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A Hatchet Job So Bad It’s Good
In the past, the insurance industry’s power has been a major barrier to health-care reform. Most notably, the industry paid for the infamous “Harry and Louise” ads that helped kill the Clinton plan. But times have changed.
Last weekend, the lobbying organization America’s Health Insurance Plans, or AHIP, released a report attacking the reform plan just passed by the Senate Finance Committee. Some news organizations gave the report prominent, uncritical coverage. But health-care experts quickly, and correctly, dismissed it as a hatchet job. And the end result of AHIP’s blunder may be a better bill than we would otherwise have had.
For 2009, it turns out, is not 1993. Once again, Republicans have tried to kill reform with smears and scare stories. But all they seem to have killed with their cries of “socialism” and warnings about “death panels” is their own credibility. Some form of health-care reform is highly likely to pass.
So it’s a different game than it was 16 years ago. And it’s a game that the insurance industry apparently doesn’t know how to play.
The motivation for the AHIP report seems to have been the decision by the Finance Committee to weaken the penalties for individuals who don’t sign up for insurance, even as it retains regulations requiring that insurers offer the same policies to everyone, regardless of medical history. The industry worries that some people will game the system, remaining uninsured as long as they’re healthy, then signing up when they get sick.
This is, believe it or not, a valid concern. Many health-care economists believe that a strong individual mandate, requiring that almost everyone sign up, will be needed to make health reform work. And the Finance Committee probably did weaken the mandate too much.
But AHIP, apparently unable to help itself, didn’t stop there. Instead, the report threw every anti-reform argument the authors could think of at the wall, hoping that something would stick.
One argument was particularly striking: the claim that attempts to limit Medicare spending would lead to higher insurance premiums. In fact, the report assumes that 100 percent of any reduction in Medicare payments to hospitals will translate into higher costs for patients with private insurance.
The only way to justify this claim is to assume that all hospitals are purely charitable institutions, charging as little as they possibly can. Now, some hospitals may fit this description. But all of them?
What’s more, this argument stands the usual logic of markets on its head: if you believe AHIP’s story, competition raises prices instead of reducing them. And it doesn’t matter where the competition comes from: anyone who gets a better deal, whether it’s Medicare or a private insurer, makes life worse for everyone else. I don’t believe that, and neither should you.
Of course, the report doesn’t mention these implications. The only bad competition it talks about is competition from the government. Specifically, it claims that a public insurance option would be a bad thing — not because it would be inefficient, but because the public plan would negotiate better prices. Isn’t that an argument for, not against, such a plan?
Which brings us to the ways in which AHIP may have done health reform a favor.
As I said, the individual mandate probably should be stronger than it is in the Finance Committee’s bill. But there’s a reason the mandate was weakened: fear that too many people would balk at the cost of insurance, even with the subsidies provided to lower-income individuals and families. So why not address that cost?
Aside from making the subsidies larger, which they should be, there are at least two changes to the legislation that would help limit costs. First, health exchanges — special, regulated markets in which individuals and small businesses can buy insurance — can be made stronger, in effect giving small buyers a better bargaining position. Second, the public option — missing from the Finance Committee’s bill — can be brought back in, giving private insurers some real competition.
The insurance industry won’t like these changes, but that matters less than it did a week ago.
There’s also another point, which House Speaker Nancy Pelosi has stressed. Part of the opposition to a strong individual mandate comes from the sense that Americans will be forced to buy policies from a greedy insurance industry. Giving people, literally, another option — the right to buy into a public plan instead — would defuse that opposition.
Even with stronger exchanges and a public option, health reform would probably increase, not reduce, insurance industry profits. But the insurers wanted it all. The good news is that by overreaching, they may have ensured that they won’t get it.
- Posted in
46 Comments so far
Show AllNice article but missing was a reference about Price Waterhouse, the authors of this horrible piece of work. These little bean counters are nothing more than whores who were paid handsomely by big insurance for a nasty, kinky act of perversion that can best be described as a "rusty trombone" see the Urban Dictionary. They pleasured their client in the most self demeaning manner possible and are now faced with admitting their report was irresponsible and by implication, self-serving.
