Network News

X My Profile
View More Activity

Co-Ops as an Alternative to the Public Plan

PH2009080800066.jpgI've been on MSNBC twice today to explain the difference between a public option and a co-op. I think I'm getting sort of good at it. So I may as well do it here, too.

There's an idea out there called "the public option" grounded in a particular critique of the insurance industry. In particular, the argument is that the private health insurance industry is irreversibly compromised by its need to turn a profit. But we don't want people's access to health care to be governed by whether or not they're profitable.

The theory of the public option relies on the insights of the single-payer folks and the demonstration of Medicare, not to mention foreign systems: A robust public insurer can do a better job holding down costs and delivering access to high-quality care than a fractured private insurance system.

Obviously, a lot of people don't like these ideas. Among them are insurers, Republicans and, crucially, providers like doctors and hospitals, who fear that a large public insurer will hold down costs, which will in turn hold down incomes. They have argued, credibly, that they can unite and kill a bill that contains a strong public option.

In early June, Max Baucus asked Kent Conrad to solve this argument. Conrad came up with the co-op proposal. And I literally mean "came up" with it. Conrad told me that the idea emerged "out of conversations in my office after we were asked to see if we couldn't come up with some way of bridging this chasm." To put it bluntly, the co-op does not solve a policy problem so much as it solves a political problem. That political problem was, "How do you finesse a compromise on the public option?"

You could imagine a co-op proposal that actually offered a meaningful alternative to private insurers. Some months ago, Conrad, alongside public plan supporter Chuck Schumer, seemed to be edging in that direction. But I haven't heard anything similarly encouraging since then. The co-op is now a favored alternative for Republicans who don't agree that the profit motive is a problem in health insurance and who don't agree that single-payer or Medicare-for-All represents an appealing alternative to the current situation. Given that constituency, it's not likely to satisfy people who have the opposite perspective on all of those questions.

As the situation stands, there's no existing model for co-ops to follow and no policy specifics on Conrad's idea, so it's impossible to say whether, or how, they will work. I could imagine very good co-ops or totally useless ones. But given the political forces arrayed around the issue, I think that's sort of the wrong question. The idea works if it somehow solves the political problem that birthed it.

Photo credit: Melina Mara -- The Washington Post Photo.

By Ezra Klein  |  August 17, 2009; 5:01 PM ET
Categories:  Health Reform  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: It's Not About the Insurers. At Least Not Totally.
Next: How Is Conrad Counting the Votes?

Comments

And killing the public option for some other plan buys what? Not Republican votes. But maybe invitations for Senators to parties, and continued donations from Pharma, etc.

Posted by: AZProgressive | August 17, 2009 5:15 PM | Report abuse

Co-ops suffer the same flaw as the 'public option'. Both have no profit motive.

While good liberals will tell you that profit is an ugly word and should not be a part of healthcare, I disagree and here's why:

Capital demands a return on investment. Capital invested in healthcare should get a return. If not, it will flow to other enterprises that will provide a return just as water will flow to it's lowest point. In order to keep the capital required in healthcare from exiting, a return on captial must be subsidized.

Both co-ops and public plans require this subsidization....a cost....just to keep the capital from going away.

Subsidization is unfair advantage and will destroy competition.

It's not 'rocket science'.

Posted by: WrongfulDeath | August 17, 2009 5:26 PM | Report abuse

I really wish that democrats were as skilled as republicans in fillibuster politics. When are we going to hear "up or down vote" demanded on the bill that comes out of conference committee with a strong public option? I am so tired of hearing on CNN how we need sixty votes in the senate to pass health-care. We do not! We need 51. Would someone in a democratic party communications office please start shifting the conversation to whether or not Nelson, Lincoln, and Lieberman are going to SUPPORT a REPUBLICAN FILLIBUSTER??

I realize that the politics of this are hard. But right now the politcal press is focusing 24-7 on health-care. There is ample space in the news cycle for democrats to start talking about what the real process is in the senate.

Personally, I would really be stunned if Nelson, Lieberman et al voted for a fillibuster. That would really be something.

Posted by: phillycomment | August 17, 2009 5:26 PM | Report abuse

To me it just boils down to what is done to make the public plan "strong". In any formulation that it currently being considered where the public plan basically has to be on a level playingfield then I see absolutely no reason why the public plan would do much to lower costs.

Making providers accept the public plan in order to accept medicare would lower costs. Price controls on drugs would lower costs. Subsidizing entry into the public plan to increase the number of people covered could lower costs. But the public plans being considered don't have any of these things. The public plan as currently being discussed is just not a gamechanger at all.

Posted by: spotatl | August 17, 2009 5:29 PM | Report abuse

Wait, didn't you say you were going to explain the difference between a co-op and a public plan? I've just read this post twice, and I still don't know what a co-op actually is.

Posted by: piminnowcheez | August 17, 2009 5:33 PM | Report abuse

>>"Capital demands a return on investment. Capital invested in healthcare should get a return."
Bingo. Capital investment must earn a profit or capital will flow elsewhere. That's why healthcare should not be a private endeavor, any more than police protection or fire protection. As with those services, government should ensure a floor and provide a basic level of healthcare and that should not be profit-driven. And as with police (where you can hire private security) or fire (where you can install your own sprinkler system, etc.), in health care there could be a vibrant market for services beyond the basic.

Despite what you think, you're not arguing for removing a public option. You're actually arguing for single-payer. Ironic, isn't it?

Posted by: gilroy0 | August 17, 2009 5:33 PM | Report abuse

Fascinating how profit becomes religion for the right wing. It's a golden calf like none other. We run lots of services in this country as non-profit, public utilities, medical services, social services, etc. I worked for 20 years with a non-profit health services agency that contracted with both public and private providers, including insurance companies. We provided a service with more efficiency and effectiveness than any other entity, because we could do it without the need for profit, and at the same time we could draw on charitable resources and volunteers.

In our neck of the woods, the Pac NW, by far the best health insurance and the best medical provider is Kaiser Permanente and it does so without the need for profit with greater efficiencies and at lower cost than any other provider.

Posted by: cmpnwtr | August 17, 2009 5:40 PM | Report abuse

The public option is really Medicare written large, and then inverted. Let's not forget that Medicare has a private option (Medicare Advantage plans) that lets seniors choose to select a private for-profit option that replaces Medicare Parts A, B and D, (but costs the government more because GOP-provided subsidies that the private firms get above the standard Medicare funding).

So, the public option has a TRACK RECORD in the costliest segment of the population (seniors), and folks like it, and although the costs to government are increasing too fast (even if the private-plan subsidy were removed as Obama proposes).

[excuse my ALL-CAPS, but the WaPo chooses not to let commenters have the extraordinary option of using italics or bold in their comments, for emphasis].

THERE IS NO TRACK RECORD of a successful health insurance co-op. Once again, there is no track record of a successful health insurance co-op. Full stop.

