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The Health Care Debate Made Very, Very Simple

Matt Yglesias's post on the Blue Dogs' public plan principles is an interesting example of one of the central ironies of the health-care debate. In most cases, individuals arguing that health reform is too expensive are dead-set against policies that would make it cheaper. It's a neat trick: Their opposition to real cost controls makes health-care reform pricey, and then they attack it on grounds of cost. Conversely, the folks willing to accept a pretty costly version of health reform would also be happy to embrace cost control policies like a public plan able to set Medicare rates.

Or look over here: Virginia Postrel is upset that Barack Obama isn't basing his cost control strategy around Medicare reforms. She doesn't appear to have bothered to learn that Barack Obama is basing his cost control strategy around Medicare reforms. Weird!

What you're seeing here are people who fundamentally don't want a universal health care system, and are willing to be flexible in how they argue and advocate for that goal, fighting with people who fundamentally do want a universal health care system, and are willing to be flexible in how they argue and advocate for that goal. A lot of these relatively esoteric policy disputes are simply manifestations of those two underlying impulses.

By Ezra Klein  |  June 5, 2009; 2:00 PM ET
 
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Comments

Well, to be fair, most of the conservatives simply don't want the government to be involved with the solution.

This makes them delusional not mendacious.

Posted by: leoklein | June 5, 2009 2:41 PM | Report abuse

Any public option with access to taxpayer funds would not be fair competition in the marketplace for health insurance. It would be like playing poker with someone that has open access to the casino's chips or playing baseball with Barry Bonds or competing in the mortgage industry with Fannie and Freddie. It wouldn't end well. It never does. Why would this be different?

The health insurance industry and the health care industry need a reformed pricing mechanism that better leverages market forces to control costs. Removing the employer tax exemption for health benefits and encouraging price competition between health care providers would help do this and it would not involve sacrificing the economic freedom of individuals.

Posted by: fallsmeadjc | June 5, 2009 2:55 PM | Report abuse

"Any public option with access to taxpayer funds would not be fair competition in the marketplace for health insurance."

I couldn't possibly care less. This is supposed to be about taking care of the people's business, not about taking care of wealthy special interests.

Posted by: labonnes | June 5, 2009 3:21 PM | Report abuse

"Any public option with access to taxpayer funds would not be fair competition in the marketplace for health insurance."

I commented in one thread yesterday about how amusing I always find this. On one hand, public health entities shouldn't exist because they are inherently inefficient. On the other, they shouldn't exist because they present unfair competition.

Studies have shown, however, that the overhead in Medicare is much lower than with the private insurers. There is the real rub: a public option will force the private insurers to actually compete. If private insurers are more efficient, they'll win. If the public plan is more efficient, it will.

There isn't any real competition in this industry right now, and they would prefer to keep it that way. How is this? Look up the word "collude" or "collusion."

Posted by: J-NC | June 5, 2009 3:48 PM | Report abuse

Advocates for universal health care are a wealthy special interest. They spend lots of money and time advocating their cause. Why does the pejorative "special interest" label only apply to interests that you disagree with?

Given the way the Government runs things I don't see how placing the remainder of the health insurance industry in their hands is going to help "the people."

Posted by: fallsmeadjc | June 5, 2009 3:56 PM | Report abuse

This is the second time you've linked to Virginia Postrel's post. The first time, someone pointed out that "Postrel's point is that we should do Medicare FIRST." That is in fact what she said: "If more-efficient government management can slash health-care costs by addressing all these problems, why not start with Medicare? Let's see what 'better management' looks like applied to Medicare before we roll it out to the rest of the country."

So quit misrepresenting what she said. She is not "upset that Barack Obama isn't basing his cost control strategy around Medicare reforms." She wants him to do that FIRST, not simultaneously. FIRST. GET IT? FIRST.

Posted by: ostap666 | June 5, 2009 4:17 PM | Report abuse

A public option would be inefficient and waste tons of taxpayer funds and it would be unfair competition to private insurers because it would have access to free capital. It would be inefficient because it would not have to maintain any market discipline to survive. It's survival would depend on keeping politicians happy. It could undercut private insurers because it wouldn't matter if it lost tons of money on every client. That's not fair and it wouldn't be good for this country.

Posted by: fallsmeadjc | June 5, 2009 4:21 PM | Report abuse

JNC: "I commented in one thread yesterday about how amusing I always find this. On one hand, public health entities shouldn't exist because they are inherently inefficient. On the other, they shouldn't exist because they present unfair competition."

So you have a lemonade stand selling lemonade for $1 at a cost of $.90 per cup giving you a great profit margin. The government opens up a lemonade stand next door selling lemonade for free, but taking $1.50 per cup from the taxpayers to do it. Less efficient, unfair competition, right?

