cos | Letter to the Editor

So I've read all these comments and I want to use them to underscore my own point. Insurance companies complain about "unfair competition" from a public health plan. I've yet to see anything on this page, either in Cos's origional post or in any of the comments about why that complaint is wrong, you all seem to agree that the public option isn't fair.

Trouble is, none of you are saying that explicitly. You're all silently moving on to the next stage of the argument about how it's OK that it isn't fair. There's a LOT of power in the words, "you're right about that." It could even pull the debate out of the quagmire a little bit. Lets not squander it.

My point is that, right or wrong, that debate is a pointless distraction. Fundamentally, there's no reason for us (the general public, the Congress, etc.) to care whether having a public option would be "fair" to insurance companies. What we care about is whether it's fair to the people in general. Insurance companies and Republicans are trying to misdirect us into debating its purported unfairness to insurance companies, and that's not the point. Sure they care, but the rest of us have no reason to care. It doesn't matter if it's okay that it's fair, or not okay, or whatever. What matters is to get off that ridiculous subject altogether, and talk about what matters, and to do that, I want to clearly point out how they're misdirecting us.

I've done this in person when people have honestly asked, out of genuine concern, whether it's fair to insurance companies to ask them to compete with the government. I've asked, essentially, "why do you care?" and they've thought about it and realized that I'm right, that question doesn't matter so why waste time on it?

Here on my own livejournal I don't really mind arguing that it's okay that it's unfair, but to a broader audience I'd rather focus on the main point: that we're being misdirected into debating the wrong question.

First, in response to your earlier comment to me, I was going to point out that the "unfairness" is not a smokescreen to the question the insurance companies are trying to ask, but you're answering a different question (which you've just pointed out).

Second, I think it does matter that there is private insurance, and the reason is for competition. Here, I'll point to the British model, where there is an automatic public option but something like one third of the population also have private insurance (including one set of my grandparents, but not the other). Private insurance should continue to exist because I don't think the public option should be funding all the medical options available (easiest example is types of assisted living, big gradients without necessarily referring to actual health outcomes). Plus, monopoly service stifles innovation (desperately needed in healthcare - wouldn't it be interesting if a private insurer worked out how to cost less than a public option?) and can promote sloppy performance.

I was going to point out that the "unfairness" is not a smokescreen to the question the insurance companies are trying to ask, but you're answering a different question (which you've just pointed out).

Huh, that comment confuses me. My point all along was that the very question the insurance companies would have us debate is the smokescreen: it obscures the real question we should be debating, which is whether having a public option would make health insurance for Americans better, with a question of their own, which is whether the competition would be "fair". Ultimately, we the people don't care about that latter question, we care about the former: will the overall result of this be better or worse for us (not "will it be better or worse for insurance companies")?

Second, I think it does matter that there is private insurance, and the reason is for competition. Here, I'll point to the British model [...]

Nobody suggests that any plan that actually eliminates all private insurance could possible get anywhere close to passing the Congress, so that's a strawman. Private insurance would only disappear entirely if it could not provide anything whatsoever that anyone finds value in. It might get much smaller than it is now, or might not, depending on how good a job it does, but complete disappearance seems far-fetched (and if it does happen, it would happen only because it turns out that we get no value out of having private insurance).

As you point out, even if we had a public health system as comprehensive as the NHS (which neither Obama nor Congress seems to be contemplating), there would *still* be some niches for private insurance as long as we didn't ban them. And you certainly can't pretend that there's "fair" competition between the NHS and the private insurance companies in the UK. It's clearly dominant, with huge structural advantages, and no pretense of a level playing field. But so what? A level playing field between private and public insurance is not a legitimate public policy goal, better more effective health of the people is.

A level playing field between private and public insurance is not a legitimate public policy goal, better more effective health of the people is.

Just to try to fathom, for a moment, the minds of those who say they want a level playing field: As I see it, "efficient allocation of resources" is a legitimate public policy goal. If one finds a way to structurally favor the public plan, _despite_ the fact that it allocates resources inefficiently, then there would be legitimate complaints against that. For example, if the public plan was tax-subsidized, I would see "uneven playing field" as the following legitimate complaint: the public plan could be _worse_, by all available measures, than any private plan, and yet might still outcompete them due if it had heavy subsidies. This would be a negative outcome for everyone, and I think this is the outcome envisioned by those who complain about the evenness of playing fields.

