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

by: Mike Lux

Thu Aug 27, 2009 at 15:30


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 of 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.

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

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This is so true (4.00 / 1)
you would have to break up the insurance trusts and there actually would be some form of competition in order for those regulation to have any teeth; there are some like Ezra Klein who are smart, yet believe we are living in a country like the Netherlands and you know what they have there? Regulations of profits. The only regulation that could ever make up for a public option is going down that road as a regulation of profits. That's our main problem. Now we all know that will never happen(such as the fight for Medicare for All is done for which is a shame, because people actually understand what Medicare means and for all explains things as Anthony Weiner points out), so we need a public option regardless of what people from Third Way like Paul Begala try to imply(SS had to amended, yes, but it still started as a federal program. It didn't start out as a pseudo regulated 401k. Give me a break, Paul).



if we have to adopt an incremental approach to the public option (0.00 / 0)
why can't we adopt an incremental approach to the individual mandate too?

Can anyone honestly tell me what this is, though? (4.00 / 3)
If we do what the President wants

It seems to change by the day, and was always pretty vague in its details. So forgive me if I feel like we're seeing organizations like Third Way, Blue Dogs, ConservaDems, and even the GOP and their wingnut United Healthcare and FreedomWorks screamers, play "bad cop" to Obama's "good cop", so that he gets to champion a somewhat better bill than they're pushing for, that we get to feel oh so grateful to him for, which in the end turns out to be far, far less than what we'de hope for and could have gotten, had he pushed Dems to make it happen.

So sorry, not buying the obvious con. Either we get a real public option with stiff regulations on insurers, negotiated drug rates with PhRMA, affordable premiums, good coverage, no preexisting conditions or rescision for ANY reason, and subsidies that are paid for by tax hikes on those that can afford them, or this will have been one big con job cooked up by Obama, conservative Dems, Repubs, and industry. Don't put a bone next to a steaming pile of dogshit and call it a huge improvement. Which is exactly what this con job is.

The enemy is not only industry and the GOP. The enemy is also conservative and corporate-owned Dems. And Dems who lack the spine to stand up to them. You're either with the people, or with them. Zero in-between. Any compromise deal that will emerge will just be prettied-up dogshit, the result of cowardice and legalized corruption.

I wonder if Obama has any idea how close he is to losing the left, if he screws this up--and it will be HIS screw-up, if that's what happens. I wonder if he even cares.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton


Remember that poll about the public option! (0.00 / 0)
It showed that a bill without it would only result in 5% more rethuglicans supporting it. At the same time, it loses 33% of liberals. Now, if this isn't clear evidence for every strategist that the president should publicly show strong support for the public option, I really don't know what else would be.

But still, only wishywashy statements from the WH. Imho that raises dire concerns that maybe Obama is so entrenched in his stupid postpartisan ideology that every support from the right side, no matter how small, strongly outweighs any losses at his own base. What other explanation can there be?


[ Parent ]
A more likely explantion (4.00 / 1)
is that the White House's posturing is not about public opinion, which only matters when it's mobilized. At present, the only side effectively mobilizing public opinion is the Republicans.  Lopsided poll results alone don't pressure anyone.

Of course, what that does mean is that Democrats might be able to turn the tide if they did begin the effectively mobilize public opinion.  Public opinion is a powerful resource, even if its not a very good explanation for the White House's (or Democrats') behavior.

Politics is the art of the possible, but that means you have to think about changing what is possible, not that you have to accept it in perpetuity.


[ Parent ]
It is perplexing, isn't it? (4.00 / 5)
Namely, that in the face of such massive public support for a public option (a REAL public option, that does what it's supposed to do, offer an affordable alternative to private insurance with good coverage, and not some restriction-crippled hack job of an "option" that few will qualify for and that won't be a viable alternative to private insurance), and the votes to make it happen (although Kennedy's passing makes that a bit harder now, but not impossible), Obama continues to promote a bipartisan "solution" achieved through bipartisan collaboration, even though it's not necessary, and it's not going to yield such a public option. He's increasingly like the guy who keeps buying scratch lottery cards by the 10's and 20's in the vain hope of hitting the jackpot and paying off his huge debts.

What gives? Why is he doing this, when he not only doesn't have to, but when it's clear as clear can be that it will not yield a good plan?

