Battle Royal
Posted by Steve Piontek, Editor-in-Chief in companies, health care reform, opinion, regulationIf this was a sports event or some really stadium-packing group like the Rolling Stones or U2, it would have been sold out in minutes and the scalpers out in force. But as the event I am referring to is the battle over health care reform that will be fought out in the halls of Congress and over many months, tickets are still to be had.
In any case, this promises to be one hell of a battle, even if it does go on for months. Upwards of $2 trillion annually is at stake here in terms of the tab for health care in this country. Entrenched forces are not going to walk away from that lightly and those attacking the status quo are going to have to be mighty determined if they are to make over the current system the way they want.
One thing about President Obama in his drive to reshape the health care system in the U.S. is that he has stayed on message and managed to get a lot of Democrats in Congress behind him. Given the man’s track record of pulling off surprises, I would not be at all complacent if I were one of the industries to be affected.
Those industries, meanwhile, realized that simply saying no is not going to cut it with the President, the Congress and the public. So they have made gestures-execs from six health care-related trade groups presented the President with a pledge in May to work to shave some $2 trillion or more over 10 years from the cost of health care.
By some accounts, however, these organizations immediately started to backpedal, saying that what they said was misrepresented or exaggerated.
What’s proving to be the galvanizing point of focus here is the so-called ‘public option,’ wherein the government could be a provider of insurance to those who aren’t covered by group or individual plans.
The cries have already gone up about how the public option with the government’s muscle behind it would eventually crowd out private insurers from the market. This, critics say, would spell the end of health care as we know it in this country.
I think it’s important for insurers and others involved in this battle to realize that for a lot of people a change that spells the end of health care as we know it in this country is not exactly the worst possible outcome. Some of these people, in fact, might welcome such a development.
One such very vocal critic of insurers and their allies is Paul Krugman, Nobel Prize winning economist and New York Times columnist. His June 5 column in the Times was headlined ‘Keeping Them Honest.” And sorry to say, the ‘them’ he was referring to are health insurers.
Krugman argues, in fact, that only the public option will keep insurers honest. His column ends, “Right now the health insurers are promising to deliver major cost savings. But history shows that such promises can’t be trusted. As President Obama said in his letter [to Senators Max Baucus and Edward Kennedy], we need a serious, real public option to keep the insurance companies honest.”
This battle is just beginning to heat up. Not only are Senate Democrats promising some kind of public option in any health care reform scheme, but more and more talk is filling the air about taxing health insurance benefits.
Republicans, for the most part allies of the health insurance business as it is, are saying they’re being locked out of the legislative process and thus any bill won’t be bipartisan.
The way this is shaping up, the summer of ‘09 could be one of the hottest on record. Just what we journalists love.
Tags: health care reform, opinion, politics
Entries (RSS)
If the public option crowds out the private plans, it will only be because the public option is better and cheaper than the private plans. So what are we afraid of? If we can’t provide health care plans more efficiently than the government can with its inefficient bureaucracies, then as a society we’re better off having government do it. Are our bureaucracies even more inefficient?
We already realized we can’t provide street paving and police departments and national defense more efficiently than the government can, so we have the gov’t do it.
Most of the street paving is done by private contractors. The military is made up of volunteers. As per Thomas Sowell’s book, “The Housing Boom and Bust”, we are in the present recession mostly from government meddling in the housing market. Medicare is subsidized by private insurance payments, and is still going bust. Socialism simply doesn’t work….never has and never will.
Dear Steve,
First, if you recall earlier messages from me, you know that I really like your take on things. Once again, I agree with you completely. As a good “GBA”, I’d like to offer some policy-wonky economic observations.
As you correctly point out, the major interests are going to protect their turf. When this comes up, I think mostly of hospital administrators – mostly (nominal) Not-for-Profits who none-the-less pursue “Utility Maximization” (so says my text book) and the “5 P’s”: Increased Pay, Perquisites, Power, Prestige and Patronage (I live in Metro-Boston. See: Mass General Hospital.)
The ONLY decent explanation I have ever laid eyes on when it comes to healthcare inflation is Baumol’s “Cost Disease” theory, which explains the increase in cost in real terms as a function of the absence of productivity improvements inherent in the hands-on nature of a physician delivering care. Sure, there’s technology, drugs, etc. driving up costs There’s also fee-for-service reimbursement that creates incentives for over-billing. And the red herring of malpractice suits (a real hassle for a narrow band of care givers – not an overall economic driver as is often incorrectly stated.) Etc. etc.
Anyway: the point I would make is that all of this talk of cost reductions (via improved IT, reducing “waste, fraud & abuse”) is nonsense. It’s always going to come down to a matter of who controls the transaction. Right now, the most important decision makers are the hospital, drug and insurance execs who sign the deals. What could the federal government possibly do that would lead to price disclosure and self-policing by care givers? The Massachusetts “solution” worked (initially) because every interest had a belly at the table. But there is still no cost control, inflation remains rampant, and cuts are already being made. I think it’s going to crash, just like Tennessee’s program did in the 90’s. Massachusetts is not unique, nor the first to try, nor the smartest. At the moment, policy makers here have strained elbows from slapping themselves on the back. But the chickens are going to come home to roost. God help the country if it thinks we’re a model.
Thanks for reading!
Hey guess what the life guys are next!!! The Gov. can’t figure out away to pay down there debt. There isn’t a great love for insurance people so what better industry to steal from, there going to look like gods. And they put Capone in jail what a shame.