It is pie in the sky. Ponies for some!

Why should any progressive/liberal want to run the political risk of creating a co-op option that has an unacceptable risk of failing down the road? They shouldn't.

The only alternative that I see that would consider a good or acceptable alternative to the public option is MEDICARE FOR ALL. With the medical risks spread across the age spectrum, there is even a potential reduction in the per-person costs of Medicare.

So, the choices for the Senate should be:
- public option separate from Medicare
- Medicare for all
- no health care reform.

Dem. "moderates" should understand that any Dem. who does not vote for (or refuses cloture on) one of the first two choices is going to be opposed by the Dem. party in funding of campaigns, and primary opponents from the Dem. party in their next election.

Frankly, I don't give a darn if the Dem. party survives if they can't pass needed legislation with the electoral mandate they were given in 2008.

Posted by: JimPortlandOR | August 17, 2009 5:40 PM | Report abuse

"...Republicans who don't agree that ... single-payer or Medicare-for-All represents an appealing alternative to the current situation."

Why single out Republicans? There are no major Democrats pushing single-payer or Medicare-for-all. And the co-ops are a Democratic idea that now seems to be supported by the Democratic White House.

In any event, the unstated point of a public option was to have it subsidized from general revenue so as to keep its rates below market. Co-ops may not offer this option.

Posted by: tomtildrum | August 17, 2009 5:43 PM | Report abuse

it all comes down to an even playing field. Price controls on doctors, no premium taxes paid and taxpayer funding makes a co-op another name for public option that will get no support from anyone outside of progressives and liberals. Republicans, insurers, doctors and hospitals aren't that stupid. Well maybe some republicans are but the rest aren't.

Posted by: visionbrkr | August 17, 2009 5:46 PM | Report abuse

"I've just read this post twice, and I still don't know what a co-op actually is."

A co-op is a system of ownership; members would pay premiums to the co-op and the co-op would pay benefits to providers on their behalf. It would simply be a not for profit insurance company (which already exist by the way).

The public option is a government run insurance company; taxpayers would pay premiums and the public insurance plan would pay benefits to providers on their behalf.

The co-op will never be able to compete with existing insurance plans and will quickly go out of business without taxpayer support. The public option (despite politician’s assurances) will not survive without taxpayers subsidies which will crowd out private insurance plans.

Posted by: kingstu01 | August 17, 2009 5:48 PM | Report abuse

visionbkr, insurance companies have price controls, as well (ever look at a bill?). Doctors deal with the insurance companies because they have to.

Also, I know plenty of people for whom insurance companies are never going to profit from. What's their option?

Posted by: constans | August 17, 2009 5:51 PM | Report abuse

kingstu- thats not the kind of public plan that anyone is currently discussing. The public plans being discussed are supposed to rely strictly on incoming premiums and will be self sufficient.

To me they are absolutely identical until they become insolvent. If the co-op becomes insolvent then I thnk it would go away. If a government run public plan goes insolvent then I think that people believe it would unquestionably be bailed out and refunded. But thats not the point of what the public plan is SUPPOSED to be which is why for now I would prefer to support co-ops. Though if people want to make a sales pitch that we should have a public plan subsidized by the government then thats a whole different argument. But how its being discussed where it is self sustaining I don't see any advantages at all to calling it a public plan compared to a co-op.

Posted by: spotatl | August 17, 2009 5:59 PM | Report abuse

kingstu01 - thanks! that was helpful. I don't really see how the conclusions in your 3rd paragraph follow, but that's okay, I'm not asking you to blog-on-demand for my benefit. From your explanation, though, it occurs to me that since co-op(s) in this instance would be set up by government mandate and presumably regulated according to the desired reforms, there's not a lot of practical difference that I can see between co-ops and the public option. But maybe that's the point.

Posted by: piminnowcheez | August 17, 2009 6:02 PM | Report abuse

Here's where I see a compromise:

Either a national or regional co-ops are created. States can, by vote of the legislature, choose whether or not to participate in those co-ops.

Alternately, each state can choose whether or not to have a co-op, and whether or not to join/allow other states in that co-op.

That way, small, Republican-leaning states can choose to "opt out" of the co-op system, but people living in more populous states will still benefit from the larger risk pool, particularly if they join together (NJ and DE, for example) with neighboring states.

Posted by: augie2 | August 17, 2009 6:13 PM | Report abuse

There's just no way you can create a "solvent" insurance industry. There are a lot of patients who will require more care than they can possibly be expected to pay in premiums over their lifetime. There are many people who will never have enough money to pay the "average" premium required to sustain an insurance plan. The result will be a sliding scale where those who make more money will pay more, much like progressive taxation. When the required sliding-scale premiums become higher than the public is willing to spend, they will object, forcing the government to cut spending by negotiating downwards the prices they are willing to pay for services.

I don't really see what the alternative is, unless we regard our lives as gambles in which we bet that we won't get any kind of chronic illness that would bankrupt (or at least reduce to penury) us and our families. So far, I'm in the clear, so it looks like I'll have a prosperous life, as long as I stick to my current job.

Posted by: constans | August 17, 2009 6:17 PM | Report abuse

Most people including Obama seem to make much of insurance company profits, but profits are not the driving force in their business model. The Medical Loss Ration is what is important. Here is a primer:

The goal of a well run corporation is to make money for shareholders. In the case of health insurance companies this is in conflict with providing good efficient health care to the country.

The for profit insurers have learned that the way to get a high stock price is to have a low Medical Loss Ratio which is the percentage of inflow (premiums) paid out in medical benefit to patients. Notice that they consider medical benefits as "losses."

They do this in two ways. They make the numerator smaller by making it difficult for doctors and patients to collect. They make the denominator larger by obscene executive compensation, high profits, billions spent processing complicated forms they require of physicians and patients, and still more billions spent on fighting with doctors and patients over coverage and payments. See the SEC fillings for the Medical Loss Ratios and a recent Commonwealth Fund Study for the difficulty patients and physicians have with coverage and payments.

You will find that the MLR's of the large companies are in the 70% to 80% range. The federal part of Medicare has an MLR of 97% - 98% which is similar to that of nationalized health plans in other countries. Canada's is 98.7%. The difference amounts to about $200 Billion each and every year. Then there are the compliance costs of patients and physicians who have to fill out myriads of complicated forms and fight to get paid. As I remarked above, this is a double win for the insurance companies because it both reduces payments and increases the amount of money spent on non medical items. If profit were their concern, they would find it in their best interest to offer better service. These compliance costs also amount to about $200 Billion a year.

We would save another $100 Billion a year by cracking down on drug company "marketing, not only the odious ads, but the pushers who haunt physicians' office and the vast payments to doctors, both direct and indirect. The total is about $500 Billion a year which would easily pay for good health insurance for everyone such as an improved Medicare. All we need is the political will to do what every other wealthy country in the world has already done.

