Posted on 09/01/2009 1:22:33 PM PDT by MarMema
Responding to the concern that setting up a government-run public option insurance plan would inject politics into American health care, public option backers are saying, “Right. And that’s a good thing.”
A recent Washington Post article reports, “Economists in this [pro-public option] camp say a public option would not under price insurers so as to drive them out of business; political pressures from medical providers would restrain Congress just as it is restrained today from limiting Medicare rates too much.” The article adds, “And the [public] option's pricing powers would be limited by political pressures against driving too hard a bargain on providers.”
This is a novel argument; bringing “political pressures” into the private marketplace makes the market more efficient. I'd sure like to know the names of the economists in the public option camp who say lobbying Congress is a form of healthy market competition. Ample real-world experience shows the opposite. Massive government intervention distorts markets, reduces the benefits of competition, and leads to waste, inefficiency and cronyism, not lower prices and better service.
We already have an example from the world of health care. Every year Congress experiences a political firestorm as it tries to save Medicare from bankruptcy by cutting reimbursement rates to doctors. The American Medical Association, not surprisingly, vigorously objects and lobbies hard to preserve or increase payments to doctors. A deal is reached and the controversy is re-scheduled for the following year. Whether this management technique is saving Medicare or sinking it faster is an open question, but I doubt most Americans want their own health plan run this way.
The current lack of competition in health care comes from politicians, not insurers. Health insurance is perhaps the most highly regulated economic activity in the country, with price controls, limits on products, extensive reporting rules, a ban on interstate sales, high barriers to entry, unequal tax treatment, and a host of minutely detailed federal and state regulations. Congress and state legislatures should first repeal the anti-competitive laws that they enacted, and force insurance companies to compete more against each other, before Congress sets up an insurance company of its own.
Another version of the public option idea is for the government to create nonprofit co-ops, like Group Health, but there is no particular policy advantage to health co-ops. Group Health faces the same problems of health care mandates, malpractice lawsuits, rising inflation and Medicaid cost-shifting as every other hospital. The only difference is all these financial strains are handled in-house, rather than billed out to a separate insurer.
Most Group Health members get their coverage through their employers. So on paper a Group Health member might be called a member/owner instead of a customer, but in practice it functions just like any other insurer – lose your job, you lose your Group Health coverage. Health co-ops are not an alternative to insurers, for the simple reason that a co-op is an insurer.
The President says that under his plan if you like your current insurance coverage you can keep it. This is simply not true. He forgets that most of us do not own our own health coverage, we get it from our employers. When employers find they can no longer afford to provide insurance they will drop their current plans, which in turn will force workers into the government option plan. Even the eight million Americans covered by personally-owned Health Savings Accounts would be forced on to the public option, as Congress decides these affordable high-deductible plans do not meet the federally-mandated definition of health insurance.
Public option supporters are right about one thing. A public option would reduce the cost of private insurance premiums. It would reduce it to zero, as private insurers go out of business trying to compete against a federal insurance plan that can print its own money.
ping
Did they say this before or after they tried selling the Brooklyn Bridge? Whenever you hear "We're the govt and we can help" run for your lives and in this case it fits.
This writer speaks as if private insurers exist to benefit mankind first, rather than owners and shareholders.
Private insurance, especially HMOs, do not compete well against government insurance because government insurance has no high executive costs, bonus costs, advertising costs, dividends, etc. It is a simple reality. When this debate renewed months ago this was a simple fact often stated, but now buried in bad economic analyses and knee jerk pro insurance propaganda and business cultists.
It is government (regulation) which is making healthcare insurance so expensive, and now government complaining that the costs are too high and they must step in and rescue us with socialized medicine.
I keep on telling liberals at work they didnt pick their insurance company but it doesnt register, they trust Obama.
“Government” is not an independent actor. It is the insurance companies themselves that lobby and pay big bucks for those non-competition laws. Also, Obamacare is a creation of the same companies using the Government, not the other way around, to force people to buy their product. The “cost cutting” is to benefit both, reduce Medicare payments and create new standards for which private insurers can deny care they currently are customarily compelled to cover.
To cut costs the most obvious thing to do is to allow the government to negotiate on drug prices. This is logical to anyone but the most rigid business cultists. Obama’s u-turn on this issue is so hard the Democrats will not call him on it. They have no stomach for calling Obama a liar since they fell for him so hard. Admitting that he is a liar would be admitting they fell for him, and there is nothing a liberal would likely less do that admit their arrogant sense of intellect can be deceived.
I'll get back to you with more on this. Have to go to work. And I work in healthcare. Every day I see how regulation has forced spiraling costs.
YES! What proponent of free-market health insurance do not admit is that we do not have free-market health insurance!
Let's try that first.
"As you can see, insurance premiums in Massachusetts are almost 3 times the national average, due to their “universal health care” mandates. As opposed to less regulation, such as removing restrictions on purchasing out of State insurance, our government has always opted for more regulation. Despite the fact that a healthy 25 year old male could purchase health insurance in Kentucky for $960, politicians prefer to mandate that same person pay $4,032 to purchase it in his home state of Massachusetts."
"The high cost of health services regulation is responsible for more than seven million Americans lacking health insurance, or one in six of the average daily uninsured. Moreover, 4,000 more Americans die every year from costs associated with health services regulation (22,000) than from lack of health insurance (18,000). The annual net cost of health services regulation dwarfs other costs imposed by government intervention in the health care sector. This cost exceeds annual consumer expenditures on gasoline and oil in the United States and is twice the size of the annual output of the motion picture and sound recording industries."
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