The New York Times in its Sunday, November 29 editorial argues for even a modest public plan citing again the old story that people need choice and that it will provide competition to the insurance industry and thereby keep a lid on premiums.
The current proposed versions of Public Option Light call for the option to be self sustaining and to negotiate payments with providers as opposed to the Medicare model. Proponents point to those designs as alleviating the fears of some of us who say that a public option will quickly become an expanded Medicare gradually morphing into a single payer system.
And what is this choice we seek, well it boils down to who is processing the claims and how. Given the new underwriting mandates in reform legislation and the soon to come required essential benefits packages (one that unnecessarily drives costs higher) what will be the difference between a private plan and a public plan? The larger question then becomes why do we need a public option in this environment? The Congressional Budget Office said such a plan would likely charge premiums higher than private insurance simply because of initial adverse selection and the fact it will not manage claims but merely pay them on arrival, exactly the same thing the CBO criticized Medicare for doing. In other words, there is no claim or cost management which provides some insight into one of the reasons for Medicare’s financial condition.
Then there is the ever present danger of Congress tinkering with the public option endlessly until it too becomes too big to fail and to costly to maintain. Again, I point to Medicare where the major portions of both House and Senate reform legislation deal not with the private sector but with Medicare, expanding benefits, changing this or that…tinkering and adding costs to that program when we have not found a way to keep it solvent. Simply lowering what the Medicare pays to hospitals and others is not managing costs. If the private sector tried that, the doctors and hospitals would drop out as participating providers (again a Medicare example). Medicare gets away with what it does simply because there is a private sector for providers to shift costs to, not because it is well run or more efficient. Has anyone stopped to think that Medicare’s administrative costs are too low and that is why there is such a high level of fraud and claim costs are out of control? It is far easier for politicians to point out the generosity of the Medicare payment process when compared to the private sector than to equate that with higher than justified costs.
If Medicare is so good and efficient why not simply allow some Americas to enroll in Medicare as the public option, why do we need another bureaucracy?
The New York Times and others are obsessed with insurance premiums when they should be obsessed with the costs that make up those premiums. I have repeatedly made the point that large self-insured plans including the plans of the various states experience cost increases at the same level as insurance premiums simply because the medical claims are what drive the costs. There is nothing in the pending legislation that addresses the fundamental problems in the system and even the modest attempts at doing so are focused on Medicare, not the 200,000,000 million Americans with private and employer based coverage.
There are those who say the real test will be to have a trigger, that is no public option unless over a period of some time costs are not controlled. That is absurd because costs are not going to be controlled by either the private sector or Medicare simply because this legislation is designed so that costs will increase. We seem to forget that the goal stated or otherwise is to expand coverage not to reform the health care delivery and payment system and we certainly do not want to upset the AARP, the AMA, and other physicians groups or the trial lawyers or the AFL-CIO.
Just as with the financial and housing crisis, we are our own worst enemy. Getting politicians into the act of “fixing” things and in the process telling us who else to blame is not and never has been the right solution. They are incapable of telling Americans the truth, they are incapable of seeing the unintended consequences and the interrelationship between all the moving parts or for that matter the human nature reaction to changes they make.