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The Three Bears of the Public Option

According to early documents and consistent reports, the health reform plan that the Senate Finance Committee is considering won't have a public option at all. Rather, it'll have some variant of Kent Conrad's co-op compromise. The House plan, meanwhile, has a strong public option that can use Medicare's bargaining power to negotiate low rates and a large provider networks. And Ted Kennedy's HELP Committee, we learned today, will endorse the "level-playing field" public option, wherein the government's insurer has no advantages over the private market.

One thing to notice in this debate is that all the committees -- from the centrists on Finance to the liberals in the House -- have recognized a simple fact: The private insurance market has failed us. It has failed to control costs, provide good service or generally act in a manner that didn't convince a substantial slice of the population that it should dynamited altogether. It has failed us so completely, and so totally, that everyone from Henry Waxman to Max Baucus has recognized that the government should build an alternative option into whatever reform proposal it develops. That's a striking statement.

By Ezra Klein  |  June 30, 2009; 2:38 PM ET
Categories:  Health Reform  
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Comments

Wow all the liberal think we should have socialized health care. What a shock. The sad thing is this is mentioned like its some sort of national consensus. My healthcare works fine and the alternatives to this problem with hurt far more people than the menial help it will give.

Has the Obama administration done anything that has not been a disaster? Be it supporting dictators in Central America, not standing up to them in the ME, the left is in the process of damaging this country far worse than Bush ever did.

Posted by: Natstural | June 30, 2009 2:57 PM | Report abuse

"The private insurance market has failed us."

LOL. Who says that government-regulated monstrosity is a "market"? Or that 90% of what it does can even be described as "insurance"?

Yes, what we have now does not promote affordable healthcare.

I want to know why it is possible to get my golden retriever x-rayed for $50, while it costs ten times that to x-ray me. How come it's not profitable to take my x-ray for the same price as my vet takes them -- what on earth could possibly be that much more expensive to photograph me???

In a nutshell, I want to see somebody fixing that. But all I see you libs doing is trying to rig up a way to make everyone think that something very, very expensive is "free."

This intellectual dishonesty is truly amazing. Insurance isn't too expensive -- healthcare is. And nobody here asks why. Never. Crickets.

You waste such opportunity to do good, Ezra.

Posted by: whoisjohngaltcom | June 30, 2009 2:59 PM | Report abuse

"The private insurance market has failed us."

Total BS. Total BS. The government already messes around too much with private insurance market. Medicare is an abject failure at controlling costs- it underpays for things so people ending getting excessive tests and procedures.

It's a bit of a misnomer to call what people have and are asking for "insurance". What the idiots really want is someone else to pay for their healthcare. We need real health insurance- high deductible coverage only. It is the government regulation of the insurance market (often state governments) that have prevented these sort of plans from coming into existence.

If you want healthcare to cost less, you fundamentally need less healthcare. You need to increase the supply of doctors by fighting the AMA. You need to decrease malpractice liability by fighting the ABA. You need to negotiate prices with drug companies and fight PhRMA. Make most drugs non-prescription- you'll save a trillion easily. You need a consumer incentive to refuse care by making it cost them real money. Finally, you need an educated consumer who understands that things like Xanax are addictive drugs, and just because the doctor says you should buy a pill or take a test doesn't mean it's in your own best interest.

Posted by: staticvars | June 30, 2009 3:06 PM | Report abuse

Well...I am as much of a free market guy as you get and I support a public plan. If Dems really think that corporate greed is the reason why insurance costs what it does then go ahead and hand them a 10 billion dollar check to start up whatever insurance plan they want to. Any state regulation they find too onerous to make work then knock that down for private plans as well. I don't think for a second that the goverment would be able to both charge what they believe is "fair" and cover everything they believe is "fair" so even with a 10 billion dollar gift I think the new plan would quickly be insolvent and would be relegated to the dustbin of history. But if you really want to try then by all means do so.

Posted by: spotatl | June 30, 2009 4:02 PM | Report abuse

So why don't you support HR676 which would eliminate private insurance and support good insurance for everyone with no extra cost by the eliminations of the waste caused by these parasites?

Posted by: lensch | June 30, 2009 4:15 PM | Report abuse

The biggest argument in favor of the public plan is its ability to save money. It has three ways of doing that.