Posted by: staticvars | June 5, 2009 4:54 PM | Report abuse

Please bear in mind that because of tax subsidies on premiums, the U.S. taxpayer is already bearing a burden to support private health coverage. It's just that under the status quo, my tax money goes to support the relatively affluent.

Posted by: palepink1 | June 5, 2009 5:39 PM | Report abuse

"So you have a lemonade stand selling lemonade for $1 at a cost of $.90 per cup giving you a great profit margin. The government opens up a lemonade stand next door selling lemonade for free, but taking $1.50 per cup from the taxpayers to do it. Less efficient, unfair competition, right?"

Wrong. Because first of all the government isn't a for-profit industry. And second, to treat your analogy accurately, that $1.50 would be the fee said tax-payer paid for said tax-payer's own cup of lemonade. That would be a 50% higher price for the same item. So if it really worked that way, no tax-payer would ever go for it.

What would really happen is the government would sell that $.90 cup of lemonade for $.91, because they are more efficient and have less overhead. And since the private stand exists solely by wastefully inflating the mark-up on price, they're now whining that...*gasp*...they actually have to *compete* with a service that doesn't care about its own profit margin! *HORRORS*!!!

Posted by: goaway41 | June 5, 2009 7:25 PM | Report abuse

goaway41: The flaw in your argument is that it really does cost more for the government. The myth of lower government overhead is just that... First of all, the ridiculous 2% number does not reflect the fact that they outsource their claims processing, thus the administrative fees are included in their costs. It also doesn't reflect the lack of a disincentive to receiving excess care.

I pay an average of $3750/yr/person in premiums for a PPO health insurance plan. I pay taxes on this full amount as owner of an S-Corporation. The means adjusted maximum payment for Medicare is more than $5750/yr/person- and this still includes some taxpayer subsidies, putting the real cost over $6000/person/year. This is vastly more than I pay. However, with full taxpayer subsidies, the cost is going to be $1200/person/per year. So, the government plan is less efficient, has higher actual costs, but cheats to be cheaper.

We need to attack costs, and we shouldn't use the model of the most expensive plan as the guideline.

Posted by: mmcknight5 | June 6, 2009 12:32 PM | Report abuse

"What you're seeing here are people who fundamentally don't want a universal health care system, and are willing to be flexible in how they argue and advocate for that goal, fighting with people who fundamentally do want a universal health care system, and are willing to be flexible in how they argue and advocate for that goal."

As a characterization of the debate, this seems right-on to me. Which raises the question:

Why on earth would anyone "fundamentally want a universal health care system"? That is not a rational goal to have, as an end in itself. It's quite a strange, obsessive one, in fact.

Posted by: soncharm | June 6, 2009 9:29 PM | Report abuse

All those who claim that offering the option of a public plan is the best option should think about how Mankiw's piece about why no non-profit plans exist, if they would really be cheaper.

http://gregmankiw.blogspot.com/2009/06/whats-point-of-public-option.html

Posted by: staticvars | June 6, 2009 11:37 PM | Report abuse

mmcknight5: Actually, no. The flaws here are:

First of all, you are making the comparison with a private PPO plan that doubtless doesn't cover everything and everyone. Those are the two most common cost-saving measures used by a private insurer: refuse to cover particularly risky people by pricing them out, and find grounds to refuse care for the people who are "covered". Find a private plan that has as wide a range of both qualified clients and approved procedures as Medicare, and then we'll talk.

And second, you are assuming that all tax payers would subsidize it, which is single-payer and not the public option under discussion. It is called a public **option** because it is **optional**. You don't have to opt in, and if you don't, you don't pay anything for it. And if it really is as inefficient and expensive as you are claiming, then it will fail for lack of subscribers. Listen to the anti-reform people from the GOP and the insurance industry as they attack the idea of a public option. Their entire hang-up is not that it would cost more or anything like that. They are afraid it would actually work.

Posted by: goaway41 | June 7, 2009 1:00 AM | Report abuse

goaway41:
"You are making the comparison with private PPO that doesn't cover everything and everyone"
A plan that covers everything is doomed to be expensive, see the McAllen, TX debacle. Refusing care for patients/revenue for care providers is the key element of controlling costs. We are being over-treated. The key point is, a public option will put the already indebted government at risk of losing even more money.

"you assume that tax payers would subsidize it"
Who is going to be paying for the risk pool of people they are going to get? What's going to happen when the public option runs out of money? The North Carolina plan is lining up for a bailout. If the public option plan is such a wonderful idea, if there is so much money to be saved by removing a profit motive from the insurance providers, why not set it up non-profit plans, separate from the government? If it's a non-profit that works, I could even give my money to it as a charitable donation.

If the point of the plan is to cover people that don't currently have insurance, no insurance company would lose any money, although prices could rise because demand for care could rise. If someone can set up a non-profit plan that beats the for profit insurers on cost and benefits, sign me up now.

Posted by: staticvars | June 8, 2009 9:03 AM | Report abuse

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