Letter to the Editor
Last night, I submitted this as a letter to the editor to USA Today:
- For decades, private for-profit insurance companies have been spreading fear about "government run health insurance". Despite the fact that people on Medicare - run by the government - are more satisfied with their insurance than people on private insurance, the private insurance companies have been telling us that national health care wouldn't work, because the government can't run a good insurance system, and we're all better off with private insurance. Obama's plan puts their claims to the test, and it's time to put up or shut up.
Obama proposes a compromise between a national single payer system, and the private insurance we have now: he wants to put a public health insurance option in the same market as private companies, to let people choose and see what works better.
Insurance companies' complaints about "unfair competition" are a smokescreen. They want to mislead us into a conversation about how to be fair to insurance companies, while they continue being unfair to the American people.
What the for-profit insurance companies are really saying is that they fear the government can run a better health insurance - that satisfies people more, and leaves us healthier, at a lower cost. They may be right. Congress owes it to us to create a public option so we can try it and find out. Stop worrying about the health of the insurance companies, and care for the health of the American people for a change.
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The funding models for public insurance are very different because, like all our progressive taxes (where progressive means the shape of the tax curve, not the name of a political movement), public health care is redistributive. That is to say that the wealthy pay more for it than the poor do but everyone has equal access. Since an insurance company can't manage its funds that way or even manage its risk-pool that way, it isn't fair.
But I think THAT'S the smoke-screen. It's a GOOD thing that it isn't fair, not being fair is how we get better coverage.
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What I have seen as a talking point, over and over and over, is that creating a public option would be unfair competition for the private insurance companies, because the public option would have competitive advantages over them, with the power of government, and thus the poor little insurance companies might fail despite being as good as they can be.
I've seen this question raised at some of those town hall meetings, I've seen it in clips from traditional TV news, I've seen it raised repeatedly by Republican members of Congress... it's so pervasive that when I got into a conversation about this with a random stranger in Pittsburgh who saw that I was into politics and I asked him what he thought of Obama's health care reform, he didn't know much about it but even he raised this point: "I've heard that ..." It's kind of crazy, but there it is - this is what people are talking about. This is what Republicans and Fox are pushing: That a public option would be unfair competition for the private companies.
Edit: On the redistributive nature of government-run health insurance - which is totally a tangent from the point of my letter - I want to point out that it's more of a redistribution from the healthy to the injured and sick, than it is from the wealthy to the poor. In other words, it's about spreading the risk more evenly, more than about spreading the income more evenly.
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There _is_ a provision in the bill for people under 3x the poverty line to get subsidized care, but this is effectively a voucher program -- it applies whether they get public or private insurance.
For the most part, the public option is no more redistributive than any private plan. Both redistribute money from those who happen not to make claims, to those who happen to make claims -- this is the purpose of insurance.
There is one sense in which the bill could be said to be redistributive; it requires everyone to have insurance, even if they are healthy, and in that sense it _does_ redistribute wealth from the healthy to the sick. But that provision is _independent_ of the public option. It applies even if the public option does not pass.
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Since my letter here is specifically in defense of a public option, that's an important thing to clarify.
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In this way one would hope a public insurance option would be MORE redistributive of monies from those who do not make claims to those who do.
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I hypothesize that there is no reason to create a government plan that's the same as private plans, so the interesting part of the health care debate is in how the government plan is different than a private plan.
So far, I've seen two proposals for how it can be different: The one Obama promised us in the campaign that convinced me to vote for him even after he lost my buy-in on Iraq was the redistributive plan I talked about before where the thing that's different is that the costs are offset by wealthier people playing more.
The other way in which it could be different, the way it sounds like congress is thinking of going, is that the government could mandate an unnatural risk-pool with healthy people paying to offset the cost of providing care to unhealthy people.
Both of those approaches involve powers not available to private industry which means both of them constitute, "not fair." The conservatives are right about this.
I've noticed a common theme when people of different political backgrounds talk about things: each side thinks the other side is stupid and/or not listening. Maybe the conservatives are frustrated with us because they keep telling us how unfair this thing is and we don't seem to be absorbing that fact. I think the more productive approach is to concede that point because it's fairly sound; the government really does have more options than private corporations and it can make a thing they can't. It's not fair. Then we can talk about what it costs us to do a thing that isn't fair vs. what it gets us to have public health insurance and the debate can move forward again.
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Maybe the conservatives are frustrated with us because they keep telling us how unfair this thing is and we don't seem to be absorbing that fact. I think the more productive approach is to concede that point because it's fairly sound; the government really does have more options than private corporations and it can make a thing they can't.
I don't think you can have both "the government plan is pointless because not different" and "the government has more options". As I see it, these are both wrong. The government should _not_ have more options -- the point of the setup as presented is to put the government and private plans on equal footing. I don't see where more options come from.
It doesn't follow, for example, that the government can mandate a wacky risk-pool in its plan alone (not to make any statement on whether it would be good to mandate it for all plans); if it does that, healthy people will flee to other plans, in the same way the good drivers flee to car insurance policies with more restrictive requirements, which are thus cheaper.
One advantage I see to having a government plan is based on the following hypothesis: A health insurance organization whose goal is to make a profit, will ultimately be less efficient -- _as judged by the market_ -- at providing health insurance, when compared to an organization whose only goal is to provide health insurance. If this hypothesis is true, then the government plan will outcompete private plans on an equal footing, and the result will be a societal benefit with no economic downside. (Remember that, historically, the point of chartering corporations was not because profit is a good, even if some people seem to see it that way today; it was because offering profit was an effective incentive to get people to join together to do things ultimately benefiting the public good. If we can get the benefit without the cost, we should absolutely take it.)
