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Facing Down the Private Insurance Industry
Despite budget pressures, President Obama has not backed off his commitment to universal healthcare reform. But the devil is in the details. And if he is not careful he could end up with a reform worse than nothing.
A crucial question is whether the law will include a public, Medicare-style plan. This public plan could be used by people who otherwise lack good insurance, or by employers who conclude that the public plan is a better deal for themselves and their workers.
The public plan would be the gold standard of both good coverage and cost-containment. Without the public option, a system to cover everyone by relying on the existing private insurance industry will realize few cost savings. The result would be increased pressures over time to cut care and shift out-of-pocket costs from insurers to consumers.
The administration's projections have relied heavily on the supposed savings of better use of computerized medical records. However, absent a single unified system, or a strong public option, better computerization will not realize major savings.
The US healthcare system is the most expensive and least cost-effective in the advanced world mainly because private insurance companies waste about 25 cents on the dollar on claims, profits, administration, and marketing. They have no serious financial incentives to emphasize prevention, and every possible incentive to avoid sick people. Doctors and hospitals, meanwhile, make their money from increasing costs.
Other countries get better results at lower cost because a universal system naturally emphasizes wellness and prevention, and spends its money on the most cost-effective treatments, not the most expensive ones. Every nation faces similar inflationary pressures because of advances in technology and an aging population; but other advanced countries, using single-payer systems, do a fine job of covering everyone for 10 percent of gross domestic product or less, while we spend upwards of 15 percent and leave out nearly 50 million souls and under-insure tens of millions more.
Obama's plan is a variant of an astute strategy first proposed by the political scientist Jacob Hacker as a solution to two political obstacles to health reform. First, how do you enlist the uninsured and the anxious insured in the same coalition? Second, how do you build momentum for a single-payer system recognizing that there are not the votes to legislate it all at once?
Hacker's insight was that if the government offered a public insurance option, people who liked their present private insurance could keep it, while others could elect the public plan. Coalition problem solved. And the superior efficiencies of the public plan would gradually overtake the rival private plans. Momentum problem solved.
But Hacker neglected one key political detail - the immense power of the private insurance industry. Not surprisingly, the industry's stance is that any public plan must compete on disadvantageous terms. And most Republicans oppose a public plan outright.
Obama, the great conciliator, has chosen to work with the private insurance industry rather than targeting it as the primary obstacle to meaningful health reform. Periodic leaks from the White House suggest that if push came to shove, Obama would ditch the public plan in order to get a bill through Congress.
Senator Max Baucus of Montana, chair of the Senate Finance Committee, is no enthusiast of a public plan. After the New York Times last week reported Baucus sparring with Senator Ted Kennedy on whether to include a public plan, the two senators quickly cobbled together a statement insisting they were really in harmony.
However, in the push to get legislation in the face of fierce industry and Republican opposition, a good public plan could well be tossed overboard. That would leave a legacy of expanded coverage, but a time bomb of exploding costs, underinsurance, and a squeeze on actual care.
I would much rather see Obama battling for public health insurance, making it clear to Americans that the obstacle to real reform is the private health insurance industry. That, however, is not the president we have.
We'll see what kind of public plan, if any, survives.
- Posted in
29 Comments so far
Show AllThe obstacle to real reform is that our elected officials answer to the HMO's, big pharma and Wall Street. The reforms that they are pushing are being channeled to Obama from Hitlers grave. Now, like in Nazi Germany, we are in an economic Depression and the few crumbs left from the pie will be rationed out according to new computer charts that will determine whether or not "your life is worthy to be lived". If you are detemined to be terminally ill, the chart will notify your Dr. that it is "too expensive" to keep you alive and you will be denied treatment.
This is the true nature of the "reform" about to be shoved down our throats with a good dose of sugar from the Nazi administration and media.
Health Care is an oxymoron.
Conventional medical care is sickness care, not health care. Changing the way it's paid for won't make it any safer either, we need to reform the drug companies and conventional care to improve the health of our citizens.
