Cutting Through the Public Option BS

by: Ian Welsh

Mon Aug 17, 2009 at 18:30


To put it really simply, if you don't need a profit, and if you are only as efficient as your competitors, you will drive them out of business if you are not constrained in some fashion from doing so. (Capital is the usual fashion to wipe out competitors, since non profits have trouble raising it.  In the health care context, arranging it so the public option takes on more unhealthy people is the more likely way to do it.)

Since a real public option properly created to not be constrained from doing so WILL drive private insurers out of business, it will not be allowed to happen. It may be called a "public option", but it won't actually be allowed to operate as a public option should. A public option which won't destroy the insurers in time, is also a public option which can't drive down prices effectively.

All else is shadow play.
Ian Welsh :: Cutting Through the Public Option BS

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Cutting Through the Public Option BS | 47 comments
Well, 'in time' is doing some heavy lifting there. (4.00 / 1)
My plan, quote myself from previous post, because I'm just that wise:

We completely abandon the Public Option with great sorrow, and instead settle for the 'Cost Control Option,' which is completely unlike the Public Option in that it makes a cost-control plan available alongside the private plans that can be enrolled in through a national or regional purchasing pool. This Cost Control Plan will compete with private plans, ensuring an insurance product with broad choice of providers and encouraging private plans to match the administrative efficiencies, cost-control abilities, and quality-improvement capacities of Cost-Control insurance.    

re (4.00 / 1)
We completely abandon the Public Option with great sorrow, and instead settle for the 'Cost Control Option,'

abandon that too and go for the 'Medicare option'

give people, no matter their age, the option of enrolling in Medicare

[ Parent ]
I dunno. The problem with Medicare is (4.00 / 3)
that nobody wants the government involved in Medicare. The government is both a brutally inefficient tyrant and a completely ineffective bumbler. However, arguing against the 'Cost Control Option' might make some Blue Dog heads explode.

We're just so remarkably bad at politics. Our defense against 'death panels' is 'it's not in the bill' and 'you're making me cry.'

[ Parent ]
Huh? "nobody wants the government involved in Medicare"??? (4.00 / 1)
Did I miss the calls to move Medicare to private insurers, or what the hell are you taking about, Joel? Or was the irony lost in translation???
[ Parent ]
No, I'm completely serious. (4.00 / 4)
I mean, if we let the gov't take over Medicare, what's next? Highways? Schools? The military?  
[ Parent ]
Inconceivable! (4.00 / 1)
You're right, this would be the road to ruin! This has to be fought tooth and nail!!!
[ Parent ]
Uh. (0.00 / 0)
You're joking...right? Please tell me that was snark.
[ Parent ]
Don't remind me! (4.00 / 2)
Once I went on vacation in Hawaii, and while I was there, I mailed postcards that were delivered by our horrible, horrible government halfway across the planet in four days for about 24 cents!

I still have nightmares.

Montani semper liberi

[ Parent ]
Problem is, that's not really sustainable (4.00 / 1)
Medicare currently pays 94% of a given patient's hospital costs. Medicaid pays 84%. Private insurance pays 135%. Shifting more people over to Medicare is only going to create more cost imbalance without reforms to the system.
[ Parent ]
have you seen medicare bills? (4.00 / 1)
have you seen what hopitals charge?

getting 94% of that is a more than enough

but if it turns out that's not enough, we can increase it

[ Parent ]
You may think that (0.00 / 0)
But, the fact is, Medicare doesn't pay enough to cover the costs... I have family that work in medical administration...  They flat out have said that if they had only medicare patients, the hospital would close within a month...