So to me, the right answer to "uneven playing field" is "show me where resources would be allocated inefficiently". An uneven playing field which can't pass that test is potentially bad; one which can is potentially good.

Mind you, I _also_ suspect that most of the people who complain about level playing fields are under the misimpression that the public option WOULD BE subsidized. So if you don't directly attack that point, you may not get through to many.

(BTW, I am arguing here entirely under the hypothetical view that subsidized public healthcare would be bad. This is not because I hold that belief; I just want to point out what people who DO hold that belief are probably intending to argue about.)

*nod* I see what you're saying - it is part of what some people who are formulating these messages are thinking. It's not what they're communicating to the general public, though, and there's where my letter is aimed.

Purist Libertarians tend to believe that just about anything we currently subsidize by taxes would be better done privately, but only a very small proportion of the public agree with that view, so it's not a winning argument.

I'm on the other side: I'd be much happier if we had a ongoing-tax-funded public option. That's not going to happen this time around. I suspect my position has a lot more support than the Libertarian position, though I'm not sure whether it's a majority (it's really hard to measure to that level of precision, it's probably in the 35%-65% )

I have read the rest of this thread and I didn't see a clear answer to this.

The answer is that the complaint is wrong, because a government option wouldn't provide "unfair competition." Like the commercial health insurance companies, the government's health insurance program would be self-funded (as in, funded by premiums). So the question is, what exactly is unfair about the government adding to the competition?

The only thing I can think of that's unfair is "another provider will be charging less than we do, stealing all our business." But that's only a valid argument if the government health insurance wasn't 100% funded by premiums -- ie, if tax money was going to the insurance payouts. Companies self-fund their insurance using premium monies, so it would be unfair if the government funded its insurance using monies that regular companies can't get (like tax revenue).

But I wasn't satisfied with that, so I did some research: http://www.heritage.org/Research/healthcare/bg2311.cfm makes the argument that government-run health insurance is unfair because:

1) The government will have the lion's share of the market . . .
a) . . . due to insuring people who aren't currently insured. (solution for commercial entities: make your non-group (ie, not offered through an employer) insurance more affordable and you, too, can insure people who aren't currently insured)
b) . . . due to being cheaper than current options. (see a) for the solution).
c) . . . and that would lead to the OMG DEMISE of private insurance (they could have made this argument better by saying that the government would have a monopoly -- which *is* unfair (historically, among service providers). Thus, even though the government is "fair competition", it's quite logical to conclude that they're *so* much better that they drive their competition away (again, fairly and legally), that they then become a monopoly (which isn't fair.) )

2) The government isn't a corporation and thus does not need to follow corporate laws. Thus, they get out of things like paying taxes,
The article says 'In reality, the "competition" would be rigged, with the government plan enjoying a number of advantages.' but it doesn't say what those advantages are.

If that's really "unfair competition", how come Wal-Mart is still allowed to provide goods at super-cheap prices?

3) The government may or may not need to follow state licensing guidelines for insurance companies. (My first thought was "duh, just look to see if Medicare and Medicaid need to follow state licensing guidelines." But it's not that easy, as each state handles Medicare and Medicaid differently.) Again, this argument could have been made much better if it was changed from "it's unfair because they might not have to follow state licensing guidelines" to "state licensing guidelines exist for your protection -- otherwise insurance companies would never pay out *any* claims. If the government health insurance program doesn't have to follow those same guidelines, those insured by it are at risk."

And then of course, if the government has a monopoly AND doesn't have to follow licensing, the state of health care in the US would get tons worse.

4) Similar to #3, private insurance can be sued with torts, which the government can't. It's unclear whether the government health care insurance program would be able to be sued with torts or not.

(continued)

5) A new regulation in the plan is to have a government agency review *private* health insurance plans. If the government agency doesn't think that the health insurance plan is good, it can deny the commercial entity the right to offer that health insurance plan. Again, it's unclear whether or not the government health insurance would have to be reviewed by the same agency, but even if it is, it might be fast-tracked with things overlooked because it's the government.

6) The government has resources that insurance companies don't. We could get messages about the federal insurance program sent to us with our census forms, tax information, voter information, etc. In essence, the government has the largest list of possible leads to market health insurance to, including lots of private information (like phone numbers, including those on the "do not call" list, e-mail addresses, and mailing addresses). And they have that information already, even before a plan is formed. (I agree that this is unfair, though I doubt that the government will spam us).

