Everybody, but mostly members of Congress, should read this article by Jacob Hacker andRahul Rajkumar about what life would be like if we passed health reform - an individual mandate, an insurance exchange, and all that other great stuff - and not a public health insurance option.
That future is bleak. Insurers still control the markets, as they do now, and in fact, the giant insurance companies have grown. Hacker and Rajkumar predict we'll have a choice "basically between WellPoint and UnitedHealth--gargantuan for-profit insurers each about the size of Medicare." Sounds great, right?
It gets worse.
Hacker and Rajkumar also pointed out a peculiar fact our geography and politics:
Ironically, the problem is worst in the rural areas of the country whose Democratic Senators--such as Kent Conrad of North Dakota and Finance Committee Chair Max Baucus of Montana--have been among the Democrats most willing to forsake the public health insurance plan. In these rural areas, one or two dominant insurers hold over 90 percent of the market. (In all of Montana, for example, one insurer has 75 percent of private enrollees.) For people in these parts of the nation, a real choice of health plans is as mythical as unicorns.
I would add that the overwhelming majority of rural voters support the choice of a public health insurance option [pdf]. They know what's best for them.
What if we passed a co-op plan? Not much:
Equally mythical, it soon becomes clear, are the consumer cooperatives that Conrad and Baucus had backed to attract Republican support. The reform legislation envisioned that these cooperatives would be chartered by the government and owned by consumers--the idea being that a democratically-controlled enterprise would be driven not by profit, but by serving the interests of its citizen-owners. But the cooperatives are almost impossible to get off the ground, just as similar consumer-oriented ventures have been in the past. Doctors largely boycott them, insurers undercut them, state politicians argue over them, and federal dollars are woefully insufficient to nurture them. It soon becomes clear that they represent little more than a fig leaf covering a lack of commitment to the basic aim of a public plan: having a tough competitor that forces large insurance companies to bring up their standards and bring down their prices.
All this means premiums remain high, as do provider rates and drug prices. Medical inflation keeps increasing. And guess who pays for that? Taxpayers, seeing as how people who can't afford the skyrocketing premiums get government subsidies to help them pay for their private health care. Needless to say, the plan isn't terribly popular.
Rationing of care by private insurers continues. This hits people's individual lives:
Those with chronic conditions or nearing retirement age who are self-employed or work for small businesses are hit hardest. A 59-year-old self-employed man with diabetes, or a 48-year-old single mother with breast cancer who works at a small retailer--these are the sort of people who will fall through the cracks without a public plan available in all parts of the nation. They may qualify for a "hardship exemption" so that they are not compelled to buy insurance under the reform legislation's "individual mandate." But not being forced to buy insurance they can't afford is a poor substitute for having access to a public plan they can afford.
These are the stakes before us. If we do reform right, with a public health insurance option, costs can come down, people will be covered, and none of this will come to pass. But if we remove just one element in the reform package, this idea of choice and competition, we'll end up with an unpopular and ineffective plan that does nothing to control costs and keeps us crushed within the status quo.
This is what makes health reform so hard - change just one piece of the whole plan and suddenly it doesn't work anymore.
Hacker and Rajkumar have another point to make on this idea of public/private competition:
This is a not a radical idea. In many areas of American commerce, private and government programs comfortably co-exist. FHA insured loans and non-FHA loans, Social Security and private pensions, public and private universities--all have long thrived side by side. Each side of the divide has strengths and weaknesses, but in every case the public sector is providing something the private sector cannot: A backup that's there if and when you need it; a benchmark for private providers; and a backstop to make sure costs don't spin out of control. Just as it is comforting to have Social Security in case your 401(k) evaporates or an FHA loan in case your credit score tanks, a new public plan provides an added level of protection against the vicissitudes of an unaccountable insurance market. A public plan is about competition as well as choice.
This is exactly right. The idea that private industry can't ever compete with government is, as President Obama says, illogical, especially because the same people who say this say at the same time that government is too inefficient to run anything correctly.
As Hacker and Rajkumar make desperately clear, we need the public health insurance option. It's not negotiable. We need one available nationally on day one, accountable to voters and Congress, and able to set rates with providers. If we get something less, we don't get health reform.
(also posted at the NOW! blog)
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