My mom get's B12 shots.  Medicare pays $.33 for the nurse to acquire it from the pharmacy and administer it...  The bill had to include extra digits to show the cents digits...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

[ Parent ]
Define Cost (0.00 / 0)
The problem I have with this argument is no one ever defines "cost."  Medicare pays 94% of what?  The heathcare industry is padded with all kinds of excesses which they call costs.  Hospital administrators in private hospitals get paid excessive salaries and bonuses.  Hospitals pay doctors $100,000 a year just to get them to refer their patients to the hospital.  I applaud Medicare and Medicaid for refusing to support these kinds of "costs."  
[ Parent ]
bingo! (0.00 / 0)
thank goodness we are protecting the insurance industry at the expense of the entirety of this nation.  

it's true that an effective public option would eventually drive these folks out of business, just as single payer would wipe them out with one swipe of the axe.

this would create considerable job losses in an economy that doesn't need that sort of thing.  there would be some short term pain in that respect.  the obvious argument is that it is obviously necessary to chop off the arm to save the body.  the arm is infected, and it's going to kill us all, eventually.  it would be a case of people who would be sacrificing their jobs for the good of the nation.  that's real patriotism.  that's the type of patriotism we saw during WWII.  does that exist anymore?  or is everyone just covering his or her own ass?

if we did do single payer or an effective public option we could offer some sort of assistance to those in the industry who lost their jobs, and honor their paycheck sacrifice for the good of the country.

Hopefully, they'll be so appreciative (4.00 / 1)
That they don't totally screw us right away.

That's what I'm praying for: a more compassionate insurance industry.

One your last point. I'd support a new monument on the National Mall. Better yet, The Museum of Health Insurance. So that when these cease to exist, future generations of healthy Americans can better understand their past.


"It sounds wrong...
     ...but its right."

[ Parent ]
what kind of statue for the monument? (0.00 / 0)
uncle sam, bending over, pants down, while a doctor snaps the rubber glove?

"go ahead and cough," on the plaque?

[ Parent ]
Let's stay positive and satirical (4.00 / 1)
Barack Obama with various disgraced CEOs and lobbyists splayed at his feet and his eyes fixed on the Blackberry in his hands. Erected to honor the moment when he happened to surf by OpenLeft, read the diaries and comments, and completely change his approach to Healthcare Reform. The very moment when the bright future was assured and American could truly become Camelot on the Hill.


"It sounds wrong...
     ...but its right."
[ Parent ]
from your keyboard... (4.00 / 1)
to god's blackberry in the sky.

Amen.

btw, god, get off that thing.  you're god, for god's sake. no wonder our world is in crap shape.

would this type of humor fly @ RedState?  does if fly here?

[ Parent ]
Conyers has considered the jobs aspect (4.00 / 1)
On page 24 of HR 626:
FIRST PRIORITY IN RETRAINING AND JOB
6 PLACEMENT; 2 YEARS OF SALARY PARITY BENEFITS.-
7 The Program shall provide that clerical, administrative,
8 and billing personnel in insurance companies, doctors
9 offices, hospitals, nursing facilities, and other facilities
10 whose jobs are eliminated due to reduced administration-
11 (1) should have first priority in retraining and
12 job placement in the new system; and
13 (2) shall be eligible to receive two years of
14 USNHC employment transition benefits with each
15 year's benefit equal to salary earned during the last
16 12 months of employment, but shall not exceed
17 $100,000 per year.

I'd already figured that some of the riffed insurance company employees could be hired by the new plan and the rest retrained for higher-paying jobs.

[ Parent ]
So basically (0.00 / 0)
we're going to take your job away, but we'll try to get you a new one.

yeah that's gonna go over well with the public.

[ Parent ]
Well, there is that 18,000 lives thing, right? (4.00 / 2)
Just saying.

You can do policy, or not. Then you look at the net -- "the greatest good for the greatest number."  

Because in the real world, this kind of policy issue gets addressed all the time. And successfully. As it was in every single other country that got better health outcomes for half the price than we do.

If you want to do policy, feel free! Alternatively, you can yammer right wing talking points. The choice is yours!

I am in earnest -- I will not equivocate -- I will not excuse -- I will not retreat a single inch -- AND I WILL BE HEARD.  

[ Parent ]
18,000 lives? (0.00 / 0)

[ Parent ]
The people who die for lack of coverage. (4.00 / 2)
If you take those earbuds out of your ear son, you'd understand what's going on around you.