What is it about the US that the population don't understand that they are entitled to a 'Public Health' system. Look at any measure of public health, infant mortality, obesity, etc., in the US and you will find it near the bottom of industrialised countries. Now, what don't we understand about the efficacy of the current system.
I have single payer (government run) health insurance. As a 13 year old, my son was diagnosed with restrictive cardiomyopathy - basically the bottom half of his heart was not functioning properly. He was monitored for another year, ECGs’ echocardiograms, exercise stress tests, etc. His cardiologist, Head of Paediatric Cardiology, recommended and then asked him if he wanted a heart transplant. He didn’t hesitate to say ‘yes.’ A year later he had a transplant and now another year later he is the picture of good health and a very active teenager.
At no point, was insurance nor was our ability to pay discussed, nor was our insurance cut off or limited by a co-pay.
A fairly conservative estimate of his care during that period would $1 million.
Now can some U.S. resident explain to me, slowly, the benefits of the U.S. ‘health care system.’ BTW: my wife is a US citizen and there is not a snowball’s chance in hell that she would ever return.
Good luck.
If we are silent, even stones cry out.
spinwing
What just happened? I had just finished reading a total 18 posted comments, reloaded the article for any that might have arrived while reading and now there is only two. Did the interesting discussion thread for this piece just get censored or something?
Real reform wouldn't put a band-aid on the existing system which is bleeding out.
"Medical bills are behind more than 60 percent of U.S. personal bankruptcies..."
"More than 75 percent of these bankrupt families had health insurance but were still overwhelmed by their medical debts."
"Expanding private insurance and calling it health reform will fail to prevent financial catastrophe for hundreds of thousands of Americans every year."
(From "Medical bills underlie 60 percent of U.S. bankruptcies: study. -Reuters)
In the current financial bizarro world were the economy is placed over a barrel so that the rich and influential can be saved from what they did to our economy, over half a million workers are losing their jobs (and their insurance if they had it) every month. Americans are going bankrupt at a rate of 6,000 a day. As fewer people are left employed, the plan to tax them to pay for all those who aren't becomes unworkable. We need the courage and the vision to make real change that will help not only those who are down, but also those left standing.
Increasing the amount of wealth being transferred from the working class to the corporations at an ever incresing rate is the only reform likely to result from this corporate-controlled "health care reform" circus we are witnessing.
I have read a lot of blogs and seen many programs denigrating single payer national health care systems. They seem to come from people that have no personal experience with such systems or a vested interest in the current system. Numerous studies have established that single payer national health care systems cost about half of our system while providing better health care as measured by outcome such as infant mortality, longevity, hospital mistakes etc. My family has personal experience with health care systems in England, Germany, Norway and USA from living in those countries. I would not hesitate one moment to choose any of their systems over ours (USA). It is difficult to understand why systems demonstrated to be better than ours, no matter which criteria you use to compare them, are not seriously considered here in the USA. Are we that misinformed, brainwashed, uneducated, dogmatically tied to capitalist philosophy (that in this case is failing), not as smart as citizens in other countries, or is it that it was not invented by the self-proclaimed greatest nation on earth. Most likely it is that our politicians are bought off by the corporate beneficiaries of the current system.
A viable health care system must also be decoupled from ones place of work like the rest of the world. This will help make our industry more competitive, and encourage employee mobility into new economic activities to help spawn and expand new businesses.
The bottom line, born out by facts and not emotions or dogma, is that single payer national health care systems work better for more people at lower cost than our for profit system.
Most if not nearly all of those negative comments are coming from industry trolls.
q
The European model of single payer was started by the Marshal Plan under the Truman administration. When Truman tried to get that system for USA it was stopped in congress by the usual gang of suspects. It is the same old battle being faught by the same combatants (just a new generation).
It is likely we'll get the worst of all health care "solutions." As long as insurance companies, HMOs, drug companies are allowed at the table for anything other than informational purposes, the consumers (otherwise known as victims) will not be a consideration. No solution that does not take into account the single-payer (or public) option will leave consumers at the mercy of the health "care" industry as we currently know it. No honest or humane system would allow for-profit interests any say in the design of the system. They should be on the same level as consumers -- take what you are given.