This raises a question about how much credibility their audits and other "services" should receive from regulators and investors.
Dirty Whores.
I think you are about to get bombarded with posts from whores everywhere that will be pretty disgusted with you for comparing them to the Price Waterhouse scum.
NC-Tom, Thank you for bringing my attention to this off-handed slight to whores everywhere.
I apologize for inadvertently sullying your reputations by comparing you to Price Waterhouse scum. It was unfair.
Yeah, well, the trombones aren't real happy about it either!
· Yr Obd't Servant
Again, this comment is insulting and unfair to real working whores. They provide a needed service, and usually do it honestly. Highly unlike our corporate leaders, politicians, and their flunkeys. Please do not use this language in future. Call them criminals or something accurate like that.
I don't know. Call me "stupid"; but it seems to me that if the penalties for not buying insurance are raised into the realm of health insurance policy premiums, shouldn't the 'penalized' at least get healthcare in return? I mean, isn't $3,800 a year the same thing whether it is called a 'penalty' or 'premium'?
No, you will not gat any healthcare for that penalty, because that $3,800 per year wouldn't go into the pocket of a private insurance company. The whole purpose of the curent plan is to prop-up, with only token regulation, the private, mostly for-profit insurance companies.
Right you are!
Recall that the NYT sat on WMD facts and warrantless wiretapping among other spikes into our backs. They do not deserve consideration on any topic. Eff em
Last weekend, the lobbying organization ... AHIP, released a report attacking the reform plan just passed by the Senate Finance Committee...
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The AHIP overreach offered the opportunity to scrap the entire 1,000 page legislative albatross and introduce Thom Hartmann's Medicare Part "E" Plan.
But Progressives have no media perch big enough to pull off that type of aggressive power play.
Americans are confused and unenthusiastic about the current proposal knowing that it will not change our health care system in any meaningful way. As a result they're tuning out.
The politicos have effectively put the nation to sleep with their snail like pace and endless arguing over minutiae which amounts to nothing.
They've got us right where they want us: Dazed, Confused and Diffused.
A couple more months of this and they'll easily pass the largest legislative turd of our lifetime.
The public option must be easily and readily available to EVERYONE, working or not, already insured or not, poor or not. I believe a system like that could work, though clumsily, partly because of the complex "subsidies" needed for the poor, and partly because private insurance will try every scam in the book to get market share.
Single payer/ HR 676 has a simple, complete, all-encompassing mandate which creates one giant pool to spread the cost of health care while eliminating redundancy and waste. I prefer it because it is simpler, more streamlined, guaranteed to cut costs, and you don't need complex "subsidies" for the poor, but it is still a mandate, thru payroll taxes, for everyone to "buy in". The mantra is "everybody in, nobody out."
Right you are, hamster.
HR 676 was introduced by John Conyers, D-MI.
John Conyers has also introduced H.R.3596 - Health Insurance Industry Antitrust Enforcement Act of 2009.
Harry Reid & Nancy Pelosi are BOTH in favor of this type of legislation.
HR 676 funding:
"establish a 5% health tax on the top 5% of income earners; 10% tax on top 1% of wage earners, 1/3rd of 1% stock transaction tax, closing corporate tax loop-holes; repeal the Bush tax cut for the highest income earners."
In part - let Wall Street greed pay.
hamster
You are absolutely correct about Single payer/ HR 676, but it will never...never see the lighgt of day under Pelosi and Reid. Never.
Paul Krugman is heavily flawed on this. Hillary Clinton's proposal had plenty of goodies for the big insurance companies and they wanted more. The same thing here with Obama. You know something? I get sick and tired of our side complaining about Republicans being the obstructionists at times when the Democrats have everything to get the job done at their disposal. No wonder people are up in arms.
Well put!
Good comment Maxpayne except I take issue with: " I get sick and tired of our side ". Max there is no " our side", there is only their side. True the Demo rats "have everything to get the job done" but with very few exceptions, Congress is made up of attorneys that represent Big Pharma and Big Insurance corporations.
The Democrats have a triple majority. They can get anything they want passed. Over 80% of Democrats say they favor single payer. A majority of Americans in general prefer it.