One is paying less for administrative costs and costing providers less in administrative costs. Medicare is already doing that. Obama and his supporters believe that with incentives private insurance can do that too, although they have not been inclined to do it so far.

The second is by re-arranging payments to providers, cutting some and increasing others in ways that incentivize patterns of behavior that save money and give more effective care. Private insurance has done some of that in the past, but more or less stopped about 15 years ago because of consumer backlash hurting the companies in the marketplace. There is considerable evidence that private insurers would be glad to do that again, if a strong public program acted first to give them cover.

Third is by changing payment patterns to discourage the overuse of procedures and treatments that evidence indicates are not very useful and are sometimes even harmful but are widely used in the US. In this case, the public plan would give cover to doctors who might be inclined to not perform the interventions but are afraid that patients would just go down the street and get them or would sue. I once had a health system CEO say that he and his doctors were well aware that in many cases MRI and surgery for back pain were not justified, but that patients would just get the treatments elsewhere, leaving his system and hurting them in competition. Again, the public plan will give both providers and insurers cover to behave correctly.

The Lewin Group estimates that these things could save up to 30% compared with current private insurance as it exists now. There is no reason to suspect that private insurance would simply stand by and be run out of the marketplace. They would more likely act to institute these same steps and more to protect themselves. This is a big win for the American people, who are now paying an average of twice as much for health care as the rest of the world and getting worse results.

BTW, people who are writing comments need to review what socialized medicine is. Socialized medicine, like socialized anything, occurs when the government owns the medical system, as in Britain. No one is talking about the government owning the health care system. The discussion is about the government running a health insurance program to compete with private insurance – socialized insurance if you will, very similar to Medicare, or maybe even part of Medicare. Doctors and hospitals will remain as they are, as private entities.

Calling this socialized medicine just makes you sound ignorant and silly. Get it straight.

Posted by: PatS2 | June 30, 2009 4:52 PM | Report abuse

As to the comment by whoisjohngaltcom that "insurance isn't too expensive -- healthcare is" - that's a great point. Ezra made the same one two weeks ago:

http://voices.washingtonpost.com/ezra-klein/2009/06/listen_to_atul_gawande_insurer.html

Posted by: JohnN79 | June 30, 2009 5:03 PM | Report abuse

Ezra - can you clarify something? How will the public option be paid for? I assume that for someone like me, who is self-insured, I will continue to purchase my own insurance, perhaps this public option, perhaps private insurance, which ever gives me the best policy at the best price.

But I get the feeling that there's a lot of people out there who feel the public option will be paid for by taxes, not by premiums.

So if there is a public option, will I get to stop paying my astronomical monthly premiums? Are we creating a system that, given the glaring propensity for politicians to loathe raising taxes, will become as bankrupt as the other entitlement programs offered by the government? Or do we pay to play this particular game?

Posted by: anne3 | June 30, 2009 6:00 PM | Report abuse

A challenge to "whoisjohn" and the other posters who defend the private health insurers:

1) quit your job
2) try to get private health insurance

3) Come back and tell us about it. This is not a liberal v. conservative issue. It's not a socialism v. free market issue. It's a battle for survival that the American people are losing. If you say otherwise, there's a 100% chance that you are either under 30 or have never dealt with a health insurer directly without a large company that you work for doing your bargaining and paying most of your premium.

In other words, you have a computer and you know how to type but you have no freaking idea what you're talking about. This is one issue where a bible-thumping, homophobic assault weapon owner and a San Francisco hippie can cry over the same beer together and walk out in complete agreement. When you've been there, you know.

Posted by: akmakm | June 30, 2009 6:12 PM | Report abuse

"that's a great point. Ezra made the same one two weeks ago"

Um, no, he didn't. Ezra identified insurance companies as the actors who deny expensive treatment but never prescribe it. He never questioned why care costs so much in the first place -- so much that you need an insurance company to help pay for antibiotics, for example.

But it is a good point. And sad, really, that nobody wants to address it. Instead, we'll just trash the economy and tell everyone it's "free." That's real forethought, there.

Posted by: whoisjohngaltcom | June 30, 2009 6:14 PM | Report abuse

"A challenge to "whoisjohn" and the other posters who defend the private health insurers:

1) quit your job
2) try to get private health insurance"

Well, I'll happily do that if liberals in Congress will first uncouple my private health insurance from my employer.

Let's be perfectly clear what perpetuates this "battle for survival that the American people are losing."