Only four answers that I could come up with:

1 - He really is as brilliant as his fanbots say he is, faking out both sides on his way to passing truly progressive reform. The only problem with this is that we've seen just the opposite of this so far. What was so brilliant about FISA, the stim bill cave-in, the bailouts without strings, the cap and trade bill, financial reform, etc.? I'm not seeing any brilliance in those. (I suppose that some might explain these as just "fake outs" intended to lead to real reform down the line. But we're seriously into psychotic territory here.)

2 - Not brilliant, just oversold into the long since disproven cult of post-partisanship, believing not only that it can work, but that it is essential that it be persued, for the sake of the republic's future, the alternative being increasing division to the point where we no longer have a republic. He's like Lincoln before the first shots fired on Fort Sumter (or, perhaps, after it, but before First Manassas, or, perhaps, after it too, the foolishness of the perpetual optimist being boundless), forever trying to avert a bloody civil war, convinced that this can and must be done, yet not realizing--or being willing to admit, due to character faults--that this is futile, that war is inevitable and it will be long and bloody, but that it's the only way to get past the status quo.

3 - Neither brilliant nor deluded, just spineless and unprincipled, forever trying to avoid real confrontation with the establishment, because he fears getting bloodied and bruised, and seeking solutions that accomplish this, yet can be sold to his base.

4 - He's a sellout, always has been, is industry's guy on the inside, and this is just the latest sellout, woven and spun to make it look like it's better than it is. I'm increasingly leaning in this direction, but am willing to reserve judgement a bit longer,

#1 is, of course, delusional (but if I'm proven wrong, I will gladly admit it, but I doubt that will happen).

#2 does make some sense, but I just find it hard to believe that someone as smart as Obama (while perhaps not as brilliant as hit fanbots believe he is, he is still clearly a smart man) could actually believe in such nonsense, especially at this point. So I'm guessing that he doesn't genuinely believe in it so much as he pretends to believe in it in order to justify his actions, not just to others, but to himself.

#3 makes the most sense to me. Conftronted with the reality of governing, he's choosing the path of least resistance, like Clinton before him. He's not a fighter, is no FDR or LBJ, and is just trying to avoid confrontation.

#4 also strikes me as a bit simplistic. Yes, he has sold out to industry, but I'm not convinced that he's done it out of corruption. Rather, I think he's done it out of political expediency, and cowardice. I.e. it's not for financial gain, but for easy power.

Put these all together, and I see a man who might want genuine progressive change, in theory at least, but who lacks the will, spine and principle to genuinely push for it, and who is ultimately more motivated by the desire to attain, keep and increase his own power, than to do actual good with it, beyond token or easy efforts. I.e. he's a punk: all talk, no action.

Which doesn't leave me entirely pessimistic, as I think that there are other avenues to achieving serious progressive reform, namely through the progressive caucus, primary challenges, and grassroots activism. But instead of such reform originating with Obama, they will have to be accomplished despite Obama, and eventually through him, as the left forces him to make it happen (so to speak).

And I think that Obama, ironically due to his spinelessness and lack of principle, leaves the door open to that. If he's susceptible to industry pressue, then that means that he's susceptible to the left's pressure as well, if it's effective enough. Basically, I think that we'll get the legislation that reflects the desire and will of those who most effectively pushed for it. Not just on health care reform, but on every important issue that we face, including financial reform, climate change, Iraq, etc. Will that be industry and special interests, or the left?

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton


[ Parent ]
My take (4.00 / 2)
Well, I've tended to view it this way:

President Obama and his advisors looked at the shipwrecks of health care reform past and asked, "What can we do to minimize the risk of 'failure'?" for something they could call "reform" (instead of asking "what would be the 'optimal' health care reform?" or even "what would be the minimally effective health care reform?").

To "minimize the risk of failure," Obama

  • brought industry groups (Big Pharma and the insurance companies) "to the table" to ensure that they would not torpedo the agreed-upon reform-again, the goal here was to "minimize the risk of failure," and so the Obama administration was not extracting concessions so much as giving them, in sort of a administration/medical-industrial-complex mutual non-aggression pact (the insurance industry knew, given the public mood, it would have to give up some things; the question was how little);

  • carefully avoided specifying key criteria that he viewed as essential in any bill (he might "prefer" a public option but would not say that was a "must have" criterion-instead it was "one sliver of it, one aspect" of health care reform)-if you enunciate only broad principles, you can say that whatever passes embodies those principles and claim victory;