Montani semper liberi
[ Parent ]
22,000 lives in 2006 (0.00 / 0)
18,000 is the old figure from 2002. h/t to Ian.
[ Parent ]
"we're going to take your job away... (4.00 / 1)
because your livelihood is a drain on this nation, as a whole.  but we realize that, despite the rhetoric, you are not necessarily an evil person.  you are a lower level, private insurance functionary.  and we are going to assist you while you transition into a government job, or job retraining, or financial aid, or if we went with a system where private insurance is still available, then your company can offer some sort of supplementary insurance."
[ Parent ]
Medicare for all (0.00 / 0)
would keep the private insurers in business selling supplemental policies. As Medicare is now, some sort of supplemental coverage is necessary if you want to be protected from bankruptcy.
[ Parent ]
If everyone is covered (0.00 / 0)
we are going to need a whole lot more doctors, nurses and techs. Can't those displaced by reform get first dibs on those jobs?

Montani semper liberi
[ Parent ]
The issue among healthcare providers (0.00 / 0)
Specifically physicians, is more subtle. The specialists in any field are not well-suited to switch to another field. So, if a surgeon gets downsized, its not really feasible for them to take the next available job as a family care doctor.

Any real reform of the healthCARE system (as opposed to the healthINSURANCE system) will require a redistribution of wealth within the community of physicians. Most practicing physicians I know are willing consider reduced salaries, but I mostly work with specialists that are not among the highest paid and already work within a system that attempts to provide some pay equity (VA and Mayo Clinic).

Nurses, on the other hand, are still in short supply. As I understand the situation this is driven by cost. In a sense, the status quo is so expensive to administer that the hospitals cut nursing staff and technicians because they need to shave costs, and they are vulnerable.  

"It sounds wrong...
     ...but its right."

[ Parent ]
Why would a surgeon get downsized? (0.00 / 0)
If anything, having everyone covered should give him/her more work.

The people who are likely to lose their jobs are those millions of drones who spend their lives pushing paper for the insurance industry, and the millions who work in hospitals and doctor's office trying to push paper right back to them. Talk about an unproductive use of time and talent.

Montani semper liberi

[ Parent ]
Because they won't make as much money (0.00 / 0)
The financial incentives over the last decades have skewed the physician population towards those specialities that pay the most and away from those that pay least. True healthcare reform will reverse that situation, and some people will lose in that situation.

"Downsized" may not be the right word, but the discussion thread was about folks losing their jobs. Sure most will be the "paper-pushers", but not all. Thing is, paper-pushing is paper-pushing is paper-pushing. Push it for private company, push it for the government, same skills. But when the private HMO decides it can only afford to keep 5 of the 8 surgeons currently on staff because they need to hire more primary care physicians, 3 surgeons will have effectively been put out of work. This is an issue that has not really surfaced yet in the debate, that's why I bring it up.



"It sounds wrong...
     ...but its right."

[ Parent ]
I agree that a strong public option must drive a lot of health insurance cos. out of business (4.00 / 3)
Or at least shrink them drastically, force consolidation, etc., especially if the government control primary care profitability. Thom Hartmann has pointed out that in all of the major industrialized nations, health insurance companies are not allowed to make a profit on basic care. (In fact, PBS/Frontline, a "public" broadcaster, forced the producers of their otherwise excellent "Sick Around the World" program to not mention this fact.) Health insurance companies, where they're allowed to exist, must make money via secondary care, such as plastic surgery, fancy hospital rooms, prettier nurses, etc.

OK, I'm kidding about the prettier nurses. :-)

One way to make a public option stronger is to pass a similar law. This would remove any incentive for dumping people with serious, pre-existing conditions onto the public plan. (I assume that they would adjust their rates, accordingly). In fact, they may fight to keep them, in the hopes that they'll use them for their secondary care. They would probably discriminate against poorer patients, not necessarily sicker ones.

You've put your finger on what I always thought the real fight should be about - just how strong is the public option that we demand. Single payer seemed prohibitively hard, given the current level of corruption of the US government, because it would put insurance companies out of business right away.

Letting them die slowly (like some of their former customers that they decided to dump) is the way to go, but of course, they will lean on their kept Congress critters to make sure that the public option is so weak, that they end up merely locking in their profits.