7) Medicare currently is allowed to reimburse less money to the doctors and hospitals than any private insurer has been able to negotiate. This would be extended to the government health insurance plan. It is arguable as to whether that is unfair or not; but it helps catapult the government plan towards being a monopoly. And in any case, if the government decides to "negotiate" even lower, there could be a perception that the doctor/hospital has to accept that, because the government is way more powerful than them. (akin to if your landlord raises your rent, or your mortgage company raises your fees or interest rate -- you accept it until a certain pain point, because they are providing you a service and have power over you. And it's hard to deny that the government is perceived as more powerful than any one insurance company....especially if it does end up being a monopoly).

8) Even though the government health plan is self-funded by premiums, it will lose money in the first few years. That money has to come from *somewhere* -- and it will come from the taxpayer (just like if you started your own business, your private bank account covers more losses once the corporate account gets to 0). The government could charge less than the actual cost of a premium *should* be, undercutting everyone, and having the taxpayer pay the difference anyway....basically the government could lie about how much a premium should be, and cover the loss with taxpayer money.

So...after reading this....while there are *some* valid points that a government-run health insurance option is unfair, I believe those are minor points. However, *if* the government manages, in a fair manner, to drive private insurance companies out of business (which is the argument that most people are making in this post + comments as to *why* the insurance companies are saying it's unfair - because a cheaper option means less profits for them), *then* the government will be a monopoly, and *then* there is definite potential for unfairness.

I have read the rest of this thread and I didn't see a clear answer to this.

The answer is that the complaint is wrong, because a government option wouldn't provide "unfair competition." Like the commercial health insurance companies, the government's health insurance program would be self-funded (as in, funded by premiums).

I disagree, not because you're wrong (I think you're right), but because this is an illustration of the very wrongness I'm protesting with my letter. You're actually trying to answer their question. I think that even engaging that question is falling for the trap, the smokescreen that misleads us away from the questions we should care about.

If we start arguing that no, it's not actually unfair competition, they can come back niggling at the details and explaining why they think it would be unfair competition, and there's no real way to prove that wrong. The point here isn't who can convince who, the point is that they're trying to bog us down into a debate about whether this would or would not be fair competition between the public option and the insurance companies.

That is fundamentally a wrong debate to engage in. It stems from their arrogant sense of entitlement, that somehow the health of private for-profit insurance companies is important, and that it should be our goal to avoid unfairly competing with them. As long as we continue having that debate, we're on their ground, and thus, we're losing.

It's important to stop trying to answer that question. That's my point. It's the wrong question.
IT FUNDAMENTALLY DOESN'T MATTER. Even if they're "wrong", saying so is part of falling into their trap.

Well, yes, this is the framing and all.

But I did read the thread -- you explained why you weren't following the "is it fair?" trap. However, I think that the question "is it fair or not?" deserved an answer *after* you'd already explained why it's not a good question at all.

I think it's useful to say "that's not the point! The point is that it's a smokescreen." But it's even more useful, for people who *understand* that it's a smokescreen, to go back and actually answer the question...ie, "not only is it a smokescreen, but the claim that it's unfair is wrong."

Plus, I think that using the facts, those who oppose the gov't health care plan could have made a convincing *logical* argument about why it *would become* unfair, in addition to making their *emotional* argument.

Ahh, okay. I worry, though, that getting too deply into the details of answering the question, will focus people back on ... the details of the question, and make them forget how fundamentally wrong the whole question is in the first place.

For example, one of the points you brought up was the government's ability to use its size to negotiate lower prices. In the context of "unfair competition" that seems like a possibly good point, but if you step back and look at the real goals of health care reform, you realize that that's actually a great reason *to* have a public plan - if it can do that, who cares if it's "unfair", it's *better*. That's the sort of thing that worrying about the fake "unfair competition" question can obscure. In some cases, the very things we want to accomplish may turn out go hand in hand with competing "unfairly", and where that turns out to be true, those are things we should pursue.

Plus, I think that using the facts, those who oppose the gov't health care plan could have made a convincing *logical* argument about why it *would become* unfair, in addition to making their *emotional* argument.

Perhaps the could've if they'd wanted to more, or tried harder. I don't know. Probably not - in the general public, this is engaged on a level of broader arguments, not details. What I see permeating the public is the idea that the public option might be unfair competition for private insurance companies. I don't see people convinced that they know a bunch of detailed facts that explain why that is or isn't true, I just see people bringing it up as a general concept. Blowing away that smokescreen is my goal here.

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