  • shifted the goal from "health care reform" to "health insurance reform"-tinkering around the edges with minor, incremental changes in insurance policy could then be claimed as successful "reform" (even though those changes would not-in fact, could not-affect the "indefensibly high administrative costs... attribut[able] to the highly complex private health insurance system"); the root problem was reframed conveniently as the solution (it's rather like calling for "segregation 'reform'");

  • perhaps least justifiably, in alignment with the media, ignored and refused to meet with advocates of single payer, who, even though single payer was "off the table," might provide a convincing critique of the public option or other reform proposals;

I would suppose the first point was the most important and  drove the others. If you're looking to minimize the risk of failure, perhaps the only strategy better than co-opting the opposition is letting the opposition co-opt you. Put differently, any plan that might be truly effective was not politically feasible, as Ian Welsh points out, and conversely, any plan that was politically feasible was, almost by definition, not going to be truly effective.

As a result, we've seen the President resort to meaningless bromides about needing a "uniquely American approach" to this problem and appeals to the (time-hallowed?) "tradition of employer-based health care" (odd, really, because, for the most part, employers provide health insurance, not health care). Only once has Obama said, referring to the health care costs of other countries, "you'd want to figure out how to get that deal"- a presumably never-to-be-repeated-again lapse because an honest answer would involve, at a minimum, some mention of non-profit insurance for basic health care.

Sell the public option-arguably the most popular but least understood part of the reform? Obama can't, at least not on the terms he himself has set, with the current public option. "Keeping the insurance companies honest"? Not likely with the puny public option. If you have crappy insurance from your employer, can you take advantage of the "public option" (y'know, "competition")? Generally, no, not if your employer provides insurance.

The constraints that Obama adopted to minimize the risk of failure-particularly the Faustian bargains with the insurance companies and Big Pharma-are helping to ensure failure because he's trapped between his rhetoric (e.g., "keeping the insurance companies honest"-the original rationale of a public option) and reality. He can't make too big a deal about a public option that, of necessity, can't be even moderately competitive. He can't point to the numerous (non-profit!) examples of health care systems from other countries. He can't go into too much detail about the high costs of US health care, two-and-a-half times greater than the average OECD country, lest that raise the touchy issue of those "indefensibly high admistrative costs." He can-and does-point to some reforms-a ban on rescission and on exclusions arising from "pre-existing conditions-that are better than the status quo but even those are fraught with peril, being the crumbs that the insurance industry gave to secure an infinitely more desirable cake, as did Pharma, this time in the form of individual mandates.)

You (and I) might call that approach "spineless" and "lacking in principle." That's our interpretation of Obama's "minimization-of-failure" strategy. Others might call it "the right blend of principle and pragmatism." We'll have to see how it all unfolds.


[ Parent ]
slam dunk, friend (0.00 / 0)
you hit all the points i would've made assuming i had your mastery of them. nice post.  

[ Parent ]
Except for one: It's a bailout... (0.00 / 0)
... for the insurance companies. That's what the mandate does.

The common factor between the bailout for the banksters and the bailout for the insurance companies? Rewarding rent-seeking behavior.

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 ]
I agree completely, kovie (4.00 / 1)
I have yet to see, among other things, an explanation of how the "public option" in HR 3200, with an estimated 11 or 12 million enrollees, will "keep the insurance companies honest." Weirdly, that small number is touted as a feature, not as a bug, even though, in 2007, it was estimated, and presumably viewed as a selling point, that "half of non-elderly Americans" (about 130 million people) would enroll in the proposed plan.

I'm beginning to feel as if the words "public option" are believed to be a magical incantation-just say them, without more, and "competition and choice" spring up everywhere.


[ Parent ]
That's a good point (0.00 / 0)
my understanding is that as since only those who can't afford insurance even with subsidies will be the ones eligible for the public option and since 90% of people are supposed to be uninsured in the future if and when insurance companies keep going with their abusive practices and more and more people cannot afford their insurance, the public option would be there to then stand as competition to keep insurance companies honest as more and more people are eligible for enrollment, because they can't afford it.

This was already a concession weakening the public option and it's not really a choice unfortunately that anyone at any income level can make; you have to be unable to afford junk insurance with subsidies for junk insurance.

I think the public option should be more robust and a choice for anyone. I also think Anthony Weiner is right and we should just be fighting for medicare for All, because people understand that and it's the only real solution in the long run.