The Democrats have sold out! Again!
Come on folks, for how long are we going to lower our standards?
We need an honest to goodness revolt! Where are the protests against this sell out? let's go!
It might help to remember that what we have is a congress that is a wholly owned subsidiary or corporate America. I read many bitterly angry posts on progressive web sites. The anger is directed at OB. Maybe he sold out and maybe not --- I don't know, but I do know that the pattern of Kabuki Theater in congress is one of "Where's the pea" "Tha ole shell game". The president proposes, and the congress disposes. We know what to do to fix the mess and congress does as well.
Well said.
Kabuki Theater is not as simple and obvious as most people believe; it's really quite devious. A good example is the insider trading story at Bloomberg on a hedge fund manager just as the greedy banks are raking it in. Yeah, the SEC is really, really taking care of the people by catching the bad guys....right.
Max there is no " our side", there is only their side.
Exactly. Maxpayne needs to see once and for all that the corporate party imcudes republicans, democrats and anyone else they can buy.
William Jennings Brian, that great populist, eventually became secretary of state for our country just before we went into WWI. What happened?
First, lets be honest for a change. This is NOT Health Care REFORM. This is a revision of Health Care. Heavily flawed, putting money into the pockets of the usual suspects.
25 million without coverage.....25 million without coverage after this bill is passed at a far greater cost. What a deal! So who benefits? Guess who......
Only a blind hog could support this travesty..... Pelosi, Reid and this Congress continue to expand their shame.
Time to remove the blinders.
"Time to remove the blinders?"
Yes henry, you really should remove your blinders.
Well Lily....what do you see as a benefit of the proposals? Everyone covered? Lowered premiums? Better care? No rationing? Better benefits? More coverage? At no cost to anyone? New care starting as soon as the bill is passed is it? Taxes start as soon as its passed don't they? Real limitations as to who may get the public option?
Where am I blind? Where in fact am I wrong? What exactly do you see as benefits of this proposed bill?
Lily, I've seen poll after reputable poll indicating that the majority of Americans prefer a health care system such as single payer. Since you don't wear blinders, you would be a good one to inform us as to why your Democrats have fought so hard against it? As always, they went against We the People. How much lower can our standards get?
"Whenever we compromised, we lost." -- the Arch Druid, David Brower
Perhaps Prof. Krugman can explain how exactly the proposed "health exchanges" differ from HMOs? (I'm sure you remember how THEY were going to make life so much better for us all...)
The legislation for the Canada health act is something like 14 pages long.
This thing they propose is over 1000?
I thought "Socialist" Governments were inefficient bureaucracies.
"The legislation for the Canada health act is something like 14 pages long.
This thing they propose is over 1000?"
And you put your finger directly on whats wrong with this whole mess. It will be more than a thousand pages before this circus gets thru with it. So why do we need thousands of pages and you guys need 14. Because your system is meant to give universal health care to everyone at the best price possible.
So this proposal is not meant to do what yours does, is it? Canada isn't a Socialist government no more than Single Payer Health Care is Socialized health care.
Its a farce.
>>So this proposal is not meant to do what yours does, is it? Canada isn't a Socialist government no more than Single Payer Health Care is Socialized health care.
>>Its a farce
An absolute farce. I understand your tax code is about 10 times the size of ours. I guess this helps to explain why with 5 percent of the Worlds population, the USA has 50 percent and more of the worlds lawyers.
The means by which you draw up legislation down there suggests utter chaos.
IF we just get a public option available to everyone, then the incentive to get health insurance can be done just like Medicare does now: You become eligible for Medicare on your 65th birthday. For every year you fail to register after you become eligible you are assessed a penalty of 10% on your premiums ever after. So give that cookie to the insurance companies who are either competitive enough or slick enough to get people to sign up with them instead of the public option.
I may be healthy as a horse when the initial sign up window is open, but I am going to seriously consider the eventual penalty for waiting too long.
But the penalty is only fair if there is a public option.
No matter what happens, Big Pain Profiteers have already won.
How?
Because they managed to end all debate, conversation, or even a mere mention of UNIVERSAL HEALTH CARE FOR ALL AMERICANS.
