Insurance companies - their own worst enemies
This seems to me to be a very, very likely scenario. The current bill is simply health insurance reform, not health care reform. The former without the latter is virtually certain to lead to an accelleration of increases in cost, not the reverse.On Wednesday, Senator Max Baucus of Montana, chairman of the powerful Senate Finance Committee, released his health care proposal, known as the chairman’s “mark.”
At first glance, the mark comes across as a victory for the private insurance industry, which is why it was promptly attacked as a sell-out by liberal pundits (see, for example, this). But the health insurance industry may yet come to see it as a variant of winner’s curse — a term economists use to describe situations in which a winner regrets getting what he wished for.
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Here’s the problem with this plan: The cost-control measures in the Baucus plan alone will not be enough to control skyrocketing health care costs. Whatever the insurance industry may say about its prowess in the market for health services, it has always been relatively much weaker than doctors and hospitals in that market and therefore quite frequently has had to raise its premiums at double-digit rates from year to year.
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Irate Harry and Louise will, of course, curse the government — and especially the Democrats — for mandating their purchase of health insurance, thus making them swallow that 12 percent premium hike.
But in a populist fit of anger, irate Harry and Louise may also believe that the health insurance industry is just exploiting the mandate to line its coffers. Contrary to the facts, many citizens impute huge profits to the private health insurance industry.
I have so far refrained from jumping on the bandwagon with those calling the administration and democratic congressional leaders sellouts for their failure to push harder for true reform here. In part that's because I understand something of the political reality, but more because I agree that a reform as sweeping and important as this will likely be more successful if we can get moderates and even some right of center folks on board with it. That said, I see three paths:
- Institute meaningful reform with some measure of bipartisan support. (Best)
- Pass meaningful reform "unilaterally," over the objections of the Republicans. (Second best - Likely to lead to uncomfortable times in the inevitable rocky patches as the reforms take hold, but ultimately to the good - see Social Security, Medicare.)
- Pass watered down, incomplete measures in an attempt to appease the Republicans and their base. (Worst possible - will fail, and be blamed on the party in power.)
So, negotiate and try to find a common solution, but we must be prepared to go over and through the objections of those with vested interests either in the structure of the current system or mearly the political failure of the current administration.
I don't get it. You refer to "true reform" and "meaningful reform." Implicit in your remarks is that true or meaningful reform must brake the costs of key providors: Hospitals and Drs. I absolutely agree. But I'm missing how you are suggesting that get done, in either a bipartisan or unilateral manner. Isn't the only significant brake the pulic option?
ReplyDeleteActually, no.
ReplyDeleteI believe we will likely get to the place where a single payer system will be necessary to impose the change needed to control costs. I agree, however, with the President that this is simply a means to an end. There is some good background in this post: http://idealpragmatist.blogspot.com/2009/09/foundational-information-from-brookings.html.
Basic summary is that to bend the cost curve, you need to:
1. Improve transparency and education for consumers and providers alike.
2. Redirect compensation incentives toward efficieny and efficacy, rather than mere quantity and techincal sophistication. That is, we shoul pay for people to get good, timely care that keeps them healthy, rather than lots of fancy care after they get sick.
3. Reform the insurance market to eliminate risk selection.
4. Give incentives to the population to improve their own health.
A publice insurance option can make it easier to exercise direct influence over some of those matters, but will not control costs in a direct way by it's mere existence.
I realize my confusion encompasses two issues: Correctly or not, I see a robust public option as the sole means to counter unbridled health insurance cost escalation thay will likely accompany a bill such as "the mark." That does not speak directly to the costs of health care. (As an aside, I agree the ultimate solution lies in the single-payer system, and I view the public option as a step in that direction.) After that it begins to get messy: I take your point that "the mark" is not health care reform; rather health insurance reform. It addresses the former not at all, the latter ineffectively. Simply put, "true" or "meaningful" reform are not included in the bill. I was trying to see substance through the fog. There's only fog.
ReplyDelete