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View Diary: Save a Little Lieberman Criticism for Bob Schieffer (82 comments)

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  •  However, there is some logic to Lieberman's point (0+ / 0-)

    Not to defend Lieberman, but his supposition that a public option would cause private insurance rates to go up isn't entirely crazy.  Let me see if I can illustrate the point.

    Let's say you're a hospital emergency room.  A certain procedure costs you $500 to perform.  Now, a private insurer negotiates with you to pay $550 for the procedure and all is well.  Then the public option comes to you and says they'll pay you only $400 for the procedure but that you will get access to their big pool of patients.

    So of course, at $400, you're losing money, but what you can do is renegotiate with the private insurer at a higher rate, say, $650.  This means that, on average, you're still making money.  Thus the cost savings in the public option is passed onto the private insurer.

    Now why would you do this as that hospital?  Because if you don't, then those patients on the public option will show up at your emergency room anyhow.  So you'd rather take the lower fees rather than get nothing at all.  Then you make up for those losses by passing the cost onto private insurers or the uninsured.

    One example though of how this is happening today is in the pharmaceutical industry.  In the US we pay a lot more for drugs than other countries do.  We do so because we don't engage in collective bargaining with the pharma companies.  So what happens is France goes and negotiates a price for the entire country and gets a lower rate because of it.  In the US we don't so we all pay a higher rate.  If we negotiated prices in the US, we'd see the price of the drugs go up in France because pharma wouldn't be offsetting those losses by charging us.

    •  Does Pharma run an ad every 10 minutes during (1+ / 0-)
      Recommended by:
      Brooke In Seattle

      prime time television in France pushing marginal drugs of dubious effectiveness?  I don't think so.  If they stopped running up a huge advertising budget for boner pills and the like, they would incur much less expense and could set their prices on merely exorbitant rather than outrageous.

      And it feels like I'm livin'in the wasteland of the free ~ Iris DeMent, 1996

      by MrJersey on Mon Nov 02, 2009 at 01:30:43 PM PST

      [ Parent ]

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