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The Underpants Gnomes Theory of Single-Payer

This is really weird. Yesterday, I said that Ed Morrissey didn't understand Barack Obama's health-care plan. Today, as a rebuttal, he posted a video of me talking about other health-care plans that I say liberal interest groups hope will move us toward single-payer. It's not really clear to me how this is a rebuttal. Unless, of course, you don't understand that there are differences between the various health-care plans discussed by Democrats, which I think is what's going on here. Ed, helpfully, lays out his thinking in somewhat more details toward the end of his post:

If you accept Ezra’s view (and mine) that the public plan is a stalking horse for single payer, then that’s Step 1. Step 2 would be Obama’s praise for the Canadian system, which does bar private insurance, and whose providers are all in the government system.

Actually, that's not my view unless the public plan can use Medicare bargaining rates. But put that aside. Conservatives have an Underpants Gnomes-theory of how liberals mean to achieve single payer. It looks something like this:

1) With 60 votes in the Senate and a hugely popular new president, Democrats labor to reform the health-care system and manage, barely, to create a public insurance option by promising up-and-down that it wouldn't have any government-provided advantages over private health insurance plans. This is about competition, they swear.

2) ????

3) The United States Senate votes to outlaw private health insurance.

I really don't understand it. Morrissey isn't wrong to say that many liberals would like a single-payer system. But there is nothing in Barack Obama's plan that would enact such a thing and nothing in the political jockeying we've seen thus far that should make anybody think such a thing is possible. I can tell Morrissey, with one hundred percent certainty, that liberals have not concluded from this experience that the United States Senate is extremely insensitive to the interests of private insurers and thus a few short years away from the wholesale nationalization of the industry.

By Ezra Klein  |  June 26, 2009; 6:20 PM ET
Categories:  Health Reform  
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Comments

I think Ezra's misunderstanding their point. To my knowledge, they're not asserting that private health insurance will be outlawed. They're asserting that government has an unfair advantage that will drive the private companies out of business. Under Obama's current proposal where a public plan must be self-sustaining, the unfair advantage that they imagine doesn't exist.

Posted by: cjo30080 | June 26, 2009 6:30 PM | Report abuse

Here is a number analogy for our approach to health care reform. (I'm a mathematician; I don't do sports analogies).

Suppose we had the problem of determining 2 + 3. We had been using 23 as the sum which seemed pretty reasonable, but it hadn't been working out so hot. The rest of the world has been using 5, and they've been getting pretty good results. They live longer than we do. Their babies weigh more at birth. And so on. AND they've been saving a bundle.

So we say we're gonna reform our 2 + 3 policy. We gonna consider every and all possibilities and pick out the best. I like 6; it works well for the product. Why not for the sum?

BUT wait a minute. We want a UNIQUELY AMERICAN solution. We will not consider 5. We won't even discuss 5. Our newspapers will delete 5 from their fonts. If you try to talk about 5, YOU WILL BE ARRESTED! We sure don't want to do what them damn feriners do.

Posted by: lensch | June 26, 2009 11:26 PM | Report abuse

I have over the last few days become convinced that the public option as offered by Obama may be a prescription for failure. There are going to need to be some very stringent regulations on all insurers which will create the "level playing field". These regulations will reduce margins. Plans for private insurers will need to fulfill certain characteristics, otherwise they will be designed to siphon off the healthy and then have them opt out for the public plan when they get sick. Furthermore to make the public plan "self-sustaining" under these conditions means that it will soon go in the red. There is no way that health reform can take place without the assertion of government authority over the insurance marketplace and the subordination of the profit motive of insurers to the public good: either via a single payer system (perhaps with some private optional insurances for the wealthy for certain non-essentials) or via a highly regulated marketplace of non-profit and a few for-profit insurers with reduced margins. The Obama Administration has yet to show the guts to do this.

Posted by: michaelterra | June 27, 2009 1:41 AM | Report abuse

A shorter reply: just because some of us think the appropriate place for health insurance CEOs is the stocks, not the stock market, doesn't mean it will happen.