The issue of health care reform - like many other Progressive issues - will never be seriously addressed as long as the mainstream media remains under Wall Street's control. Looks at Hollar and MacDonald's article on this subject among today's postings.
q
TO SEE OBAMA WITH ONE OF THOSE PORTABLE COMPUTERS IN HIS HAND WAS LIKE SEEING
AFOX WITH A HEN IN ITS MOUTH! TYPICAL POLITICAL POSTURING WITH NO NOTICABLE RESULT FOR THE AVERAGE AMERICAN CITIZEN. WHEN DO WE GET SOMEONE WHO REALLY
WANTS TO DO SOMETHING FOR SOMEONE OTHER THEN THEMSELVES? THIS RECORDS BS IS AS WEAK AS HIS JUMPSHOT
-Not surprisingly, the industry's stance is that any public plan must compete on disadvantageous terms
Exactly, your (supposedly) government is letting the companies that have most to lose from a superior public plan, create the legislation.
The private insurance companies won't even be happy if doctors tending to patients with public coverage must practice medicine with one arm tied behind their back.
Kuttner is recounting the history of how that proposal got on the table. In the next paragraph he mentions how the private for-profit insurance industry complicates the theory of letting a public plan compete with private.
What is happening under Obama's variant of that plan is that the public part will be starved for funds until more and more doctors and hospitals stop accepting Medicare payment. More public money will be funneled to insurance companies so that the so-called market model can continue to "work." I have yet to hear anyone make a coherent argument for how this magically transforms into universal coverage or how a jobless recovery is going to produce enough taxable income to pay for the increasing numbers needing to be subsidized.
If Single Payer does not pass and some public plan is offered that can not reject members the HMOs will only want to enrol the healthy on whom they can make a buck. That is what for profit insurance companies do. They want, over all else, to make a profit. Removing the healthy from the total will result in very high cost to the public plan. The removal of the insurance companies with their hearty desire for profits, combined with pooling the risk to all of us is what can allow single payer to be successful and we all get quality health care and a big stimulus to our economy.
The statement of the President that many people really like their present doctors and are opposed to the Single Payer option for this reason is not valid. Under Single Payer a person may go to any licensed health care professional. That person may still go to the same doctor---but with the added advantage of being able to choos any other doctor for a second opinion. A person would not be limited to just a doctor on the insurance company's list. Under Single Payer a person may remain with that doctor or may try another doctor. That's a win/win situtation for all of us. It is about choice and heath care. Forget Health Insurance, what we want is good health care.
If how his Admin. has so far handled Wall st. is any guide to how he'll "solve" the Health care situation, I'd say we should all get as much vaseline as we can for what's coming.
We'll get single-payer health care when the health care system collapses from within under the weight of its own beauracracy. When it gets to the point where the conversation is about whether Blue Cross, Aetna and the rest should go into chapter 11, like GM was, or be dissolved then we'll get single-payer but it will have cost more lives and those who don't die due to lack of health coverage will be destitute.
Like Chris Hedges writes:
"These elite cannot solve our problems. They have been trained to find "solutions," such as the trillion-dollar bailout of banks and financial firms, that sustain the system. They will feed the beast until it dies."
http://www.alternet.org/story/111376/?page=entire
It's remarkable to me that Kuttner's idea of "facing down" the insurance industry is a plan that essentially gives the whole game away to them! I know there's a sucker born every minute, but does that have to include American Prospect's resident economics authority?
This pub-op proposal seems to me inherently unworkable; in fact, "public-option" plan is not even a half-step toward single payer: it is it is at best a step sideways, and perhaps a step into the abyss. Here's why:
The advantage of single-payer is in risk pooling--everyone is in the same pool: well, sick, young, old, sick, and poor, thus averaging out the risks and costs of guaranteeing cost-efficient coverage to everyone. In the "public-option plan," everyone is NOT in the same risk pool, as they would be in single payer. In a "pub-op" plan, the oldest, sickest, and poorest would end up in the public plan; the youngest and healthiest--and hence most profitable--cohort would aggressively marketed by the private HMOs.