Quite simply: Affordable healthcare is illegal in the United States. Where is your solution to make it legal?

But you were correct in that one of us has no freaking idea what he's talking about. You just don't realize which one of us it is. In fact, your elected officials are counting on that.

Posted by: whoisjohngaltcom | June 30, 2009 6:26 PM | Report abuse

Actually, the reformers are working aggressively on the idea that health care is too expensive.

Obama put his plan for an agency to assess medical effectiveness in the stimulus bill.

Obama and others have suggested making MedPAC more powerful and independent to allow it to make changes in payments that will reduce medical costs without having to fight the Washington lobbies that manipulate congress to block such reforms.

Reformers, including Obama, have suggested merging the public option into the administrative program of Medicare to control spending and reduce administrative overhead.

Obama called a meeting at the White House with private insurers, drug companies, and providers to get them to reduce costs.

In general, Obama's suggestions would reduce health care costs by at least $300 billion a year and perhaps as much as $600 billion. This is just the beginning. There are many reformers who believe that a combination of reduced overhead, reduced drug costs, more rational health management approaches, some reduced payments to high paid specialists, and other steps could reduce US medical spending by as much as one third and bring it into the range of countries like France, Germany, and others.

However, the CBO has not factored these ideas into estimates of costs because conservatives oppose most of these plans. For them, ideology is more important than results.

Getting information from sources other than Fox News would make people aware of this.

Posted by: PatS2 | June 30, 2009 7:06 PM | Report abuse

Myth - "It will be very expensive to get good health to everyone."

Fact - Actually there's a way we can have better universal health care at no more than we are now paying (see 5. below). Here are the facts (cf. www.pnhp.org):

1. We waste $100 - $200 Billion a year on the high overhead of insurance companies.
2. We waste $200 - $300 Billion a year on doctors filling out forms for insurance companies.
3. I don't know the compliance cost of patients fighting with insurance companies, but it must also be in the 100's of Billions.
4. We pay the highest drug cost in the world to drug companies that spend twice as much on profit and three times as much on "marketing" as they spend on research. This is about another $100 Billion each year.
5. Because of the above, we could give Super Medicare (few limitations, no co-pays, no deductibles and complete drug, dental & mental coverage) to everyone at no more cost per person than we are now paying.

Other countries with single payer systems get better health care as measured by all the basic public health statistics and they do it at less than half the cost per person. If we build on our rotten system, we will get a health care system with rotten foundations.

Posted by: lensch | June 30, 2009 7:35 PM | Report abuse

I love this, a reporter writing a statement (the private insurance market has failed us) and then saying, damn, that's a striking statement! Ezra Klein has no problem with self-love, I see.

Posted by: DexterW | June 30, 2009 8:07 PM | Report abuse

PatS2:
"Actually, the reformers are working aggressively on the idea that health care is too expensive."

No. They do acknowledge that it is too expensive, but they are only trying to make it cheaper to insure. They are not trying to make it cheap enough that insurance wouldn't be necessary for routine costs. It could be that cheap -- it should be that cheap. You should not need a third-party to pay for checkups.

"Obama called a meeting at the White House with private insurers, drug companies, and providers to get them to reduce costs."

Let me explain something about the private sector: you don't "get them to reduce costs." That's the neat thing about for-profits -- they already do that. When government sits down with insurers to lower costs, the real question is what requirements government is imposing that make care so expensive.

And the answer isn't telling the AMA that there will be no caps on pain and suffering awards, as Obama did. We pay a lot more for everything as a result of malpractice awards, and negligent or not, virtually none if it is actually paid by bad doctors. That system has literally turned into a lottery.

No, lowering costs is not something you "get" anybody to "do" -- it starts with making affordable care *legal*. And I see none of that.

Posted by: whoisjohngaltcom | July 1, 2009 1:32 AM | Report abuse

john galt person,
You're allowing your ideology to bleach the detail out of reality. You're belief in markets is such that you are willing to distort how the world works in order to claim that markets are always the only way to deliver goods and services. It ain't always the case...you don't want markets building roads..for instance.

In the case of medicine: some of medicine will be remain expensive because YOU, if and when you get seriously ill, will want someone with years of training using the the latest equipment, spending time and effort on your case. The latest equipment, by necessity is expensive and the very experienced practitioners' time and training is expensive.