"They're asserting that government has an unfair advantage that will drive the private companies out of business."

After this week's hearings, the private insurance industry and their lackies like Special Ed can stick their sense of fairness where they'll receive five bills from three proctologists and a form letter from the insurer saying it wasn't medically necessary.

Posted by: pseudonymousinnc | June 27, 2009 2:07 AM | Report abuse

It's interesting how a commitment to not outlaw private insurance serves as proof that the public option won't simply put them out of business.

I note that you insist the public plan use "Medicare bargaining rates." The private healthcare system today pays higher rates because Medicare pays such below-cost rates. Are you counting on the private sector -- which needs to make a profit to survive -- to compete with something that not only does't have to operate at a profit, but which also shifts its losses onto them both directly and indirectly?

Or is it your position that private insurers who fail as a result of the public plan will be "bailed out," (which, as GM and Chrysler have demonstrated, will simply make them agents of the public plan) thus proving the government's "commitment" to private insurance?

Posted by: whoisjohngaltcom | June 27, 2009 8:57 AM | Report abuse

whoisjohngaltcom-

A commitment to not outlaw private insurance does not serve as proof that the the public option won't simply put them out of business. If the private plans can't compete effectively, then they'll go out of business. That's nothing new.

michealterra--

Regulations do not, by definition, siphon off margins. Regulations could have an indirect effect on supply and/or demand that could either reduce, increase, or not effect margins at all. And you're mistaken that Obama's proposal does not result in " a highly regulated marketplace" and that it is not self-sustaining.

Posted by: cjo30080 | June 27, 2009 12:50 PM | Report abuse

cjo30080,
Tell me how the Obama plan will keep private insurers from skimming off healthy patients from the public plan until such point that they become too ill and then turn to the public plan. I'm listening.

Posted by: michaelterra | June 27, 2009 1:57 PM | Report abuse

Turning down potential insureds due to pre-existing conditions would be illegal under Obama's proposal.

Reciscinding/canceling existing coverage would be illegal under Obama's proposal.

Raising rates for individuals with existing coverage for any reason would be illegal under Obama's proposal--insurers would only raise rates on a class of insureds (e.g. insureds in a specific age group), not individual insureds.

In short, public and private insurers would not be allowed to deny coverage to somebody who wants it, cancel coverage of somebody who already has it, or charge more because a person has a pre-exisiting condition or gets sick.

Posted by: cjo30080 | June 27, 2009 2:46 PM | Report abuse

cjo30080,
This still doesn't prohibit private insurers from marketing low-premium but even lower coverage plans for the young. Does the Administration plan, such as it is, prohibit this form of plan marketing? Does it tell insurers what coverages are required for ANY plan? If this were allowed, it would create adverse selection "up front".

Posted by: michaelterra | June 27, 2009 3:03 PM | Report abuse

"If the private plans can't compete effectively, then they'll go out of business."

How could private insurers ever compete effectively with something that a)does not have to profit to survive, b)is subsidized by their own income taxes, and c)shifts higher costs onto them by paying below-cost for services it purchases for itself?

If you can't directly answer these objections, then you're not offering evidence to support the position that government as a "competitor" will not put private providers out of business. It most certainly will, because it's not really "competition."

Posted by: whoisjohngaltcom | June 27, 2009 11:59 PM | Report abuse

"The private healthcare system today pays higher rates because Medicare pays such below-cost rates."

Ah, yes. Because the "real usual, customary and reasonable" price of care is so meaningful. Give us a break: the fantasy of a pure, cool Galtian free market does not apply here. The treatment of serious illness is, as Ezra has elegantly put it elsewhere, not priced for individuals.

Private insurance for primary care deserves to die unmourned in a ditch.

Posted by: pseudonymousinnc | June 28, 2009 1:12 AM | Report abuse

pseudonymousinnc:
"Private insurance for primary care deserves to die unmourned in a ditch."