Hence the whole advantage of single-payer risk pooling would be lost: combining EVERYONE's resources (through a modest tax rather than bloated private premiums) so that the currently healthy 80 percent subsidize the unhealthy 20 percent and thus achieve cost efficiencies not obtainable if these two groups are in separate pools. Moreover, because of these untenable costs, the "pub-op" public plan will have to charge premiums and impose deductibles, just like the private plans--more of the same, notwithstanding the "public" branding. This is the essence of sham reform: game the system so that the public sector founders, thus discrediting the idea of publicly funded health care for another generation. This is precisely what Schumer is urging, and I fear that the Democrats, trundling out their standard excuses of the "blue-dog" contingent and the imperatives of "bipartisanship," will meekly toe that line.
This is not a matter of half a loaf vs. no loaf--any public-option plan that emerges from House-Senate conference will inevitably be no loaf; in fact, even the best possible public-option plan will be essentially no loaf, for the reasons stated above: mainly, the untenable costs incurred because of lack of risk pooling.
The only real reason for pushing pub-op is to mollify a key portion of the Democrats' campaign donor base--Big Pharma and the HMOs. Let's not join Kuttner in the HMOs' sucker contingent. We need to say, "Single payer Medicare for all . . . or NO DEAL! We stay in the streets until we win REAL REFORM, not another corporate liberal sham/flim-flam."
While I am a huge fan and supporter of single payer, I do not believe that the public option will result in the two pools you mentioned.
Employers, especially small business, are being squeezed out of coverage, not because they are the "oldest, sickest, and poorest," but because one of their employees is either older or sicker, and as a result, the rest of the group suffers. In fact, there are no discounts associated with size of group until the group reaches 200 or so employees, while the average small business employs less than ten full timers.
Another reason why your pool segments may not develop is that the recently unemployed are going without insurance because they cannot pay their Cobra. A public plan will undoubtedly attract these people, and I surmise they may not be any sicker than the general population. The same with those who work as contract employees or work part time because they cannot get full time jobs - all of which do not have access to insurance at a reasonable cost.
Another possibility is that people may realize that the insurance companies do not provide any real protection against potential health problems, or they have been burned in the past by rising premiums that their employers won't cover. Many of these already insured persons may opt to leave the private insurance networks and join the public option.
The reason why private insurance is fighting even the public option should be indicative of how they view the threat.
In fact, if you took the 50 million presently uninsured and add it to those who are either uninsured or dissatisfied with their present insurance premiums or arrangements, my belief is that the pool will largely reflect the U.S. population.
My concern is not will the public option succeed, but will it be simply a subsidy to the private insurance companies? That is, will the insurance being offered be simply a package put together by the private insurance companies and subsidized by the federal government? This would be the worst of all possible outcomes - a kind of "student loan" type insurance program, which would make the insurance companies stronger, not weaker.
That's exactly what Obama has in mind. It "would be the worst of all possible outcomes." If Obama is going to practice medicine, he should first do no harm. If he can't come up with a plan that would help someone besides his big business supporters, he should do nothing. The only reason he's in such a big hurry is that he doesn't want us "folks" to have time to figure out how similar this plan is to the bank bailout.
Sioux Rose
PITCH FORK: Very wise assessment, and note, too, how this same "speed" factor was utilized in attacking Iraq and suspending U.S. civil liberties (never to return in the same form again). There is an ancient Chinese proverb, "If you can control yourself in a moment of anger, you save 1000 days of sorrow." I would add that if one can also control their impatience, they likewise save 1000 days of regret. This adage would apply to persons and governments.
All this rush-job policy-making provides no time for REAL debate or informing the public about the issues and their long-term ramifications. From a woman's perspective, it's the wham, bam, thank you m'am version. Where's the love?
Logarithmic:
Contrary to your rosy hopes for a public option, the most prominent versions of the hybrid plan being floated--Hacker's and Schumer's--most certainly would create the multiple pools and thus undermine the public plan.
