It's Not About the Insurers. At Least Not Totally.
Over the past few weeks, health-care reform has morphed into "health-insurance reform." That's what the president calls it. That's what his aides call it. That, by and large, is what the actual bills contain. And that is what the public option is about.
There's a reason that health-care reform is often framed as an epic war between insurers and reformers: Insurers poll terribly. Much worse than doctors. Much worse than hospitals. Much worse than pharmaceutical companies. And their business model, particularly in the individual market, is by far the most straightforwardly malign: They compete to see who can avoid covering the people who need coverage. That cranky guy on "House" would be a whole lot less popular if the show were about his efforts to hide in the bathroom when sick patients came in.
It's easy to argue that insurers are villains. It's hard to argue that their villainy is the primary problem in health care.
There are two main problems in the health-care system: Coverage and cost. Insurers are responsible for the coverage problem in the sense that not everyone can afford their product. That's true for companies that sell TVs and fancy dinners and keyboards. But we don't care if those companies refuse to sell their products to poor people. We do care if insurers do. This problem, happily, isn't particularly hard to solve. A mixture of subsidies and regulations -- much like the mixture being considered in the current bills -- could answer the coverage question without too much trouble.
The other question is whether the private insurance industry is behind the relentless rises in cost. And here the argument begins to falter. Insurance profits are not a big slice of the system's costs. The average insurer has a 3 percent profit margin. You sometimes hear that it's administrative costs that are behind the cost problems. That's not true, as far as I can tell, and in any case, administrative costs are more about how large an insurer is than whether it's public or private.
The problem is that the really expensive things aren't controlled by insurers. Surgeries are expensive. So too are drugs. Nights in the hospital. Consultations with specialists. But those are all popular things. The way to make health care cheaper is for insurers to say "no" more often, as they did in the late '90s. It worked. Cost growth slowed sharply. There was never any convincing evidence -- that I know of, at least -- that outcomes worsened. But we hated that. So they stopped.
The public plan is not being devised to get much better at saying "no." That would just make people hate the government. The other idea, however, is not to cut the volume of procedures by refusing the least effective ones, but to cut the cost of procedures by bargaining for greater discounts. This is where single-payer has a huge and significant advantage over the American health-care system. This is where Medicare has a large advantage over private insurers. This requires a large public plan that's not limited to the small subset of people on the exchange and that can partner with Medicare to force better deals.
But you can't get that escalator to single-payer for the same reason you can't get single-payer. It might make a lot of sense. But no one can find the votes. Weirdly, though, a lot of people who have resigned themselves to the idea that single-payer is out of reach have decided that this path to single-payer isn't. I don't really understand that thinking.
The other option, of course, is to cut costs in the health system inside of the health system, rather than using the insurance system. That would mean changing the incentives for doctors so that they're not paid more money for every extra procedure they prescribe (if you want to know how that works, ask writers who get paid by the word whether they spend a lot of time voluntarily shortening their articles). That would mean getting a lot more evidence on what does and does not work, and under what conditions, so medical professionals could cut down on ultimately useless treatments. That would mean using heath IT to eke out the same efficiencies that computers and Google and specialized software have brought to every other industry. That would mean a lot of things that are opposed by constituencies that are much more sympathetic than the insurers.
Some of that is under consideration in this round of health-care reform. Some of it isn't. But conceiving of this as "health insurance reform" doesn't really work unless you're willing and able to go all the way to single-payer, or something near to it. And in a broader sense, this isn't a war between reformers and insurers. It's a war between reformers and the economic forces that have prices millions out of health insurance. In general, insurers, like everyone else, are the slaves to those forces rather than the drivers. And the unhappy truth is that the drivers are some of the most sympathetic actors in the health-care system. They're the people who say "yes" rather than the people who say "no."
Photo credit: AP Photo/Hans Pennink
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