But with the help of the media the powerful special interests have triumphed and democracy has failed.

Posted by: lensch | August 17, 2009 6:36 PM | Report abuse

'To put it bluntly, the co-op does not solve a policy problem so much as it solves a political problem. That political problem was, "How do you finesse a compromise on the public option?"'

Or, to put it more bluntly: how can we transform something into Broder-Approved Bipartisan BS From The Heartland Of The Heartland? By pulling something out of Conrad's rear end, apparently.

It is the embodiment of everything that's wrong with congressional politics. And a way for the Dems to capitulate to a GOP that has no intention of supporting it in the first place, whatever "it" is.

Let Kent Conrad put forward the details of a co-op system to replace federal subsidies for agriculture first. Something that his constituent salt o'th'earth North Dakota farmers would sign on to. Just as a test of his good faith.

Posted by: pseudonymousinnc | August 17, 2009 6:50 PM | Report abuse

lensch, you haven't the slightest idea what you're talking about. This:

"Most people including Obama seem to make much of insurance company profits, but profits are not the driving force in their business model. The Medical Loss Ration is what is important.

The for profit insurers have learned that the way to get a high stock price is to have a low Medical Loss Ratio which is the percentage of inflow (premiums) paid out in medical benefit to patients. Notice that they consider medical benefits as "losses."

They do this in two ways. They make the numerator smaller by making it difficult for doctors and patients to collect. They make the denominator larger by obscene executive compensation, high profits, billions spent processing complicated forms they require of physicians and patients, and still more billions spent on fighting with doctors and patients over coverage and payments"

is just about the most ridiculous thing I've ever read. The opening graph makes you appear pretty pleased with yourself, as if you've got it all figured out and are happy to explain it to the rest of us, but the truth is you really don't know anything about the business model of a health insurance company. The "make the denominator larger" bit is so bad I nearly spit my drink all over the monitor, it shows such an utter lack of any knowledge on the topic that I'm actually stunned that you wrote it. Seriously, the next time you're considering spouting off nonsense like this, do the rest of the world a favor and go for a walk or watch television instead. We are all dumber for having been subjected to that.

A couple of hints for you:

1) there is nothing perverse about calling it a loss ratio. Life/auto/property insurers call it a loss ratio as well. "Ooh, they call it a loss that they have to pay when your house burns down/husband dies/care gets totaled!" How evil!

2) There is no need to explain to us what a loss ratio is. Anyone who is not familiar with the term really shouldn't even be a part of the discussion.

3) A company's stock price is impacted by countless factors, to suggest that the loss ratio is the driving factor is ridiculous.

4) I'd really love it if you could expand on this part: "They make the denominator larger by obscene executive compensation, high profits". Please. Humor me. Explain this.

5) 3-6% profits are not "high profits" by any stretch of the imagination.

Posted by: ab13 | August 17, 2009 7:27 PM | Report abuse

"Providers like doctors" actually favor a single payer plan:
http://www.wpasinglepayer.org/PollResults.html

Posted by: J_Bean | August 17, 2009 8:05 PM | Report abuse

jeeze, ab13, that's a pretty awful rebuttal. beyond insulting lensch and whatever portion of the audience you feel "shouldn't even be a part of the discussion," you didn't make a single argument against anything he said.

you response was so vitriolic, in fact, that it made me more curious about lensch's post. so i googled MLRs and found out he had it pretty much right: insurance companies have been spending less and less of their revenue on medical care since the 1990s, and the market is rewarding them for it.

maybe you should try some high school-level debating tactics next time, instead of just yelling.

Posted by: kaivles | August 17, 2009 8:57 PM | Report abuse

ab13 Sorry, I doubt if anyone could explain anything to you.

Posted by: lensch | August 17, 2009 9:26 PM | Report abuse

Ezra, put down the freakin' adminstration Kool Aide. You are embarrassing yourself in print and on tv. Please stop, and try to develop some objectivity.

Posted by: kmblue | August 17, 2009 9:32 PM | Report abuse

lensch, we'll see if Ezra lets my longer comment through debunking your nonsense (I'm guessing it was held for moderation because it was quite long, it takes a lot of words to combat that much foolishness), but in the meantime, rest assured that I don't need you to explain to me how the business model of a health insurer works. My many years of experience managing the business and earning health actuarial credentials have taught me plenty. You on the other hand have much to learn, since you're basically starting from scratch (actually given the amount of misinformation you're spouting, less than zero). If you are so confident in your knowledge, than please, I implore you, defend your "denominator" comment.

Posted by: ab13 | August 17, 2009 10:07 PM | Report abuse

Ahh what the hell, I'll just cut it into multiple smaller ones...

Posted by: ab13 | August 17, 2009 10:08 PM | Report abuse

kaivles, his post is so idiotic it's not even worth the time to rebut. It is not "insulting" someone to point out how woefully informed they are, especially when they gone out of their way to try and show you how knowledgeable they are. I usually would just ignore something so silly, but his comment had such an air of "I've got these insurance companies all figured out so I'll explain it to all you less informed people" that I couldn't let it stand. I really really hope he'll come back and defend his "make the denominator bigger" remark, that should be some great comedy. But since you asked, hell why not:

"Most people including Obama seem to make much of insurance company profits, but profits are not the driving force in their business model. The Medical Loss Ration is what is important."

Profits are the driving force in every business model. The entire purpose of running a business in a capitalistic economy is profit. Loss ratios are but one of the factors that go into determining the profit an insurer earns, but at the end of the day the profit is what matters. It is pretty silly to try and separate the two.

Posted by: ab13 | August 17, 2009 10:09 PM | Report abuse

"The for profit insurers have learned that the way to get a high stock price is to have a low Medical Loss Ratio"

No, no, a million times no. Investors want a return on their capital, and the LR is just one of the factors. By your logic it should be a race to the bottom to see who can get the lowest loss ratio, but this is not at all what happens in this market. It is a competitive market, and a low loss ratio means you are probably overpriced, and you're not going to be able to sell new business or retain existing business. There are also minimum loss ratio requirements to worry about. But besides all of this, to suggest that just driving down the loss ratio is the way to boost the stock price is ludicrous. Do you really think investors are that stupid, that the people who are willing to lend capital to an insurer just look at the loss ratio and decide who to invest in? Investors want long-term profitable growth. A low loss ratio is not the way to get that.

"They do this in two ways. They make the numerator smaller by making it difficult for doctors and patients to collect."

Sure, the difference between private insurers and Medicare is that private insurers investigate claims to ensure that they are truly liable, that the claim was covered under the contract, and that the treatment was appropriate given the utilization management guidelines (I think there ought to be some additional regulation around claims practices, this is not meant to defend the claim payment practices of every insurer, some are much better than others), while Medicare just cuts a check.