It's maddening that the framing of this issue is not how much money would be injected into the economy, acting as a stimulus, if costs were brought down to European levels.

435 Dem Primaries 2012
Coffee Party Usa
TheRealNews.Com

Yes, exactly, why do the Dems not advertise the stimulus effect? (0.00 / 0)
And they should have reached out to the rest of the industry, which has a vital interest in driving down costs, to counter the influence of the healthcare insurers. Everybody knows that companies like GE will jump on every opportunity to save some millions. Exploiting this, and creating a reform coalition, would have allowed the Dems to isolate the rethuglicans and the insurers as the only ones who are against the bill. An easy PR victory!

But it looks like there is nobody on the Dem side who is able and willing to come up with a winning strategy. Quite to the contrary, the total absence of any meaningful actions of the party to promote their reform is suspicious. There wasn't any concerted effort to create positive media at all. And this is Obama's and Emanuel's fault. Are they that incompetent, or do they have other, hidden goals? It's puzzling.

[ Parent ]
I might add that I actually like the idea of having private + public (0.00 / 0)
I say that because I've worked as a volunteer at a hospital, and it was shocking to see the level of indifference of some of the nurses. I'm for a public option because I don't trust the greedy healthcare industry, but I can understand concern about having no place else to go besides a public institution. (A similar argument applies to public/private schools). Is it rational, given our history, to put a lot of trust in the US government, either? The fact that we could, theoretically, do as good a job as Germany or Japan doesn't mean that we will. I'd be fine with having a private option to keep the public option honest, just like I'm fine with having a public option to keep the private options honest. What matters, really, are the details.

My preferred compromise, I suppose, is to let private insurance companies make a small profit - say, 5%. That will never be enough for somebody who is greedy, but it compares OK with, say, the interest on a bank account. And hospitals that hire more compassionate nurses deserve to get some kind of reward.

(I'm also for giving modest incentive pay to hospital directors who draw more people to their non-profit, public hospitals. I think this is done in Germany, but you'd have to double-check Sick Around the World to make sure that I'm remembering the country correctly.)

435 Dem Primaries 2012
Coffee Party Usa
TheRealNews.Com

[ Parent ]
"having no place else to go besides a public institution"? (0.00 / 0)
This phrase is a bit misleading. We're all well aware that the INSTITUTIONS, i.e. the hospitals, will stay private enterpises, right? The public option isn't like the British system at all, with its state run hospitals...

However, I agree that people of course shall have the option to get insurance for first class services, like single bedrooms in hospital, etc...

[ Parent ]
No, actually (0.00 / 0)
That's the problem when pontificating based on limited knowledge - exposure is a sure thing, sooner or later!

So are you saying that, if HR 676 was made law, hospitals that are private would simply be forced to be non-profit, as they were years ago? I hadn't really thought about it, much...


435 Dem Primaries 2012
Coffee Party Usa
TheRealNews.Com

[ Parent ]
NO, damn, I'm NOT saying this at all! (0.00 / 0)
I'm not even saying they will "be forced to be non-profit"! Where do you get that idea?

We sure seem to have a major case of misunderstanding here!

[ Parent ]
I was talking about myself, pontificating (0.00 / 0)
Just hope we get that straight!

When I said I prefer "public plus private", I mean that I want parallel systems, just like we have with schools. (Though I want the public healthcare to work much better than public schools).

So, please explain (since you know the topic better than myself), if an HR 676 passes, what happens to private hospitals that were formerly used to serve the public healthcare patients? Will the government rent them? Not use them at all? I had assumed that they'd be taken over, via some sort of eminent domain. I hadn't thought about it, much, but now that I do, I suppose that any remaining hospitals not needed by the government, even if still private, would have to be non-profit.

So, my "public plus private" comment can be interpreted as: Fine, let the private hospitals and insurance cos. make a profit - but a very limited one (for primary care). It's not the fact that they make a profit that's killing us, it's the fact that they are not properly regulated, and their greed is therefore not constrained by humanitarian concerns. If I'm not happy with the government program, I'll pay an extra 5% and go to with a private plan. If the government plan is better, I'll go with that. A mass exodus to one or the other will shine a spotlight on the one losing patients, and we can at least ask the question "What is wrong?"

