Sen. Max Baucus (D-MT) in DC on February 3, 2009, explaining that insurance CEOs like his health care plan because Americans would be required to buy their product:
You talk to large insurance companies, many large insurance companies' CEOs are on board. They want to change their business model. They see it coming. The business model will change from the current one where they can discriminate, to one where there are, you know, 46 more million people getting health insurance, so it's they pick it up in volume, what they lose in the current model.
Basically, Baucus is saying that health insurance companies like his reform plan because they think it will make them a lot more money.
Sure, they'll be forced to cover some 'undesirables,' but that's a trade they are willing to make in exchange for gaining nearly 50 million new customers -- customers who are required by law to buy their product, many of them with the aid of subsidies.
The point here isn't to slam a health insurance mandate. Indeed, the primary benefit of a mandate is that it achieves universal coverage, in the process eliminating moral hazard from the health care system by providing a mechanism for ensuring everybody takes responsibility for the risks they impose on it.
Not all mandates are created the same, however. Under the Conrad-Baucus plan, there will be no public option, and everybody will be forced to buy insurance from the private sector (co-ops, as envisioned by Kent Conrad, are private entities). If their plan passes, these private insurers will do everything in their power to raise prices and reduce services, and unless there is the most effective regulatory regime in American history, they'll be successful.
As a result, without a public option, Americans will be stuck with a private insurer, and those private insurers will almost certainly make out like bandits. We may get some improvement in insurance rules, but we'll still be left with a seriously flawed health care system the meets the needs of the insurers, not the insured.
Only a total moron would believe that this plan -- requiring all Americans to buy insurance from private insurers -- is more politically palatable than offering a Medicare-style public option (or just letting Americans buy into Medicare).
In the short-term, a private insurance mandate might be enough to kill the Baucus-Conrad proposal outright, and over the long-run its impact will be a political lethal combination of driving health care costs upwards while simultaneously reducing quality of service.
A public option needs to be in the mix, otherwise health care reform could turn into yet another boondoggle for health insurance industry fatcats. As Max Baucus said, there's a reason why they like his plan. It's because it will make them even richer.