Posted by: ab13 | August 17, 2009 10:10 PM | Report abuse

"They make the denominator larger by obscene executive compensation, high profits, billions spent processing complicated forms they require of physicians and patients, and still more billions spent on fighting with doctors and patients over coverage and payments."

Oh dear. Where to start. So let me see if I get this straight, insurers push their loss ratio down by paying their executives a lot of money? And stupid investors never get wise to that, huh, they just see the low loss ratio (which somehow due to your logic is a result of the compensation) and think, "Wow, what a great and profitable company, I'll buy 10,000 shares!".

And high profits? At 3-6% margins? Those are grocery store margins. Investors like the big insurers because their profits are somewhat stable and they have a lot of growth, not because of the margins they are earning. Anyone who can say with a straight face that health insurers earn "high profits" clearly has no clue what they're talking about.

As to the "billions spent processing complicated forms", yes, medical care is quite complicated, and processing claims is a complicated and tedious task requiring a lot of paperwork. This is true no matter who is paying for it. Does the industry need to move towards some standardization to simplify the process? Definitely. But to suggest as you have that it's all a part of the plot to push loss ratios down is again ludicrous. This all shows up in the expense ratio, you don't think investors pay attention to that? I guess not, since you seem to think they only care about the loss ratio.

Posted by: ab13 | August 17, 2009 10:10 PM | Report abuse

"You will find that the MLR's of the large companies are in the 70% to 80% range. The federal part of Medicare has an MLR of 97% - 98%"

This is both untrue and misleading. First of all, Medicare's expense ratio is not 2-3% as some people like to suggest. Many of the expenses of running it do not get allocated to Medicare. The IRS collects taxes (and private companies, including insurers, bear some of that cost) and those costs are not counted. Debt service costs do not get counted (and medicare makes up a great deal of total federal spending). Private insurers pay premium taxes and risk pool assessments, Medicare does not. Medicare does not include any cost of capital in its reported expenses, but the cost of capital is not zero. And the biggest reason that is a misleading number, Medicare's expenses are counted as a percent of claims paid, but the population it serves has drastically higher medical costs, so of course the expenses, a great deal of which are fixed expenses will appear lower as a percent, but that does not mean that they would be that low when applied to the general population.

Also, the costs of reviewing and sometimes denying claims is not a total loss. Medicare could reduce costs by being more aggressive in reviewing claims and refusing payment for unnecessary, wasteful, and sometimes fraudulent claims. Instead they just write a check.

And then you double down on the crazy:

"As I remarked above, this is a double win for the insurance companies because it both reduces payments and increases the amount of money spent on non medical items."

So you're back to the "investors only look at the loss ratio so: Step 1. artificially decrease loss ratio Step 3. profit" line of argument. The underpants gnomes would be impressed.

"If profit were their concern, they would find it in their best interest to offer better service."

So let me get this straight, the people running these multi-billion dollar companies do not have profit as a concern, just loss ratio. And that is because the people who provide capital to these multi-billion dollar companies to enable them to operate also don't have profit as a concern, they just want a low loss ratio. If they wanted profits (and oh boy does lensch know how to make profit for an insurance company, we should hire you as a consultant!) they would offer better service, but apparently these idiots have not figured that out yet. So being a for-profit business is the reason these companies are bad, even though they don't actually know how to make a profit. And their profits are too high, but they don't really know how to make a profit. Your logic is impeccable.

Please, the next time you decide to educate people on a topic, make sure you actually know what the hell you're talking about.

Posted by: ab13 | August 17, 2009 10:11 PM | Report abuse

Well, I'm sure I will regret this, but friends want me to answer ab13. Let's see if I can dig out anything substantive among the insults.

When your house burns down you suffer a "loss." When your insurance company talks about the "loss, " that's what they mean. When you get sick you do not suffer a "loss." When the health insurers talk about medical "loss," they are referring to their "loss" in having to pay you so it is not surprising that they want to minimize their "loss." Quite a different thing from a casualty "loss."

I am happy for you that you knew what an MLR was. I did not think that I could assume everyone knew, but perhaps this is well-known by the world at large.

Perhaps you know better what drives stock prices. It is a difficult subject. I was just quoting Wendell Potter who testified about this to the Senate. He said that this was what the insurance companies believed. He was just a vice president of CIGNA so he may not have been as well informed as you.

Now concerning fractions, a fraction is a number of the form a/b. a is called the numerator while b is called the denominator. There are two ways to make the fraction a/b smaller. One is to make the numerator, a, smaller. The other is to make the denominator, b, larger. Any time insurance companies spend money it adds to the denominator, but if it does not go for medical benefits, It does not increase the numerator. Say they raise an executive's compensation. That will increase the total amount they spend (which is equal to the total amount they take in) so it will increase the denominator (remember that is the number on the bottom. "b" in our example) and thus make the whole fraction, the MLR, smaller. Get it? Sorry if you already knew this. It seemed you did not understand fractions from your posting.

About profits, I don't really care if they are high or not, since my whole point is that they are not important, but it might help you to know that what is a high profit percentage wise in one case may be a low profit in another. Generally a business that has a high volume and a large gross will expect to make a smaller percentage of profit than a lower volume one. If you have to work hard for each dollar, if you have to add a lot of value to something, you will expect to make a higher percentage of profit than a business like an insurance company which as visionbrk keeps reminding me is just a funding mechanism. It is not unreasonable to consider 3% - 6% as a high profit for a business that just takes in money and gives it back. This would be a very low profit, say, for a business that made expensive watches.

If there is anything else about business, economics, or mathematics you would like to know, I will try to help you.

Best regards.

Posted by: lensch | August 17, 2009 10:33 PM | Report abuse

Ezra, co-ops can be well-designed, but even if they are, they require a level of fuss and bother by the consumer/member with regards to issues of direction and management, advocacy, voting for leaders, etc. This is adds new costs of time and energy for your healthcare that is strictly unnecessary -- but I imagine that the private insurance industry already understands this, and that it will cause enough frustration and privateering to ditch the whole effort toward challenging their unjustifiable dominance.

Go universal public option!

Posted by: Lee_A_Arnold | August 17, 2009 11:30 PM | Report abuse

Providing a Public Health Care option to compete with existing private insurance companies was a Democratic compromise versus a single payer Public Health Care System.

There is no question that the real reason that the public option is loosing support is because our congressmen and senators are receiving large political contributions from the health insurance industry to buy their votes.

Anyone with any experience with CO-OPs knows that they will have very little effect on cost competition with the health insurance industry. CO-OPs cannot generate any real bargaining power because they will be too small to be effective, particularly if state controlled. Taking this approach will just be kicking the can down the road for another administration to deal with, while continuing the unbridled escalation in health care costs. This will likely cost a lot of current government representatives their jobs in the next election.

