Public Enemy

The health care debate thus far has really focused on creating a public option to compete with private insurance companies. The various players are choosing up sides. The Obama Administration, expressed by their Health and Human Services Secretary, supports it, as a means to encourage competition and innovation. The White House is joined by 70-odd members of the House who have said no public plan, no deal, and 21 members of the Senate (so far), including moderates like Claire McCaskill and Jim Webb. On the opposite side are, well, Republicans, and their paymasters in the health insurance industry, simply because they want to preserve their monopoly over the market and their advantages that don't impact the bottom line for consumers, but instead get shoveled into profit margins and executive pay. The health insurance lobby's view is that they will adopt modestly more fair practices (guaranteed issue, modified community rating) as long as the government forces individuals to buy health care and subsidizes them, an indirect payment from the Treasury to the insurers themselves. Not surprisingly, these views mirror those of "moderates" like Ben Nelson, who coincidentally has taken millions from the insurance industry in campaign contributions, and previously owned a major insurance company.

(By the way, memo to the media: what the insurance industry is offering does not add up to a concession. These are the same "concessions" made by the industry in 1993, and yet they bashed the final plan and stopped its passage. These measures would reform insurance but not reform health care, which can only come through increased competition and a resetting of the perverse incentives that insurers have to limit treatment. Only real reform would lower costs and provide better care, and forcing a monopoly doesn't exactly get all the way there.)

Chuck Schumer has tried to design such a plan, and does a good job of defending it and naming it ("Plan USA"), but under the guise of a "level playing field," it's hard for me to understand how his plan would be anything more than a non-profit insurance option doing little to truly lower costs unless it were scaled up massively. Sure, this kind of public plan would limit overhead and advertising costs, and wouldn't pay executives. But if it can't bargain for lower rates in the way Medicare can, in fact over time you'd probably see what happened in Medicare Advantage (the private insurance supplement to Medicare), where the playing field got tilted to the private market until the government stepped in this year to put a stop to it.

We all know that the only way to truly bargain down costs is through a single payer option. I'm willing to support a public option grafted onto the current system, for now, as long as it retains any ability to bargain for lower costs in the way that single payer would. However, we're getting a bit afield of the nut of the issue if we continue to discuss the mechanism of the public plan. Because a far bigger obstacle to meaningful health care reform is how the hell to pay for it. Literally every funding stream that has been discussed gets quickly shut within a matter of days. Today, Charlie Rangel ended the option of capping or taxing employer-provided health benefits. Earlier they cut out Obama's plan to cap charitable deductions. We're talking about well over a trillion dollars, with big outlays in the short term to get the system to bend costs downward, and if nobody wants to determine a way to pay for it, health care reform dies.