Ok, I’m a geek. Anyone who rides his bike while listening to the Kaiser Network’s podcast on the public health plan option (all 102 minutes of it) is, if anything, over-qualified for the appellation.
But boy, it sure was interesting.
I did have to take a break part way thru; listened to this to get my mind grounded after too much ethereal discussion of esoteric topics.
The discussion featured Karen Davis, President of The Commonwealth Fund, Karen Ignagni, President and Chief Executive Officer of AHIP (America’s Health Insurance Plans).
John Holahan, Director, Health Policy Center at the Urban Institute, and Stuart Butler, Vice President, Domestic and Economic Policy Studies at the Heritage Foundation.
A lively group with diverse opinions. I was most impressed with Holahan. His pragmatic, sensible, plain-spoken way of describing the issue and potential impact of a public health plan option was highly effective. Karen Davis was articulate as always, Karen Ignani is a very intelligent and articulate spokesperson for the health insurance industry. Butler’s talk was sprinkled with strawmen (public plan advocates want it because it will make Americans feel comfortable with universal healthcare) and dark predictions that any public plan option will inevitably lead to single payer, and public plan advocates are just single-payer folks in competitive clothing.
One of the key issues debated was the subject of reimbursement – would a public plan use Medicare rates, commercial rates, or some number between the two. Butler’s argument (and Ignani’s too, at times), was that the public plan would use Medicare, and thus lead to even more cost shifting to private plans, and they could do so because the government is all-powerful. (I’ve debunked this argument here).
Butler persisted in using the Lewin study (which assumed Medicare reimbursement) as the basis for much of his argument. As Davis and others have noted, it is unlikely a public plan option would use Medicare, for the simple reason that few providers would agree to it. And folks, without providers, you have no health plan.
Holahan and Ignani did an excellent job dissecting the administrative cost argument. The net is Medicare’s costs are much lower for some reasons that will likely persist in a public plan model, but much of their ‘advantage’ would disappear if the plan had to hold reserves, manage utilization, and if the private plans didn’t have to pay for underwriting, marketing, and associated costs.
Butler opined that Congress, in the person of the evil Henry Waxman (D CA) and Pete Starck (also D CA) would use their powers to advantage the public plan and dis-advantage private insurers, noting that those of us who did not believe that also believe professional wrestling is legitimate. Those Brits sure are funny!
The net is this.
1. I’m not convinced a public plan is a have-to.
2. Opponents’ arguments against a public plan are weak and based on unlikely assumptions.
3. I still don’t know what they’re so scared of. If government is so incompetent (as the Heritage folks make abundantly clear in everything they do and say), why are health plans and their political think-tank allies so worried about it?
May
13
1. Good.
2. Leaving the assumptions aside, allowing government as a competitor is like allowing someone with a gun to enter a knife fight.
3. Because while incompetence ultimately removes any private enterprise player from the game, it cannot remove government as a player.
I do not understand the rationale for a government plan. Is it to provide a benchmark of performance to private carriers to meet? If so, what is there in a government plan that would very likely make it s useful benchmark? The experience with government sponsored workers comp insurers is that some perform well, others don’t, and the only solid rationale is that they filled, at the time of their creation, a market for workers comp insurance which had dried up. But that rationale gets stale after the market comes back to life.
Michael Gantt –
1. Im also not convinced there isn’t a role for a public plan
2. You can’t leave the assumptions aside, and if private industry was so good, how does the gun/knife metaphor work?
3. Re incompetence, perhaps you forget the events of 1/20/09, when an incompetent, and associated incompetents, were removed from government.
Peter – Karen Davis at Commonwealth Fund makes a strong case for a public sector plan. Check out her stuff at their site
Just follow-up on your point #3, I find it totally ironic and funny that the private insurance industry has basically admitted it cannot compete with the government when it comes to health insurance. If this is true, why should private insurance companies even exist? Why is it the responsibility of the government to “prop up” an industry that cannot compete?
1. I know; I’m trying to help you with that.
2. The assumptions make the argument against the public plan even stronger. The gun/knife metaphor doesn’t speak to goodness; rather it speaks to the fact that a private enterprise can only compete as long as its owners are willing to fund it while government can subsidize its cots and fund losses indefinitely by taxing or printing money (i.e. it has a much more powerful weapon than any of the other competitors).
3. (By the way, you let your political views seep into your economic views.) Yes, all incumbents eventually leave office but the laws and institutions they created do not simultaneously expire. Government programs are much harder to end than they are to start.
Bill Sota –
I agree with you that it is not the responsibility of government to “prop up” an industry. If a business cannot give the market what consumers want, let it fail. New businesses will arise.
Gantt – do not lecture me.
There is no ‘seep’ of political views into economic perspectives, the two are intertwined. It has been made abundantly clear that low levels of regulation can be incredibly damaging to a nation’s economy. Compare ours to Norway’s and you’ll better understand.
Your response to Sota is naive. No insurer will ever agree to insure individuals of modest means with chronic conditions at a premium level they can afford.