Another point in favor of the public option is the following: The health insurance market is actually many markets for slightly different products. It's in the public interest to ensure that there are products to serve all segments of society, even though some of those products are less profitable than others. The public option is one way of ensuring that the less-profitable markets are still served. (C.f. the problem of rural telecommunications, which was largely solved by government compelling telecoms to provide service to less-profitable areas -- because this was seen as a public good -- in exchange for the effective monopolies they had over the more profitable urban areas.)
(EDIT: I failed at italics. Trying again.)
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I addressed the mandate portion of this in some long comments on an earlier post. First, to make it very clear, the mandate (everyone must get insurance) is an integral part of the reform, and completely orthogonal to the public plan. Regardless of what happens with a public plan, there will be a mandate.
The reason for the mandate is this: We're going to require insurance companies to cover everyone, accept everyone, and not disqualify "pre-existing conditions". If we don't mandate insurance, that'd leave the option open for people to not pay when they are healthy, and then sign up for insurance once they discover some condition or injury that's going to need ongoing care. We're much better off spreading the risk fairly, the way we do with taxpayer-funded programs. You can't opt out of taxes for a particular service until you feel like you need it.
Now, you say Obama promised that the public option would be different from private insurance because costs for poor people would be offset by wealthier people paying more. That's false. Another integral part of this reform is subsidies for low income people to buy insurance, and that is going to be subsidized by higher taxes on wealthy people, but that is also completely orthogonal to the public plan, and it was always going to be - we're going to have those subsidies, and corresponding taxes, regardless of whether there's a public option in the mix or not. Obama never said differently.
The other way you're talking about is, as I said above, also not a feature of the public option. Congress is going to mandate that all insurance companies accept everyone, and cover pre-existing conditions, and that everyone buy insurance. That'll be part of the legislation regardless of whether one of the options for insurance is a public plan or not.
A public plan will be, effectively, a single-payer insurance, but only for those companies and people who want it. If everyone flocks to it instantly (which is not going to happen) then we'll effectively have national single payer - but Congress won't have chosen it, the people will have voted with their feet/wallets. Obviously a big change like that won't happen suddenly. However, if the government can indeed run a better, more efficient, more transparent, less frustrating health insurance than the private companies do now, then people and companies *will* steadily switch over to it, which will force the private companies to improve their service. Either they'll improve to a point where they're as good as the government, and thus don't lose customers, or they'll find new business models (such as adding extra value), or they'll wither away. No matter which of these happens, the result will be better insurance for all of us.
That's why we deserve to get a public option, and that is exactly the point of my letter.
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Sounds good on paper, but (as we've discussed before) this has been significantly botched in the case of Massachusetts, which appears to be the model for this mandate. There are a lot of reasons, but I'll confine myself to three:
I've seen too much hand-waving and ignoring of these issues in Massachusetts. It is simply unconscionable. I want to see these issues addressed before I get behind any national plan.
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Health insurers exist for the same reason all other private companies exist: to maximize shareholder value within the parameters of their niche. A public option would change those parameters and lower shareholder value.
Which non-shareholders have no reason to give a damn about.
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"But what if my employer says they're dropping the private health insurance and everyone will get a raise equivalent to (after taxes) the full yearly cost of the government's health insurance premiums?"
To which the answer is "well, if the health insurance companies want to stay in business, they'll have to be more competitive." Otherwise companies *will* stop spending lots more money for private health insurance, and those insurance companies *will* go out of business. So, yeah, health insurers give a damn.
That's also why it's completely fair for the government to offer an option, but only if it's paid for by premium monies -- because otherwise the government health insurance is subsidized (by the government through taxes) which private health carriers don't have the benefit of.
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Several times in my employed life, I've been forced to switch health care plans by my employer. A few times it was due to mergers, and a couple of times it wasn't - it just so happened that for whatever financial reasons of their own, my employer at the time decided to eliminate one of the plans they subscribed to, or switch to a new provider. That's the current employer-provided health care system: Which plan you get is not under your control, it's under your employer's control, and they can make you change at their whim. Or, drop coverage (though that's less common, because employers who provide coverage want to keep doing so if they can afford to).
In principle, I don't see why it matters that one of the available plans is the new public option, while the others are the various existing plans employers already have available to them. It's no different than if some new private plan were to start up and become available.
That's also why it's completely fair for the government to offer an option, but only if it's paid for by premium monies - why the caveat? The public option Obama wants would, indeed, only be paid for by premiums, but I see no reason why it would be bad to have it paid for by taxes too, if the result were better health care for everyone.
... because otherwise the government health insurance is subsidized (by the government through taxes) which private health carriers don't have the benefit of. ... and I see no problem with that at all. That, again, is worrying about the health of insurance companies rather than the health of people. From our point of view, who cares what the insurance companies have the benefit of? We only care that good insurance is available for us, and that it doesn't cost too much. Are you saying that it is somehow inherently true that giving a public insurance plan an advantage over for-profit plans makes good health insurance for people less available? I don't get that.
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I agree with this statement. The point of my comment was to try to see things from the point of view of the people who are saying "it's unfair", and try to understand why they're saying that (beyond the motivation of setting a smokescreen).
I also agree that it's a smokescreen.