Schumer's notion is to make the public plan more appealing to the Blue-Dog Dems and Republicans by forcing the public plan to play by the same rules as the private insurers: it would have to charge premiums and impose deductibles. Moreover, there would be no limit on the ability of the private insurers to aggressively market the younger and healthier cohort. You seem to miss the point that even if younger and healthier people have lost their employer-based insurance, under a pseudo-universal mandate plan, EVERYONE will be legally required to buy some form of insurance. Here are the ludicrious conditions Schumer lays out for his plan:
Here are the absurd conditions Schumer laid out in the New York Times:
1. The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.
2. The public plan should pay doctors and hospitals more than what Medicare pays. Medicare rates, set by law and regulation, are often lower than what private insurers pay.
3. The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.
4. To prevent the government from serving as both "player and umpire," the officials who manage a public plan should be different from those who regulate the insurance market.
As you can see, these conditions are designed to ensure the failure of the public plan in order to placate the high-rolling HMO and Big Pharma contributors to the mainstream Dems' campaign war chests.
Even under the best hybrid "pub-op" plan imaginable--and you can be sure that something closer to Schumer's travesty is what will emerge from the House-Senate conference--the private insurers will spare no expense of advertising and phone marketing, etc., to grab the youngest and healthiest, saddling the public plan with the oldest and sickest. This sorting is bound to take place as long as private insurers are in the game. This is bound to happen even by the estimate of Jacob Hacker, the leading academic doyen of "pub-op" theory. He writes,
"Put simply, Health Care for America is a pure, undiluted proposal for public plan choice. So it’s notable that under my proposal, according to the Lewin Group’s analysis of a couple years ago, the public plan ends up with much lower enrollment in the public plan than projected in the Lewin Group’s new analysis (90 million versus over 131 million). (For aficionados, the national insurance exchange in my proposal would have larger enrollment, but around 38 million people in the exchange would choose private plans instead of the public plan.)" (http://www.pnhp.org/news/2009/april/hacker_says_that_pub.php)
As Dr. Don McCann of PNHP writes,
"Get That? Even with a Medicare-like public plan option, the market for the private insurers will expand! That is the real tragedy of this debate over a public plan option. It has led us away from the debate we should be having instead: an affordable single payer national health program for everyone, versus expansion of our over-priced, inequitable, and inefficient system of financing health care through private plans and public programs
Forget about the public plan option! Let’s get rid of the private health plans, and go with single payer!"(http://www.pnhp.org/news/2009/april/hacker_says_that_pub.php}
(The California Nurses Association offers a trenchant analysis of the self-defeating nature of the multiple risk pools that are INHERENT in the "public-option" sham. See http://www.onecarenow.org/materials/healthcarereformriskpools.htm)
Vanmungo,
First of all thanks for your reply. My response to your original post was not meant to attack the notion of single payer or support the public option. I was simply stating that your notion of two pools of subscribers - a private pool cherrypicking only the healthy (which is essentially what we have now) and a public insurance option which would insure the poor and sick, etc., was not likely. (I am unsure why you now state that "multiple pools" will be formed - this was my point, not yours). I provided several segments within the potential public option pool that are likely no more sick or poor than any other segment of the American public, with the exception of the top 10% of households by income.
I am very wary of the public option and do believe the option will likely not be anything close to ideal, for the reasons you pointed out. I have also been actively pushing "single payer" to my representatives and in petitions and letters, etc. But I am saddened that it has not been considered and appears that it will not be considered - Obama and his Congressional minions have dismissed it. Therefore we have to get realistic about our prospects.
This means, if a public option is the only alternative to the ripoff insurance industry, we need to have the best public option available. Your insights into what is going on at this level are important. We simply must push for Medicare rates for this plan. And I'm encouraged that Kennedy has submitted a plan that would allow those 55 to 64 to join Medicare. This takes a large segment that faces severe insurance discrimination based on pre-existing conditions and/or on-going health issue and provides them with the insurance they need.
I appreciate your comments and I will continue to push for Single Payer. But I just don't believe that it will see the light of day. Therefore, we need to have a fallback strategy that pushes the very best "public option" available. Thanks!