It's been dead for at least twenty years. The insurance you have now is already more a product of Congress than of the free market. How's that government healthcare working out for you so far?

Cost shifting is not about Medicare getting a fair deal while private insurers are getting ripped off. The fact is that some of the services Medicare pays for are being reimbursed below the actual cost of delivering them. Would you like to explain who is ultimately subsidizing these losses, if not private insurers and the customers who pay them premiums???

Posted by: whoisjohngaltcom | June 28, 2009 7:43 AM | Report abuse

"The fact is that some of the services Medicare pays for are being reimbursed below the actual cost of delivering them."

Cite, please.

Posted by: pseudonymousinnc | June 28, 2009 2:45 PM | Report abuse

pseudonymousinnc:
"Cite, please."

Why? Is your Google broken? It took me 15 seconds to find it. Are you asking me to do your homework for you? I'm tempted to just put up a link to an economics book, but merely reading the inside flap could threaten your entire political identity.

I tire of cat and mouse. Try to keep up. Since the official liberal position is, "Yes, cost shifting occurs, but [blah, blah, blah]" why can't we just skip straight to your ridiculous defense of it, whatever that is?

Posted by: whoisjohngaltcom | June 28, 2009 6:27 PM | Report abuse

What docs will sign up for the private plan if private insurance pays more money?

Look at HMOs and Medicare - best docs usually don't sign up for these plans - they don't need that kind of biz....

That's what I don't understand about the public plan - why would docs sign up for it?

Posted by: anne3 | June 28, 2009 7:44 PM | Report abuse

"Are you asking me to do your homework for you?"

No, I'm asking you to back up your assertions. Instead, you bluster.

Posted by: pseudonymousinnc | June 29, 2009 1:18 PM | Report abuse

pseudonymousinnc:
"I'm asking you to back up your assertions."

Google it for yourself. If you don't like it, then go argue with *them*.

Posted by: whoisjohngaltcom | June 29, 2009 3:10 PM | Report abuse

Even with all the resources of WaPo you haven't learned to do research Ezra. Some quotes form Medicare's birth;

"A major obstacle to Medicare legislation was widespread fear that compulsory federal insurance would result in federal control over medicine and over doctor-patient relationships. To counter this fear, the bill's authors drafted a provision specifically disavowing such control, the same strategy used to secure passage of public education bills in 1958 and 1965 (Twight 1996). Questioned about whether the 1964 bill represented socialism, Celebrezze directly addressed the issue of control, stating: "There is nothing in this bill which tells a doctor whom to treat or when to treat him.... There is nothing in this bill by which the Government would control the hospital, and as I understand socialism, it is Government control and operation of facilities. ... It is merely a method of financing hospital care, and that is all" (U.S. House Hearings 1963-64: 50). He added,

We are a paying agency and I don't see where you get any control of any kind out of that. Naturally, ... there will be minimum requirements like these which are required now under Blue Cross. I see no evidence where this would lead to control over the doctors [U.S. House Hearings 1963-64: 54].

In the 1965 House hearings, Rep. Wilbur Mills (D., Ark.) put the control issue clearly. First he quoted the bill's provision that "Nothing in this title shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided." Then he quoted other language in the bill specifying that amounts paid by the government to "any provider of services" under the bill "shall be the reasonable cost of such services, as determined in accordance with regulations establishing the method or methods to be used, and the items to be included, in determining such costs for various types or classes of institutions, services, and agencies." Mills concluded that "In spite of what we say here the Secretary has to get into some kind of an agreement with hospitals or hospital as to what the reasonable costs of taking care of a patient are" (U.S. House Hearings 1965: 136, 139, 142; emphasis added).

Ezra are you claiming Medicare reimbursements are reasonable? How do you not see how a public plan leads to single payor?

Since 1906 Liberals in Congress have proposed and advocated for nationalising healthcare. They have proposed it and written bills 20-30 different years. And you claim it isn't a possibility.

Posted by: NateO | June 29, 2009 9:53 PM | Report abuse

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