Posted by: redrockraven | August 17, 2009 11:47 PM | Report abuse

visionbkr, insurance companies have price controls, as well (ever look at a bill?). Doctors deal with the insurance companies because they have to.

Also, I know plenty of people for whom insurance companies are never going to profit from. What's their option?

Posted by: constans | August 17, 2009 5:51 PM | Report abuse

insurance companies NEGOTIATE with doctors and hosptials (admittedly hospitals more than doctors) and Medicare SETS RATES for all and they still are at a cost of $700 BILLION. To suggest throwing more money at Medicare is ludicrous and these liberals that look at the public option as a holy grail are just plain silly.

Why do they need the advantage if private insurance is SO INEFFICENT? Why do they need government funding in perpetuity? Why do they need not pay premium taxes?? Why do they not need reserves??

I'm fine with an even playing field?? WHy aren't you???

Posted by: visionbrkr | August 17, 2009 11:58 PM | Report abuse

Co-ops are the new HMO's. HMO's were going to save us the last time round. They were supposed to be cheaper and manage health care better.

In reality they were nothing but a bogus distraction whose chief accomplishment was to run real health care reform off the rails.

Sound familiar? We've been here before.

Posted by: leoklein | August 17, 2009 11:58 PM | Report abuse

lensch,

can you all please stop quoting Wendell Potter? When every player with a stake in the game isn't IN THE GAME then why should insurers look to get adversely selected against?? If they didn't and just WROTE THE CHECK like Medicare but couldn't SET RATES like Medicare does in its captive market of 65+ then our costs would be much higher.

They've all agreed that as long as everyone's in the game then we can get rid of pre-ex. Its a very simple logic of spreading the risk around. No matter what some liberals and progressives think insurers are not the devil's spawn. They are just actuaries that accurately assess risk for their policyholders which as a policyholder is a good thing.

IF I NEVER DROP MY INSURANCE I NEVER GET DENIED FOR PRE-EX. End of story.


Its decided, remember the 80% that Obama agrees to? let it go.

Posted by: visionbrkr | August 18, 2009 12:02 AM | Report abuse

So much craziness to cover, i will take multiple comments again.

Oh boy. I didn't think the response would be this weak.

"When your house burns down you suffer a "loss." When your insurance company talks about the "loss, " that's what they mean."

So now you know why the different types of insurance have historically referred to their claims payments as a loss ratio (and better than someone who has worked in this industry for a long time and has been required to study the business models and history of the industry)? And not only do you know that, but somehow it has a completely different meaning, even though they are both referring to the same thing? Do you actually think life/auto/property call it a loss ratio because the insured has suffered a loss? I can't tell if you're being dishonest or if you're actually that naive? Because you couldn't be more wrong.

"I am happy for you that you knew what an MLR was. I did not think that I could assume everyone knew, but perhaps this is well-known by the world at large."

Anyone qualified to discuss the business model of a health insurer knows what a loss ratio is (hint: in the industry we just call it loss ratio. Calling it "medical loss ratio" makes it sound like you don't know what you're talking about and just read a few talking points on a blog somewhere. Oh, wait...).

It's like you started a discussion about cars by spelling out what an engine is and said "the engine has a hundred squirrels inside and makes the car go".

"Perhaps you know better what drives stock prices. It is a difficult subject. I was just quoting Wendell Potter who testified about this to the Senate. He said that this was what the insurance companies believed. He was just a vice president of CIGNA so he may not have been as well informed as you."

Yes, he worked in communications at CIGNA. He knows nothing about the financial aspects of running an insurance company. I guarantee you he is less informed than I am about the financial side of running an insurer. He was a spokesperson. A talking head. He has no background as an actuary or in finance, he's a lifelong PR guy.

Posted by: ab13 | August 18, 2009 12:07 AM | Report abuse

"Any time insurance companies spend money it adds to the denominator, but if it does not go for medical benefits, It does not increase the numerator."

No need to lecture an actuary on math, I'm waiting for you to defend the claim that insurers pay their executives a lot of money in order to drive down the loss ratio. It was ludicrous to say then, and your pedantic little math lesson makes it no less ludicrous. Health insurer loss ratios have not declined over time, if anything they've been going up. Loss ratios are driven almost entirely by one thing: claim costs. An insurer has a cost of capital and a desired return on capital, and they charge a premium that will cover the projected claim costs, fixed and variable expenses, commissions, and leave enough left over to meet those profit/return on capital goals. It is a very competitive marketplace so they have to manage the pieces they have the most control over (expenses and commissions) in order to meet those goals. Insurers have very little control over claim costs other than negotiating discounts and being aggressive in utilization review and treatment guidelines.

I challenge you to find one instance of an insurer doing what you describe, paying an executive more for the sole purpose of artificially decreasing the loss ratio. Because you do realize that in order for that add'l executive comp to go to the denominator they need to charge the insureds a higher premium that is not actuarially justified by the level of claims costs, right? You do understand that basic math? You do also know that the large group market is primarily self-insured, where the client takes on the risk and pays the claim costs, and the insurer only provides administrative services (and the client only pays for these services, not premiums to cover claims except for maybe catastrophic stop-loss) right? And that in the individual market the insurer has to justify their rates with the underlying claims experience, so bumping executive comp to try and lower the loss ratio could never fly, you're aware of this right? Because someone who claims to know how this industry works ought to be aware of that.

Posted by: ab13 | August 18, 2009 12:09 AM | Report abuse

"About profits, I don't really care if they are high or not, since my whole point is that they are not important,"

Are you really this foolish? The loss ratio does not matter one bit except to the extent it flows into the profit margin. Do you really not understand that the goal of a business is to make a profit, not to manage just one aspect of their total expenses that contribute to the bottom line? It's like your saying grocery stores don't care about profits, they just care about paying less for their tomatoes.

"a business like an insurance company which as visionbrk keeps reminding me is just a funding mechanism. It is not unreasonable to consider 3% - 6% as a high profit for a business that just takes in money and gives it back."

And now we've come full circle and verified that you actually have no idea what an insurance company does. Insurance companies take on risk. That 3-6% profit margin is not guaranteed, it is contingent on them pricing and managing that risk appropriately. They do not get that margin just for the service of passing along money, they get that margin because they have put their own capital at risk by contractually agreeing to make contingent payments, payments which could lead to their insolvency if they do not manage the risk properly. Insurance companies become insolvent all the time. And for taking that chance they are compensated. If that is your description of what an insurance company does and the purpose they serve then you have shown without a doubt that you really haven't the slightest clue what you're talking about and are not at all qualified to discuss the financial aspects of managing an insurance company.

I honestly cannot believe that you would pretend to be informed and on this issue and make so many laughably ridiculous claims.