That being said I hope we at least have some hope for competition as our for profit system continually erodes. Perhaps we can amend it later to increase eligibility till we get to Medicare for All.



[ Parent ]
"a concession weakening the public option" (0.00 / 0)
One of several. The public option as constituted is

...a compromise that is itself a compromise of a previous compromise from a former compromise of a much reduced compromise of the original compromise of the goal of many on the left

Here's how (with the "co-op" proposal a few more compromises away).

[ Parent ]
Man............................. thanks for the link (4.00 / 1)
I knew there was more than one compromise and the capitulation on Medicare rates etc as listed in the Rep Jerrod Nadler speech. But this is a frightening list.

A robust public public option still exists form Walker's latest, called(and I like this frame) the Medicare Buy In.

The strongest and most robust public option proposed is the straight "Medicare buy in." It would simply allow individuals under the age of 65 to buy Medicare at an actuarially sound premium level. The option would provide the greatest cost savings to the government and the consumer. Senator Rockefeller's "Consumers Choice Health Plan" would be a Medicare buy in for the first few years. After that establishment period, the plan would progressively become weaker in several ways.

So not we need a public option, we need a Medicare Buy In. I will start using this frame now as it is what we need and the only compromise from single payer worth fighting for.



[ Parent ]
Wow, thanks! (4.00 / 1)
I love that-both the article and the frame!

I'm not sure if the late Sen. Kennedy's Medicare-for-All Act was a example of Medicare Buy In (it seems to be). (Certainly Thom Hartmann's recent proposal is.)

I was at a town hall last week in Montara, California (outside of San Francisco) and someone brought up a Medicare Buy In proposal which seemed to stun the crowd. (I wrote a little about it here.) I think Thom Hartmann is correct that such a proposal would be much easier explain and much less vulnerable to attack. In fact, for once, the abysmal ignorance of the "Medicare in not a government program" variety would actually work in favor of the proposal, for those who might be persuaded by such an argument.


[ Parent ]
Wow, that framing stopped that rabid crowd in their tracks (0.00 / 0)
The comeback to that was weak being "they might like it too much! Oh no!" that was a good piece you wrote whihc speaks to the effectiveness of a Medicare Buy IN frame and we need to frame things betetr for the general public, because they need examples they understand or they will shit a brick obviously.

And Kennedy's Medicare For All bill is similar and has a lot of the same tenements, though not completely revenue neutral whihc is not a bad thing since it seems to have features of a traditional Medicare for All and the option to by into it thus still taking acre of the financing problem until incrementally the traditional medicare program's age requirement is slowly lowered every ten years until there is a single payer Medicare for All system for good while giving people options till it happens and they are more comfortable with the idea.

Thomas Hartman explains that well and it is indeed time to frame this is a Medicare Buy In. And like you say, this would convince people who actually think(for whatever reason or propaganda they are drinking) that Medicare is not a government run program to buy into it and support the plan because they think it's private. As long as they support a true robust public option they can think what they want. This should of been the campaign and frame for the campaign from the beginning.

thanks for all the links.



[ Parent ]
Actually, the magic words are... (0.00 / 0)
"strong" and "robust."

The magic in these words is that they allow "progressive" public option advocates to declare victory without actually having achieved it.

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 ]
Sandwich needed (0.00 / 0)
It looks to me like this is going to need Presidential leadership on one side and progressive pressure on the Senators that have not committed to make this bill happen with an effective public option.  Without the pressure from both sides, the monied interests have a big advantage (they always do!) which may be very tough to overcome.  I continue to believe this is the one big shot to get this right and failure to do so will limit the options to come back and redress any issues later, as some Dems are proposing to do.  

"Don't Pass on the 'Next New Deal'". (0.00 / 0)
WTF?  What's wrong with the New Deal?   We certainly need a next one.  

But what they're selling as the "Next New Deal" (4.00 / 2)
Is actually just the "Next Raw Deal" prettied up to look like what it ain't. It's a trojan horse, a turd wrapped in gilded paper. It's obvious.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton

[ Parent ]
I am curious (4.00 / 1)
Is there any realization in DC that mandates without a public option are political suicide?

CBO says HR3200's public option will enroll 10 million (0.00 / 0)
(Here).

How will that be enough to "keep the insurance companies honest"?

And since it's the insurance companies fiduciary responsbility to make as much profit as possible, and since, all other things being equal, it's always more profitable to collect premiums and deny care, why would anyone believe that anything will keep them honest?  

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


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