So stick your head out of your ideologically created world into the real one and grapple with the issue... Markets may help some aspects of health care delivery but your religious adherence to the market mechanism is not going to be a good guide to actually containing and cutting costs.

Posted by: michaelterra | July 1, 2009 2:05 AM | Report abuse

Also, re: cost reduction and for-profits:

For profits reduce costs TO THEM but not necessarily to society or the system as a whole. In the case of unregulated health insurance companies they externalize costs to society or to the insured. So again religious adherence to half of Adam Smith's writings is no qualification to discuss these matters.

Posted by: michaelterra | July 1, 2009 2:09 AM | Report abuse

lensch,
I share much of your optimism about potential cost cutting in a publicly funded or a highly regulated system of non profit system but I don't think that necessarily a no co-pay system is ideal. We don't want to encourage over-utilization of even the most generous benefit system. Some form of utilization fees, though not nearly as high as the current system of deductibles and co-pays with a yearly cap, are desirable to keep people aware that they are using a service that has value.

Posted by: michaelterra | July 1, 2009 2:21 AM | Report abuse

"The private insurance market has failed us"

Insurance does not equal coverage and coverage does not equal care. Similarly, "private" insurance doesn't necessarily mean for-profit insurance.

Most of the recognized leaders in delivering high quality/lower cost care are already using electronic records and evidence based treatment plans. They are also private...and non-profit. Those organizations have always been focused on getting the most *care* for their money rather than maximizing profits for shareholders by minimizing care.

The majority of people in this country don't seem to realize that care in most of Europe is delivered through private doctors who are paid by non-profit insurance companies, and funded primarily by employers, supplemented by government contributions. Everyone -- working, non-working, retired, disabled -- has the same coverage. In some countries, for-profit insurance supplements the national plan.

The whole discussion here has started with the wrong premise. Instead of arguing about protecting for-profit insurers from some vague, patched up "public option", we should be discussing a national public plan with niche private options.

Posted by: Athena_news | July 1, 2009 2:28 AM | Report abuse

"I want to know why it is possible to get my golden retriever x-rayed for $50"

Because if your dog has a terminal disease, you can have her put to sleep. While Galtroids might propose that for the poor/old and sick, they are in a minority here.

Private insurance for primary healthcare combines the worst of all worlds.

Posted by: pseudonymousinnc | July 1, 2009 5:23 AM | Report abuse

"i want to know why it is possible to get my golden retriever x-rayed for $50"


x-raying a golden retriever for $50?
i couldnt get my dog's paw x-rayed for $50.
health care for an ailing or senior doggie runs into the high hundreds and thousands.
with my monthly health insurance premium at almost almost nine hundred dollars a month, (and that doesnt include my monthly portion on bills) when my doggie gets sick, it is a serious concern.

Posted by: jkaren | July 1, 2009 8:58 AM | Report abuse

Whoisjohngaltcom:

“You should not need a third-party to pay for checkups”

WTF!!??

Are you suggesting that somehow doctors and labs should be forced to lower their fees, and that in turn their landlords, employees, and suppliers should be forced to lower their rents, wages, and prices? That doesn’t sound like something Grannie Ayn would approve of.

Or maybe you are suggesting that we should raise the wages of the average person so that they can afford the fees? Again, that doesn’t sound Galtoid, since they usually think the masses are overpaid.

Perhaps you are suggesting some sort of Atlas Shrugged style strike – everyone should refuse to get health care until the prices go down, and to heck with worrying about your chest pain, cholesterol, blood pressure, and so on.

The best way, by far, to reduce health care costs is to eliminate unnecessary or harmful procedures and expenses. Reduce administrative overhead for insurance. Eliminate unnecessary tests, procedures, and treatment. This has the added advantage of actually making health care better, not worse.

There is good evidence that as much as one third – that’s almost $800 billion a year – of US health spending is due to overuse of some management options. We pay $70 billion a year more for prescription drugs than they would cost if we paid world prices. We could save at least $150 billion a year by reducing billing overhead to the levels of Medicare. That would be over one trillion dollars a year. Reformers, including Obama, are addressing those issues. Those are real. Fantasies about restoring the day when the old country doc came to your house and put a five in his pocket and didn’t report it to the IRS are not useful.


Posted by: PatS2 | July 1, 2009 10:33 AM | Report abuse

Athena_news:

“Instead of arguing about protecting for-profit insurers from some vague, patched up "public option", we should be discussing a national public plan with niche private options.”