Some financial incentive for better care is actually a positive thing - that's what I take away from Sick Around the World, as well as what I've heard about private vs. public schools. This is an example of where listening to concerns of those worried about "socialism" actually makes sense. (Instead of deriding them as nut cases, as some on the left have done.) If the public wants socialized medicine, along with socialized fire departments, I see nothing terribly wrong with that. However, while a socialized fire department, reflecting a natural monopoly, is essential, that is not the case with healthcare. I really think, for reasons already stated, a public + private system is ideal.


435 Dem Primaries 2012
Coffee Party Usa
TheRealNews.Com

[ Parent ]
I will have to look deeper into HR676, too. But not today. (0.00 / 0)
Very early in the morning here now, I'm going to bed. Let's check this tomorrow.
[ Parent ]
Well, Fannie Mae and Freddie Mac WERE scary for a long time. (0.00 / 0)
They were THE big players with huge market shares that were the horror of the competition until deregulation allowed the private companies to expand the market into risky businesses were the FMs didn't dare to tread for a long time. And rightly so. If they would have resisted the pressure to go after these questionable "opportunities", Fannie and Freddie would have got out of this untouched.

So, it may be possible to create nonprofits that really can set the standards for the industry, but there is a high risk that at one point the rules will be changed to the advantage of the private companies. And that political pressure will force the co-ops into deals that don't make economical sense. And the vehement stomping of the industry's lobby for this "alternative" now makes it very probabale that this is exactly what they have in mind.

Imho the danger in this is too high, and Dems shouldn't consider this at all. But some seem to be either to dumb or too much in bed with the lobby to acknoledge this.

Dunno about that (4.00 / 1)
The existence of the USPS doesn't drive private shipping companies out of business, even though it undercuts the private companies pretty seriously on price.

Conduct your own interview of Sarah Palin!
fed ex doesn't gouge people. (4.00 / 1)
they haven't killed as many people either, except when they have texting accidents.
[ Parent ]
Because... (4.00 / 1)
They have competition. Since you have a choice of shipping companies, and it's very easy to switch from one to another, they have to actually compete.

Contrast with insurance, cable companies, cell phone companies, etc. where they can treat you like dirt because you're locked in.

Conduct your own interview of Sarah Palin!

[ Parent ]
Apples and Oranges (0.00 / 0)
When the private companies visit every address in the US every day, you get back to me.


"It sounds wrong...
     ...but its right."
[ Parent ]
Who uses Fedx to pay their bills (0.00 / 0)
Heck what company uses Fedx to send them to you
[ Parent ]
Sometimes (4.00 / 2)
When you need it there the next morning, people do use FedEx for those sorts of things. Likewise, UPS, DHL, FedEx, etc. are preferred by many people for packages larger than letters. The USPS offers basic mail-carrying for everyone in the country at a low price, and private shipping companies offer premium services like overnight delivery.

I could easily imagine a situation where most people have the public insurance option to cover their essential health-care needs, but private insurers provide Cadillac plans for the wealthy or hypochondriacs or people who just just don't like the government plan for whatever reason.

Conduct your own interview of Sarah Palin!

[ Parent ]
Have you ever sent a letter by FedEx? (0.00 / 0)
Costs over $20.  

"It sounds wrong...
     ...but its right."
[ Parent ]
Once (0.00 / 0)
It was a money order that absolutely had to be there overnight and had to be a money order. But I don't make a habit of it.

My point is, FedEx, UPS, etc. can operate quite profitably alongside the USPS even though they can't compete on price for everyday letters and small packages.

The insurance companies would have to change their business model if they had to compete with a public option, but they would not disappear wholesale. Heck, they still operate in some countries that have single payer.

Conduct your own interview of Sarah Palin!

[ Parent ]
The louder they* howl in agony, (4.00 / 1)
the better the plan is.

*Wall Street, Big Pharma, the AMA, fascists...

Cutting Through the Public Option BS | 47 comments
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