Now the debate is solely about the details of a 'health care reform bill' that is as pathetic as the 'system' we're suffering under presently.
We suck.
But the economy is all better and we're already inundated with Buy Buy Buy in honor of Christ's birthday ads, so - it's all f@#king good!
If you meet a congressman in your supermarket shove a coconut up his ___.
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AHIP and the Republicans are doing supporters of reform a huge favor!
Their scare tactics and attempts at delay are damaging their credibility, while giving reformers more opportunities to respond to their specious arguments and point out the flaws in both the current system and the sham that is the Senate insurance-company-corporate-welfare agenda.
Mitch McConnell said yesterday that the Senate should take as long as two months to debate health care reform. I agree! The longer the debate goes on, the stronger the groundswell for TRUE reform will become.
It is said that when your opponent is doing damage to his own case, the last thing you should do is try to stop him.
If we let the Republicans and their corporate sponsors keep acting like criminally greedy fools, we may yet be able to bring the terms of the debate around to the real remedy for the cost and coverage problems in our health care system ... single payer!
Krugman sez: "The industry worries that some people will game the system, remaining uninsured as long as they’re healthy, then signing up when they get sick.
This is, believe it or not, a valid concern."
***
It wouldn't be valid with single payer.
That's right, because single payer is a MANDATE. Everybody in , nobody out! Just like social security, and funded the same way. Everybody has social security, everyone pays for it if they have income. As Bill Maher says, does anyone have a problem with that?
For once in a long time, I've got really good health insurance through my employer. (Only a 10% co-pay!)
I went in for a sleep study to see if I really had sleep apnea as my girlfriend expected.
I do, and quite bad, quitting breathing for over 2 minutes several times a night. So they got me set up with a CPAP machine, which is a machine that powers a mask that provides a good amount of air pressure into my breathing pathway to blow everything up sort of like a balloon so that I don't suffocate myself when sleeping (My throat pretty much collapses on itself).
This thing has immensely helped me. I am much more alert during the day, as my brain isn't repairing itself from oxygen deprivations each day.
Then I got my copy of what they billed my insurance - Nearly $5,500 for the sleep study, and $2,400 for the CPAP machine.
That's $5,500 to have me sleep in a bed with a bunch of wires on me. $2,400 for what's basically an air-blower hooked to a mask with a bit of electronics to monitor and keep the air pressure steady. (I'm a serious techno-geek, I could probably build the same thing for about $400 in my garage, if not less.)
Like I said, I've got good insurance. I "only" had to pay $640 for my part of the deal. But where do they get off charging such an insane amount for so little? No wonder insurance is so damned expensive. Although I am not taking any pressure off the insurance companies, this is outrageous that a medical provider is charging so much, just because they can "get away with it." WTF?
Something's wrong about several parts of the equation. Thieves everywhere. That could have been done for half the price and the provider would have still made a good profit, and another person could have been treated for something as well. Makes me sad and disappointed. :(
You hit on something really important. Capitalism is seriously out of whack. When people really need something, the profit vultures swoop in for the kill. Medicine, especially, is shrouded in ritual and exclusiveness. I've found this to be much less the case when traveling in other countries, where doctors act like it's a job and not some sort of priesthood.
Frankly, when it comes to health care services like these I like the way Japan handles it. To see how they do it watch T.R. Reid's terrific program "Sick Around The World" on Frontline. It was done months ago. As long as we have for-ridiculous-profit medicine this is what we're going to see. Serious regulation is needed, as is done in other countries. Single-player plus regulation -- I don't see any other way it's going to work. And as long as we have a corporatist Congress and President this will happen when pigs fly.
Thank you Mr. Krugman for calling the Insurance Industry by its' proper name. I was getting tired of all the articles about the "Health Care" Insurance corporations.
Health Care? What a hoot!
Anyway, the We'll-do-it-for-a-price-Watercloset study had, I believe, a more cynical motive. The argument against the senate committee bill is a straw man to make the bill look like something that will help the people. It's a lie. It's hollywood. The bill is the very thing that guarantees a rise in insurance premiums.
You are being gamed,, Mr. Krugman. If I'm full of it, how come the bill isn't on the internet? Are people like you too dumb to read it?