Good point. The type of approach you seem to be discussing – the “social insurance” model – is the most common in the world and works great where it is used. It is only slightly more expensive than single payer or true socialized systems, and may work better. France, Germany, the Netherlands, and many other countries are examples.

Unfortunately, most of the comment threads on health care on Ezra’s site have suffered the intellectual equivalent of termite infestation, and we are reduced to dealing with paranoid fantasies rather than reality. Perhaps we should start ignoring some of the sillier comments. Either that or we should all be sent to our rooms to spend the next few days becoming better informed.

Posted by: PatS2 | July 1, 2009 10:47 AM | Report abuse

One thing to notice in this debate is that all the committees -- from the centrists on Finance to the liberals in the House -- have recognized a simple fact: The private insurance market has failed us. It has failed to control costs, provide good service or generally act in a manner that didn't convince a substantial slice of the population that it should dynamited altogether. It has failed us so completely, and so totally, that everyone from Henry Waxman to Max Baucus has recognized that the government should build an alternative option into whatever reform proposal it develops.


Why do you not say WHY it has failed us? Because costs are shifted and have been so for years from the medicare system to private coverage. hospitals every day reach to their private insurers to get back monies taken away by medicare. If you have private insurance you hear all the time of the "threat" of a hosptital network leaving your plan. The backstory to that that no one knows is that it starts with medicare reducing their reimbursments (which OBAMA favors) and then it leads hospitals that want to stay open to go to private insurers to require ridiculous reimbursement increases to pay for the lost monies from Medicare. WHen insurance companies balk at this as it would cause them to raise premiums they leave the network or at least threaten to. They either do and the insurance company loses market share potentially or they give in and increase their cost to even greater levels more than Medicare allows and further spiral the system.

Again we'll all be rationed soon. Its just a matter of how soon and how much. Those of us that will have monies to pay for above standard care will be the ones that survive whether that means getting a second catscan per year to catch a re-occurance of cancer where the current system allows for it but the MEDICARE style system will not. Start saving now people.

Posted by: visionbrkr | July 1, 2009 11:01 AM | Report abuse

"health care for an ailing or senior doggie runs into the high hundreds and thousands."

...which is much better than the high tens and hundreds of thousands we regularly spend on people, isn't it?

Yes, you can put your dog to sleep, but you can also do the procedure. I'm assuming that with people we'll always do the procedure instead of euthanasia. The question -- the *point* is why must the *procedure* cost so much more for a person than it does for a dog?

And then, run that reasoning -- whatever the answer may be -- against the needs of a person who can't afford the current price of the procedure, but who might be able to come up with the amount we spend on dogs.

Only then can you tell me why that person should not have access to that procedure, and how that reasoning actually works in that person's interests.

Affordable healthcare is illegal in the US. Unless you happen to be a dog.

Posted by: whoisjohngaltcom | July 1, 2009 2:44 PM | Report abuse

PatS2:
"Are you suggesting that somehow doctors and labs should be forced to lower their fees, and that in turn their landlords, employees, and suppliers should be forced to lower their rents, wages, and prices?"

Nope. I'm suggesting we drop by the office and ask them what special requirements we impose on them that cause their costs to be so much higher than, say, those of a vet -- or even compared to their human counterparts in other countries. Then let's see if all these regulations are really worth the costs they add.

"The best way, by far, to reduce health care costs is to eliminate unnecessary or harmful procedures and expenses. Reduce administrative overhead for insurance. Eliminate unnecessary tests, procedures, and treatment. This has the added advantage of actually making health care better, not worse."

And why do you think doctors request procedures which even they will tell you are unnecessary? Because I'd like to fix that, too, before we trash the whole system by turning it over to government.

Of course, it's possible that you don't really want to fix this system, which is perfectly understandable. Maybe what you really want is just that one particular solution. I think that's pretty much what got us into this mess, though. This is not a "market failure" -- it's all part of somebody's grand nationalization scheme.

Posted by: whoisjohngaltcom | July 1, 2009 2:59 PM | Report abuse

This is a FRIGHTENING possibility for the future if ObamaCare fails in its current form. Obama may force us to take universal healthcare by necessity by ruining AIG. http://bit.ly/hNUSy

Posted by: AverageJoeLE | July 1, 2009 9:40 PM | Report abuse

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