8 Responses to “Another Voice for a Public Option”

1. J. Bo says:

   I do so love Robert Reich. I know he’s happy being a professor and occasional “pundit,” but I selfishly wish he were serving in the Obama administration…

   June 25, 2009 at 3:50 am
2. methodpam says:

   Thank you for taking the time to post these links. I might not come across some of these as I’m whizzing through my day-to-day and it’s great to come here and have them at my fingertips.

   June 25, 2009 at 9:09 am
3. nobody says:

   It’s easy for Reich to refute these critics. He’s misstated their complaints.

   No one is particularly worried about the scale, admin or not-for-profit advantages of a public option. They are worried that it _will_ be directly subsidized, Dr. Reich’s assurances notwithstanding, that will gain advantages from regulation, and that it will impose prices on providers. There are strong political forces invested in the succes of such an option, and they will meddle at the margins to ensure it comes out right. For example, if its benefit package is more generous than the private options, or it finds itself with more high-risk clients, political supporters will call for direct subsidies to “adjust” these imbalances. And the government will very likely require providers to participate, and will impose, rather than negotiate, “volume discounts” upon them. Maybe not at the start, but the political incentives and forces pressuring for those features are inevitable and irresistable.

   And his claim that private participants “have little or no incentive to supply highquality care at a lower cost than they do now” simply isn’t true. The insurers can’t make a profit if they don’t have revenue; and they lose revenue if their offerings to companies providing insurance to employees are lower quality or higher cost than their competitors.

   It is true that providers have less incentive to lower costs than they might. Since most people never see the bill, cost never enters their treatment decisions and provider choices, so providers have little incentive to control costs. But this indifference is chiefly caused by tax treatment that makes employer funded care much cheaper, after-tax, than individually funded care.

   In a similar vein, last night I heard HHS Secretary Sebelius complain about “the monopoly” of private insurers. Come again? Is that similar to “the monoply” of car makers, or computer makers, or electronics makers? Reich and Sebelius want to argue a “public option” fills a deficit of “competition” — but they have to mangle economics and English to find that lack of competition. This is a solution in search of a problem.

   June 25, 2009 at 10:18 am
   • blurb says:

     I think it’s more correct to state that Reich misstates your complaints.

     Your second paragraph is more conjecture than fact.

     Your third paragraph is sadly misinformed. You clearly have not read the McKinsey report. The only way currently that insurance companies make a profit isn’t by competing on care quality. If that were the case, you’d see several healthcare providers in a geographic area as opposed to one or two. There is effectively in the U.S. no market competition around quality of care. How insurance companies make profits is how well they manage who they insure. We’ve gone over this already. Sebelius is correct in stating that we see monopolies of private insurers by geography. Larger metropolitan areas might see more competition, but since you’re usually locked in to whatever your employer provides, where is the true market-based competiton? Your analogy to cars and computers is incorrect. I can go buy any car I can afford. The same with computers. I cannot buy any healthcare I choose. You need only look at me and my family. We are small business owners and operators. We don’t have enough employees to qualify for a group plan. We tried to get our own private insurance and were denied. There exists no real free-market for health insurance. The companies will not (and do not) insure a sizable portion of the populace. If nothing is done, the number of uninsured is only going to grow. No mangling of language is necessary. You need to open your mind and eyes and see what is right in front of you on this site.

     You are against reform, it’s clear. But your arguments against reform are outdated, weak and informed by personal bias rather than factual data. I’ve used massive amounts of data to prove that reform, including cost control, tort reform, behavior modification, dietary modification and patient education is necessary to successfully reform the system.

     The general public of the United States agrees with me. Read these poll results:
     http://www.nytimes.com/2009/06/21/health/policy/21poll.html
     Of note: 72% of respondents say they are in favor of the U.S. government offering a public health plan to compete with private insurers.

     June 25, 2009 at 11:23 am
     • nobody says:

       I stand corrected. Reich hasn’t answered my complaints, which are the same as Paul Ryan’s, and the WSJ’s, and the more prominent opponents of the public option. He has done a fine job sowing rout and confusion among those critics who happen to be morons.

       These “conjectures” of pressure to subsidize and support the public option simply draw lines from the behavior of politicians over past decades. They like to add benefits, they like to hide the cost of those benefits and defer financing for them. For example, Medicare and Social Security.

       While I haven’t had time to read the whole McKinsey report, I do find this on page 10:

       “we show that the overriding cause of high US health care costs is the failure of the intermediation system to (a) provide sufficient incentives to patients and consumers to be value-conscious . . . and (b) establish . . . incentives or mandates to promote rational supply by providers . . . ”

       Which is exactly what I’ve been saying about employer provided health care. I see no data anywhere for the idea that insurance companies have monopolies. Now, end consumers may not buy employer provided health care, but neither do they buy enterprise software or high-grade construction steel. There is still a competitive marketplace for all these things. That for employer provided health insurance may be distorted and constrained by regulation, and the complexity of the product, but it is an axiom of economics that profit-seeking companies compete, unless they collude.

       Likewise the handling of pre-existing conditions might be a problem of the current system, but it isn’t any demonstration that there isn’t competition.

       I’ve supported very large changes in how we do things, but they aren’t the changes you want, so they aren’t “reform”. Such semantic games ought to flag a problem for you — they certainly do to every reader who doesn’t already agree with you.

       Because, friend, you have proved nothing. Neither have I. We’ve offered arguments. Mine are considerably better than yours, I daresay. But I don’t confuse myself with Pythagoras. If you cannot imagine any reasonable peson disagreeing with you, how can you fairly examine the bases of their disagreement?

       June 25, 2009 at 12:25 pm
       • blurb says:

         I’m not trying to “prove” as much as I am have a conversation and counter certain arguments with data. I’ll never change your mind.

         You are now engaging in semantics around reform, because you and I disagree about what that reform should look like.

         Regarding healthcare monopolies, here’s a story from 2006 that talks about an AMA study about healthcare monopolies in the U.S.:
         http://www.marketwatch.com/story/study-confirms-health-monopoly-fears

         Here’s a PDF from a pro-public plan organization that shows, by state, how few competitors there are:
         http://bit.ly/L0shL

         What are, specifically, the bases of your disagreement?

         I’ll have more about monopolies in a future post…

         June 25, 2009 at 3:13 pm
4. nobody says:

   It was you, not I, that wrote:

   “You are against reform, it’s clear.”

   Perhaps I’m reading that more precisely than you intended to be read.

   I’ve been known to change my mind. My views were once quite similar to yours. But as I stepped through the implications and alternatives, they changed.

   June 25, 2009 at 4:10 pm
5. nobody says:

   The AMA piece on market consolidation is interesting. I wonder how wrapping in more traditional plans with the HMOs and PPOs does to the conclusions. And I wonder what fraction of the US population lives in those consolidated market segments.

   The HCFAN piece seems interesting, but I note that it carries signs of methodological rigging. For example, Justice Dept. concentration standards are written by lawyers, are subject to interpretation and are often regarded as absurd by economists and businesspeople. And figures on insurance company net income and share buybacks are absolutely meaningless without knowing the equity invested. People who use figures like this bear careful watching.

   Still, I am surprised to see that they have figures showing that much concentration (though a lot of it is in more rural states, where the providers might be more concentrated too). I’ll have to look at that. I predict I’ll blame any serious problem on regulatory barriers to entry.

   June 25, 2009 at 4:18 pm