Posted by: ab13 | August 18, 2009 12:10 AM | Report abuse

There's just no way you can create a "solvent" insurance industry. There are a lot of patients who will require more care than they can possibly be expected to pay in premiums over their lifetime. There are many people who will never have enough money to pay the "average" premium required to sustain an insurance plan. The result will be a sliding scale where those who make more money will pay more, much like progressive taxation. When the required sliding-scale premiums become higher than the public is willing to spend, they will object, forcing the government to cut spending by negotiating downwards the prices they are willing to pay for services.

I don't really see what the alternative is, unless we regard our lives as gambles in which we bet that we won't get any kind of chronic illness that would bankrupt (or at least reduce to penury) us and our families. So far, I'm in the clear, so it looks like I'll have a prosperous life, as long as I stick to my current job.

Posted by: constans | August 17, 2009 6:17 PM | Report abuse


-----------------------------------------

that's not really true. It can and has been done. You see for every cancer that kills someone slowly a heart attack takes him or her quick and that same persons' paid premium his or her whole life. yes we're all going to die but we're not all going to have long drawn out illnesses. What about those of us about to get hit by a bus??? Its all about spreading the risk around a large pool. And also those of us with insurance don't realize how large the discounts are. Most large enough private insurers have per diem rates in the hospital of $1500-$2000 per day depending on the care you get. that's not unsustainable (depending on how long you're in for) IF AND ITS NOW AN IF ABOUT TO BECOME NO LONGER AN IF WHEN AN INDIVIDUAL MANDATE PASSES you have been paying into the system all along. If I started paying my premium at age 22 and I paid it to age 65 and averaged $400 per month that's over $200,000 i would have saved up for my care, with reasonable investment over time that's maybe $333,000. So basically to cover a million dollar event I'd need 2 others to get hit by a bus. Sounds plausible to me.

Posted by: visionbrkr | August 18, 2009 12:11 AM | Report abuse

Co-ops are the new HMO's. HMO's were going to save us the last time round. They were supposed to be cheaper and manage health care better.

In reality they were nothing but a bogus distraction whose chief accomplishment was to run real health care reform off the rails.

Sound familiar? We've been here before.

Posted by: leoklein | August 17, 2009 11:58 PM | Report abuse


HMO's in their 90's models DID KEEP COSTS DOWN. The problem is everyone hated them becuase they restricted choice too much for their liking. Then insurers let go of the pursestrings on MRI's CT scans etc, outsourced pre-authorizations for many of them and let costs go up because they didn't want to be hated for denying care. Now they're hated for occasionally denying care (but if you talked to some on here NO CLAIMS ARE EVER PAID, gee how's that done with a 2.3 TRILLION per year system??) AND for high cost.

Personally I enjoyed the days they were just hated. If you don't like your plan, READ IT AND UNDERSTAND IT. Follow the rules of the plan and you'd be fine. Too many people don't care that their doctor sends their labwork to the LAB THE DOCTOR OWNS TO MAKE A BIGGER PROFIT. Too many people don't care that their surgery's being done in an outpatient surgery center that's out of network and increasing cost due to high UCR levels EVEN THOUGH THE DOCTOR OWNS THE SURGERY CENTER.

Pay attention to the cost or don't complain when your premium goes up. You have no one to blame but yourselves.

Posted by: visionbrkr | August 18, 2009 12:21 AM | Report abuse

and further to the point that executive compensation at health insurers is at or below every other industry is the list of corporate CEO's salaries for 2008. The ONLY insurer on the list is Aetna's Ronald Williams who is well known for being a great leader, working with Obama on reform even though the administration keeps stabbing him in the back with his attacks on the industry.

Oh and he's 89th on the list right behind Plains Exploration and Production Company and ahead of TFS Financial Corp.


http://www.aflcio.org/corporatewatch/paywatch/ceou/top100.cfm


My god the audacity of them. Don't they realize if they took their profits and handed it back to policyholders it would save each of us a penny from our healthcare dollar we spend.

Posted by: visionbrkr | August 18, 2009 12:32 AM | Report abuse

Exactly. It's your own fault if you won't spend the time and energy to figure out something that is too complicated for half the population to understand and has enough fine print to bury you in a catastrophe.

Posted by: Lee_A_Arnold | August 18, 2009 12:41 AM | Report abuse

visionbrkr- "HMO's in their 90's models DID KEEP COSTS DOWN. The problem is everyone hated them becuase they restricted choice too much for their liking."

A NATIONAL co-op could act sort of like an HMO that pays Medicare+5 rates to any provider who'll take them. It would not have the stigma of an HMO because hey, it's the "USA co-op". It would give private insurers cover to lower their rates too.

Posted by: bmull | August 18, 2009 7:42 AM | Report abuse

What I am most fascinated about is where the same people who would rail against HMO's for the crappy things they do will be the ones saying that universal healthcare should do those exact same things.

Posted by: spotatl | August 18, 2009 7:45 AM | Report abuse

Exactly. It's your own fault if you won't spend the time and energy to figure out something that is too complicated for half the population to understand and has enough fine print to bury you in a catastrophe.

Posted by: Lee_A_Arnold | August 18, 2009 12:41 AM | Report abuse

these same people will have NO IDEA how the public option works. I love those of you that live in the utopia that thinks within the public option we're all carefree to go to our own doctors when we want and get all the tests we want and everything will be rosy and I'll never get a bill for something that's not covered, not out of network. I can't wait for that reality to set in.

Its not better, its just price-fixing. Something the majority of doctors won't stand for.

Posted by: visionbrkr | August 18, 2009 8:17 AM | Report abuse

"Capital demands a return on investment"

Newsflash! the public option takes capital out of the equation.

Posted by: newagent99 | August 18, 2009 9:25 AM | Report abuse

"and further to the point that executive compensation at health insurers is at or below every other industry is the list of corporate CEO's salaries for 2008"

liar.

