositor through FDIC up to $250,000.00 per account, and regulate the banks, charge them for the insurance, and the Government cannot offer insurance for Health Care to US Residents, and also regulate the Insurance Companies, Doctors, HealthCare Providers, and everyone involved in this sector?

Why can't we have an FHIC (Federal Health Insurance Corporation) just like we have the FDIC??
10:05 AM on 08/28/2009
Good question.
07:33 PM on 08/28/2009
My guess is that the $100K cap (temporarily raised to $250K until 2013) has something to do with it. Also--this year being a large outlier--very few banks actually go bankrupt in a given year, which means actual claims are not that common.

http://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation
12:15 AM on 08/28/2009
If doctors profit from every procedure they can bill for, what difference would a public plan make? Public insurance plans will pay for unnecessary services just as well as private ones do.

This is a tough one. When a doctor recommends a test, we feel good because we feel like the doctors are doing everything they can for us. We don't ever stop to ask if they have an ownership interest in the facility they are sending us to. Nor do we go out of our way to find out what the "average" response to our ailment is, or question the treatment recommendation. We're not doctors after all.

Interestingly, we'll even get down right pissed off if our insurance company doesn't pay for these unnecessary services, because we'll feel like they are just padding their profits at our expense.

So costs go up. And up. And up.

It's a complicated issue, but as long as there is an unchecked profit motive for doctors, eliminating insurance company (though a popular target, they are only middle men) profits, isn't going to change the trajectory of costs.

Let's sideline the discussion of public v. private. It's moot until we've addressed the cost drivers.
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WorkingClass
12:10 AM on 08/28/2009
The insurance companies must be destroyed. Its them or us.
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ClarcKing
Citizen
11:55 PM on 08/27/2009
A good article, thanks. Insurance companies should not be delivering healthcare services at all. Conjugating a person's health and /or life with a profit motivated insurance company is a corruption of the intention and purpose of healthcare. I have yet to see anything written about the Hill-Burton Act, the general hospital system. A Hill-Burton general hospital system/standard with single payer feature is an option that should be discussed.
09:36 PM on 08/27/2009
It's truly laughable if the Dems think you can take on healthcare reform, without taking on the insurance rackets. That's like saying you can take on organized crime without taking on the Mafia. I see no existential difference between the two organizations. Both are in the business of killing people, either actively or second hand. And both are all about money firstly and foremostly. The main differences are one is legal, the other isn't, but one is honest about it's unconcern for human life while the other puts on a front about it.
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floridafun
07:11 AM on 08/28/2009
if every senate member who believes so strongly that public healthcare will destroy private insurance and would ration care and bankrupt america...would come together in the next couple weeks and drop the subsidized public option healthcare they now have as fed employees, i would say they really believe in their reasons for being against public option healthcare for all.
11:43 AM on 08/28/2009
Have to object to this:

The mafia's income is not directly proportionate to the number of people it kills; in fact, the fewer people they need to kill, the better it is for their business.

An insurance company, now, its profits go UP the more people it kills.

Which is why insurance companies kill something like 50 people a day; the mafia, a lot fewer.
08:39 PM on 08/28/2009
You're serious aren't you?

Since you've got the stats, for every person the insurance industry "kills" how many people could then receive the life saving treatments they needed because someone in the industry made a tough, end-of-life decision? There is only so much to go around after all and health care is not cheap.

Out of curiosity, what do you think the government plan would do with those same people? What if the government plan did exactly the same thing? Would you leave? Enjoy the freedom to move now; once the public plan's up and running, it will be the only plan before long. Oh, and the bonus...health care will still cost too much.
08:53 PM on 08/27/2009
You can pay me $50 to be cured now or $10 a month to be on a treatment that will get rid of your symptoms. Which one do I want you to choose?
You don't have an MRI machine, and I do. You need to use it to see if your tumor is malignant. How much is a fair price for me to charge so that you can get this vital information?
You need a heart surgery, and I'm the only one in town that can do it. How much is a fair price to save your life? How about if I just bill you later?
Obviously, doctors have to be compensated, and equipment must be purchased. But until the profit motive is taken out, there will be no incentive to get people healthy and keep them that way. If it is necessary to do Health Care without making a profit it will force us to find simple, cheap remedies that work--and most of them probably wont have any of the ghastly side-effects of most pharmaceuticals.
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JuniperSunshine
Libertarian Homeschooling Mom
08:23 PM on 08/27/2009
Making it mandatory to buy something does not generally LOWER the prices! This is simple enough for a 10 year old to understand. For some reason, all of Massachusetts was surprised to learn that if people are forced to buy something, you can charge anything you like and treat them poorly - all without losing customers?

SINGLE PAYER IS THE WAY!!!!
06:51 PM on 08/27/2009
If you are concerned about receiving "real" health care reform in this country, please take the time to watch a video on our current system. The video was created by Oregon physicians who are advocating for the single-payer option. The video is very informative and helped me to gain a better understanding of various aspect of health care, as we know now it.

https://www.madashelldoctorstour.com/Mad_as_Hell_Video.html

These Oregon physicians are in the process of organizing a caravan designed to inform the public about the benefits of the single-payer option. At last count they will be stopping in approximately 23 states, on their way to demonstrate in Washington. They need volunteers and our support. Please spread the word.
07:35 PM on 08/27/2009
Good Stuff, creolechild!

And the information is coming from probably the only true friends we as patients have in America.

Thanks for the clip.

Remember - Yes We Can! - AND Yes We MUST! make REAL health care reform NOW!
06:13 PM on 08/27/2009
A bill that will allow biz as usual but sport the label of "Reform" is what we will get if we decide to sit on our hands and trust our politicos to do what is in the best interest of America. We must keep up the pressure!
10:15 AM on 08/28/2009
It's not simply business as usual when they are talking about mandating that all US citizens purchase worthless policies which offer no true protection. It's outright highway robbery. And if we stand back and allow it pass, because they've worn us down...it's criminal.