Logarithmic--
The point is that you keep insisting that the public option is a half-step toward single payer or a half a loaf or a compromise. BUT IT IS NONE OF THOSE THINGS. It is simply more of the same: lipstick on a pig, a Trojan Horse for the HMOs, a complete sham.
It is dangerous for progressives to get sucked into the illusion that the public option is anything other than a fraud.
I notice that you do not address any of the painstaking arguments or facts I advance to prove this point; you simply act as though I did not make those points and reiterate your support for a public option. This is not dialogue--it is you conducting a monologue without listening.
You speak about pushing for the "best" possible version of a public option. But I defy you to come up with a scenario in which the public option will be anything but a sham.
"Multiple pools" are equally destructive, whether there are two or more. If the sickest and poorest are shunted into the public plan--as they are almost certain to be--then all the cost efficiencies of a single pool are sacrificed; it doesn't matter whether there are two pools or five--you seem to be confused about the mathematics of this issue. The Canadian and European plans achieve half the U.S.'s per capita health-care costs by having everyone in the same pool--it is ABSOLUTELY IMPOSSIBLE to control costs in this matter unless there is a single pool.
I tried to show that there is no legitimacy to your assumption that the youngest and healthiest will not be cherry-picked by the private plan. Let's take your example: a young, healthy person loses his job and thus his employer-tied insurance. Under all the prospective public-option plans, there will be a mandate: people will have to buy some kind of insurance. You seem to assume that the "public plan" will be able to compete with the private plans in going after this young, healthy cohort--well think again! These are the most profitable clients, because they are the least likely to get sick and actually claim any dollars from their plans--they are the most likely to be paying in more than they are taking out. Hence the private insurers will aggressively and voraciously recruit this cohort, using every conceivable form of advertising and marketing--for which they have a huge budget--to snatch up the young/healthy. There is no way a public plan will be able to compete for this cohort, especially under the conditions being laid out for it. The public plan will have to charge premiums and impose deductibles; it will not have an advertising budget. Losing out in the battle for the young/healthy pool, it will inevitably incur far greater per capita costs.
I have quoted to you the likely models for a public option plan. You seem impervious to these facts. You are determined to believe that the public option is a progressive step forward. The facts show that you are being duped, and that the public option is being designed to fail (read up on Schumer's and Hacker's and Stark's plans).
If you buy the ruling-class notion that single payer is "dead," you are playing their game. Single payer will be dead only when supporters like you give up on it. It's a self-fulfilling prophecy.
Don't be intimidated by the likes of Baucus and Obama. Continue fighting for the only REAL reform--single payer. Don't play their game--don't fall for their sleazy PR sham.
"in the push to get legislation in the face of fierce industry and Republican opposition, a good public plan could well be tossed overboard."
Had more USans voted third party progressive in the 2008 elections, securing universal healthcare would be a piece of cake. But since 70 million voted lesser evil, this task is greatly complicated. Will those voters sit around chatting on their cell phones in their air-conditioned SUVs and spoil this opportunity? Or will they push their Saintly O'Bamba to do the right thing? Time will tell.
Vanmungo's point that a universal insurance pool is the only pool that will work should be re-iterated over and over. When the pool is spit in two, one for the healthy, and one for the unhealthy, the elite parasites suck mammon from the healthy and politically assault the program covering the unhealthy. Granted they might find a way to abuse ANY system. This is why we the far left prefer a broader stroke against the elites. So we demand BOTH universal coverage AND a 2x to 3x reduction in the cost of healthcare. We have to learn how to apply the dull club against the parasitic elites. They understand no other language.
"if push came to shove, Obama would ditch the public plan in order to get a bill through Congress"
O'Bamba's goal is to get the uninsured insured, to save the industry flak for one of its various failures. Fixing this one failure while neglecting the other failures is a classic elite ploy to further divide/conquer the people, pitting the reformists against the revolutionaries. It's best for the people to say "hell no" to O'Bamba and force him to accept single payer with a 3x reduction in healthcare costs in five years. But if things go as planned, the people will fail to push, fail to get what is theirs, and will vote O'Bamba in for another term of royal shafting.