Think, Mr. Krugman. The fact that Baucus called the study a hatchet job was a dead giveaway. Surely, you can't be that naive.
Reading the above posts---esp. Klom Dark, who appears to be young and perhaps new to CD/Welcome!---it occurs to me that we older folks have yet to absorb the disaster our children face.
When I was young and in the employee pool virtually every place I worked for included an insurance package, usually Blue Cross/Blue Shield. Back then, the people in the Human Resources Dept. (probably went my another name back then...) when they hired me would make me look at the health insurance paperwork and actually walk me through it. Back then, I didn't care about health insurance. I was nearly invincible.
As I got older and developed my own ideas, the insurance was no longer available from employers. Other than the fact that my life exists in a certain Evolutionary fragment, there may of course be no necessary connection here, but I suspect that my employment history is pretty typical of millions. I paid into the private insurance system, paycheck after paycheck, when I was an actuarial low risk but as I got older the employment insurance perk slowly disappeared, even as my employable skills increased, no thanks to my employers.
Several have written about the historical rise of private health insurance. Few have written about the massive transfer of wealth that went into its dominance. When I didn't need it I was taxed for it every working day. When I did need it, it wasn't there. That is the private insurance racket. That is why we need
Single Payer along the lines of "other" "civilized nations" (as though we are civilized!). What is now evolving out of this corrupt Congress is virtually a mirror-copy of the private racket, but now MANDATED. If I were 20 years old today and understood what is coming my way, ...
* I'd walk away from the wars and strip myself of armor.
* I'd stop having children. Blackmail the grandparents.
* I'd demand that ALL Wal*Mart stores be turned into museums.
Sorry, I'm ranting.
I changed my mind. Not sorry. Glad I could write this to you. I am very angry at what is happening to our Common Weal. I think I grew up in another country, called the United States of America. Back then I suspected I was being suckered. Today I know it.
If anything from the Baucus bill survives, kill the messenger!
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OleManRiver, There are untold millions of us out here how payed for years in our 20's,30's, and 40's and now have shit. Why not have a national system where you build up your money like Social Security? Damn I forgot they stole all that and left only IOUS.Well Hell I guess were just all fucked over again, nothing new about that. Really liked your post. Panguy
Krugman endorses the idea of forcing people to buy inferior health care from greedy insurance companies ... The first time in history people will be forced to pay a corporation for living and breathing in the United States...
Of course you know that the penalties will be $1900 per person per year enforced by the IRS. And ... oh yeah ... not paying could cost you $25,000 and time in prison ...
Paul "Shifty" Krugman ... ever the friend of the common man, when said man's back is not turned ...
As Jesus said, "The stinking corpses of stinking insurance company executives dangling from lamp-posts is a sweet aroma in the nostrils of the Lord."
No one but the parasites and scavengers stands to gain from any bill that forces people to purchase insurance.
Krugman's language is worse than annoying. If someone does not buy insurance when it makes little or no sense to do so, that' "gaming" the system. But when an insurance company hires an actuary to determine how much to charge which people, that's business.
There's no cure for worms that does not involve getting rid of the worms.
No bill should pass that does not allow people to receive healthcare without paying parasites.
No reform, no bill.
I totally agree. For Krugman and his ilk it is a "game". I wonder how many ill people will like this "Game".
I wonder if a suicide attack is still a suicide attack when the attacker is terminally ill?
Thanks, charlie/panguy.
As for social security, economists like Dean Baker keep trying to assure us that the system is sound, but I suspect you are right---that "lock box" was broken a long time ago and the trust fund was robbed to make us think we had "progress." Robbery at that level is called a conspiracy. No wonder the rich are trying to get anything they can while they can; they know what's coming but they aren't talking. They're stashing.
The robbery may even have happened at a lower level. Thus, for example, in my decades of employment I worked for dozens of employers who deducted SS payments from me, but I have absolutely no way of knowing if they actually posted those payments to Social Security. What I do know is that if I had to depend on SS I'd be freezing to death under an interstate overpass.
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A banker, insurance company executive, or senator unhanged is a blight on America.