United Health Group
CEO: William W McGuire
2005: 124.8 mil
5-year: 342 mil

Forest Labs
CEO: Howard Solomon
2005: 92.1 mil
5-year: 295 mil

Caremark Rx
CEO: Edwin M Crawford
2005: 77.9 mil
5-year: 93.6 mil

Abbott Lab
CEO: Miles White
2005: 26.2 mil
5-year: 25.8 mil

Aetna
CEO: John Rowe
2005: 22.1 mil
5-year:57.8 mil

Amgen
CEO: Kevin Sharer
2005:5.7 mil
5-year:59.5 mil

Bectin-Dickinson
CEO: Edwin Ludwig
2005: 10 mil
5-year:18 mil

Boston Scientific
CEO:
2005:38.1 mil
5-year:45 mil

Cardinal Health
CEO: James Tobin
2005:1.1 mil
5-year:33.5 mil

Cigna
CEO: H. Edward Hanway
2005:13.3 mil
5-year:62.8 mil

Genzyme
CEO: Henri Termeer
2005: 19 mil
5-year:60.7 mil

Humana
CEO: Michael McAllister
2005:2.3 mil
5-year:12.9 mil

Johnson & Johnson
CEO: William Weldon
2005:6.1 mil
5-year:19.7 mil

Laboratory Corp America
CEO: Thomas MacMahon
2005:7.9 mil
5-year:41.8 mil

Eli Lilly
CEO: Sidney Taurel
2005:7.2 mil
5-year:37.9 mil

McKesson
CEO: John Hammergen
2005: 13.4 mil
5-year:31.2 mil

Medtronic
CEO: Arthur Collins
2005: 4.7 mil
5-year:39 mil

Merck Raymond Gilmartin
CEO:
2005: 37.8 mil
5-year:49.6 mil

PacifiCare Health
CEO: Howard Phanstiel
2005: 3.4 mil
5-year: 8.5 mil

Pfizer
CEO: Henry McKinnell
2005: 14 mil
5-year: 74 mil

Well Choice
CEO: Michael Stocker
2005: 3.2 mil
5-year: 10.7 mil

WellPoint
CEO: Larry Glasscock
2005: 23 mil
5-year: 46.8 mil

Wyeth
CEO: Robert Essner
2005:6.5 mil
5-year: 28.9 mil


Posted by: newagent99 | August 18, 2009 9:31 AM | Report abuse

Visionbrkr: "these same people will have NO IDEA how the public option works."

This is incorrect. Because it is the public option, a general idea of how it works will become the norm. Changes in it will become known in the same way.

Price fixing, rationing, whatever -- we already have it NOW, under different forms.

Posted by: Lee_A_Arnold | August 18, 2009 9:46 AM | Report abuse

There actually WERE medical co-ops during the great depression -- see this New Republic article found at http://www.tnr.com/story.html?id=bf1ba8d3-2929-4812-857f-33b91cd9966e&p=2. So someone tell me why we can't have something like this in communities around the nation?

"The earliest managed-care organizations were medical cooperatives that popped up during the Great Depression, first in the Great Plains and, then, on the West Coast. In order to make affordable care available to the communities or groups of employees they served, groups of doctors charged flat, monthly fees rather than billing for every service. They sometimes had governing boards, with representatives chosen by the patients, who oversaw the finances and consulted on other areas of policy. They also emphasized preventative care. The founders of these clinics ranged from citizen do-gooders like Michael Shadid--the immigrant doctor who built a cooperative for the financially strapped residents of his rural Oklahoma hometown--to forward-thinking businessmen like Henry Kaiser, who created group clinics to make sure his shipyard workers had good health care.

"Physicians, suspicious of the organizations' communal nature and perceiving a threat to their clinical autonomy, fought these group practices bitterly. And they succeeded in confining theirgrowth to a few isolated pockets around the country. But where group practices did establish themselves, they provided good care--really good care--at low prices."

Posted by: flynnb | August 18, 2009 9:58 AM | Report abuse

Ab13 - Well, nobody else on the blog seems interested in our discussion, so I will just summarize what I think our main points of difference and let anyone who is interested make up their own minds.

1. lensch believes that health insurers believe that a low MLR yields a good stock price. ab13 thinks not.

2. lensch believes that in the last 20 years MLR have been dropping and their stock has been going up. ab13 says, " Health insurer loss ratios have not declined over time, if anything they've been going up."

3. This is just a corollary of 1., but lensch believes that since insurers want to lower their MLR, one factor (I never said "solely") in their non-medical spending such as executive compensation or more people to process forms or fight with customers is that such expenses lower the MLR. It follows from 1. that ab13 believe this is nonsensical rubbish.

4. lensch thinks that MLR's for private companies range from 25% to 96%. ab13 says, "There are also minimum loss ratio requirements to worry about."

5. lensch believes that government run health care systems such as the federal part of Medicare and systems in other countries typically have MLR's in the 98% range. ab13 thinks this is a bogus figure.

I will omit the semantics and the question of the knowledge of the blog readers which I was foolish to mention. I may have left out some substantive disagreement. If so, I apologize.

ab13, the field is yours in splendid isolation.

Posted by: lensch | August 18, 2009 10:23 AM | Report abuse

The USA needs to be more competitive in the world and generate more jobs for USA Citizens.
The Rest of the World does not care what
health care citizens of the USA receive, how it is paid for,
or what internal politics the USA throws at the problem.
However, the Rest of the World is being treated to yet more entertainment at USA expense.
W

Posted by: George20 | August 18, 2009 10:35 AM | Report abuse

this is just bait and switch. the Republicans will back the co-op idea just long enough to kill reform this time around. Then when it comes back on the table with a co-op option, they won't like th co-op because they'll have a better idea. The Republicans don't want to fix the existing health care system -- it works really well for elements of their constituency (and the part of their constitutency it doesn't work for is already on Medicare so they don't need government in their health care).

Posted by: margaretmeyers | August 18, 2009 10:36 AM | Report abuse

Conrad's Co-op was a brainstorming session. There are a handful of functioning Medical Co-ops around, but they are almost exclusively in or very near large cities. They have NO bargaining power when it comes to contracting for services of a specialist outside of the Co-op (part of the initial savings of Medical Co-op membership stem from using Co-op salaried staff, so it's a lot like the VA in this respect) and very little control over "out of network" episodes (if your child is attending school outside of the area and needs medical attention -- unless your child happens to attend school in an area where a "sister" Co-op is located...MAYBE).

Posted by: Odquest | August 18, 2009 10:39 AM | Report abuse

Obama's health care Czar made $8.5 million in compensation from medical supply and home health companies that will benefit from a public option. She was and is a lobbyist.

No liberal who makes that kind of money should lecture insurance companies on profits. Obama picked a very greedy person as his Czar. Defend that.

Posted by: Cornell1984 | August 18, 2009 10:52 AM | Report abuse

"lensch believes that health insurers believe that a low MLR yields a good stock price. ab13 thinks not."

Well, like I already said, you're wrong. Investors and analysts care more about the combined ratio, which is loss ratio + expenses + commissions. A low loss ratio all on it's own does not yield a good stock price, because one, it is but one of the components of underwriting profit, two, a really low loss ratio probably means you are overpriced (you are aware there is a ton of competition in this market right?), and three, there is so much variation amongst companies due to different products, different accounting, and different regions that using the LR to compare companies for investing purposes would be ludicrous.

Let's see what the Kaiser Foundation had to say about it in the aptly named "Use and Abuse of the Medical Loss Ratio to Measure Health Plan Performance":

"The medical loss ratio is not a straightforward indicator of either
medical or administrative expenditures. It
certainly is not a measure of clinical quality or social contribution. The medical loss ratio is an accounting monstrosity, a convolution of data from myriad products, distribution channels, and geographic regions that enthralls the unsophisticated observer and distorts the policy discourse. The hard but inescapable
conclusion is that informed choice and sophisticated purchasing of health care
must rely on a more extensive set of performance measures, no one of which is as comprehensive as the medical loss ratio is purported to be but each of which has some of the analytic validity that the medical loss ratio lacks."

http://content.healthaffairs.org/cgi/reprint/16/4/176.pdf

Posted by: ab13 | August 18, 2009 11:21 AM | Report abuse

"lensch believes that since insurers want to lower their MLR, one factor (I never said "solely") in their non-medical spending such as executive compensation"

You still seem unwilling to address the elephant in the room: for executive comp to lower the loss ratio an insurer would have to charge more premiums above and beyond the level required by the claims cost. Do you think investors are so dumb as to think "Wow what a great company, they grew revenue by 5% and lowered the LR 5% by giving the CEO a huge bonus and sticking their customers with the bill!" Really, that's your argument? When executive comp is public information, and the investors who track insurers review their financials in detail?

Posted by: ab13 | August 18, 2009 11:30 AM | Report abuse

"lensch thinks that MLR's for private companies range from 25% to 96%. ab13 says, "There are also minimum loss ratio requirements to worry about.""

Yes, that is a fact. Are you disputing that there are minimum loss ratio requirements for many plans in many states? I also would like an example of a block of insurance of credible size with a 25% loss ratio

"lensch believes that government run health care systems such as the federal part of Medicare and systems in other countries typically have MLR's in the 98% range. ab13 thinks this is a bogus figure."

Yes, Medicare's loss ratio is not really 98%, that is a bogus figure. The 2-3% expense ratio people love to throw around is not the true cost, for numerous reasons I've already cited.

Posted by: ab13 | August 18, 2009 11:34 AM | Report abuse

“kingstu- thats not the kind of public plan that anyone is currently discussing. The public plans being discussed are supposed to rely strictly on incoming premiums and will be self sufficient.”

I do not believe anything any politician says and neither should anyone else. In our “free market” we bailed out banks to the tune of several trillion dollars (direct cash and guarantees). When the public plan fails to collect enough premium dollars to pay claims, what do you suppose will happen?

“kingstu01 - thanks! that was helpful. I don't really see how the conclusions in your 3rd paragraph follow, but that's okay, I'm not asking you to blog-on-demand for my benefit. From your explanation, though, it occurs to me that since co-op(s) in this instance would be set up by government mandate and presumably regulated according to the desired reforms, there's not a lot of practical difference that I can see between co-ops and the public option. But maybe that's the point.”

Insurance companies tend to have huge market shares because large companies offer the lowest premiums. They are able to offer these lower premiums because they have significant market power when bargaining with medical providers. If United Health has 2 million members in Cleveland (for example) they can demand lower hospital and doctor reimbursements because they can “guarantee” the doctor or hospital a certain number of patient visits. A co-op would not have this market power (which is why most on the Left want a public option). The public option would grow so big; they would exert tremendous market power (i.e. Medicare). The only problem is a monopsonist (a single buyer of a product) can set the price they are willing to pay and they are so large; the provider (doctor or hospital) is forced to take it. This would be great for patients (because they get lower premiums) unless the monopsonist (in this case the public option) pays less than the cost of providing care (which is the case with Medicare reimbursements).
My conclusions are based upon historical precedent. Both the National Flood Insurance Program and the California Earthquake Authority are insolvent if measured using the same methods a private company would use. The only reason they are not is due to implicit taxpayer backing.

Posted by: kingstu01 | August 18, 2009 12:59 PM | Report abuse

There are many reasons that co-ops will not be nearly as effective as a public option. The NYT points out several:

http://prescriptions.blogs.nytimes.com/2009/08/17/so-whats-a-health-insurance-coop-anyway

Posted by: slantedview | August 18, 2009 1:58 PM | Report abuse

Visionbrkr: "these same people will have NO IDEA how the public option works."

This is incorrect. Because it is the public option, a general idea of how it works will become the norm. Changes in it will become known in the same way.

Price fixing, rationing, whatever -- we already have it NOW, under different forms.


Posted by: Lee_A_Arnold | August 18, 2009 9:46 AM | Report abuse

but the point is while the benefits will be standardized which is good to a point, it will not force all providers to participate so you'll still have issues of your lab work being sent to someone that doesn't accept the public option, you being referred to a doctor that doesn't accept the public option etc. ER doctors don't have to accept the public option nor do anesthesiologists.

You haven't resolved anything there. It is no better and no worse.

Posted by: visionbrkr | August 18, 2009 4:32 PM | Report abuse

actually new agent 99 you need to go to a new liberal blog site because that one's old. Ronald Williams is the CEO of Aetna now. Heck why not check out the link to the afl-cio site that i provided.

And you also linked all health related fields. I said HEALTH INSURERS. And while the numbers are high for you and me in comparison to what CEO's make from other industries it is currently low whether you like it or not.

Posted by: visionbrkr | August 18, 2009 4:36 PM | Report abuse

Visionbrkr: "so you'll still have issues of your lab work being sent to someone that doesn't accept the public option, you being referred to a doctor that doesn't accept the public option etc"

No, for the same reasons I just stated, the fact that it's PUBLIC, everybody is going to find out who's in and who's out. It's just not a significant issue.

Posted by: Lee_A_Arnold | August 18, 2009 4:52 PM | Report abuse

Lee_A_Arnold,

do you really believe that insurers are "keeping a secret" as far as what labs are participating, ie in network, in their plans? Check their websites its all there for public consumption.

Those same labs and doctors can choose to participate or not to participate. Nothing changes with the public option in terms of the status of providers.

My God sometimes people on here scare me with the misinformation either of the current system or of any proposed one.

Posted by: visionbrkr | August 18, 2009 10:01 PM | Report abuse

Visionbrkr, Of course not. So either way, it's not an issue. You brought it up, not me.

Posted by: Lee_A_Arnold | August 18, 2009 10:10 PM | Report abuse

To all above- I read through the above snarky and in some cases earnest actuarial disquisitions and
have a headache, mainly from the paucity of concern expressed by most for what used to be known as the Common Good. The main job of any government is to protect its borders and look out for the health and welfare of its citizenry. This is not happening with the present system although we are paying through the wazoo anyway.

In point of fact, the individual and his family is at the mercy of Giant Insurance Companies which by law and judicial practice are treated as individual private citizens with all the benefits offered by the the Bill of Rights plus gobs and gobs of corporate money to protect profits and control the access of actual individuals to the Commons , in this case affordable high quality healthcare.

Bottom line: Too many people in this very wealthy (recession not withstanding) country have no insurance, inadequate insurance, or insurance which is snatched away just when they need it most. Even my very Republican spouse is ready for "socialized medicine". For my part, I'll settle for a public option.

Posted by: poliwonk | August 19, 2009 3:21 AM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company