The editorial boards of the nation’s newspapers have responded to President Obama’s announcment of a way forward on healthcare reform and the reactions have been much as you might have expected.
The New York Times characterizes the proposal as a moderate plan and observes:
Any competition between a new public plan and private plans would be waged on a regulated field of battle within a new health insurance exchange. Most reform proposals envisage the exchange as a place where individuals unable to obtain coverage at work and ineligible for existing public programs like Medicaid could buy policies that would be available to everyone without regard to pre-existing medical problems. Low-income people would get subsidies to help buy a private or public plan.
Opponents of a new public plan have raised the specter that it might have unfair advantages that would enable it to draw customers from private insurers and ultimately drive them out of business, leaving virtually all Americans enrolled in a full-fledged single-payer system, like Medicare. That prospect could be mitigated by appropriate ground rules.
The insurance industry is so desperate to avoid competition that it has already pledged numerous reforms and called for tighter regulation of the private market to expand coverage and control costs. But even with tighter regulation, Congress should include a public plan option to give consumers broader choice, provide a refuge for people who don’t trust private insurers to have their best interest at heart and serve as a yardstick for judging the performance of private plans.
As I pointed out yesterday I think that any public plan is likely to be a deal-breaker as far as the health insurers are concerned and the detente between the White House and the insurers may be short-lived.
The Times continues:
Private plans have done a poor job at restraining premium increases; they mostly pass rising medical costs on to the subscriber. A good dose of competition from a public plan with potentially lower administrative costs and no need to generate profits might be the right competitive medicine to improve their performance.
There are so many things wrong with these two sentences it’s hard to know where to begin. First, insurance simply doesn’t work that way. Premium prices must rise as medical costs rise. That’s the nature of insurance. What we have now isn’t insurance, it’s something more akin to a maintenance contract. That may be what people want but I don’t see any way that any foreseeable maintenance contract can give people whatever they want or think they need for a fixed price.
Moreover, competition between the public and private sector for artificially constrained healthcare resources has produced the nightmare we have now. It’s a bidding war and one of the bidders has very, very deep pockets. The notion that such a contest could result in reduced costs beggars belief.
The Washington Post correctly points out that while the increased costs of the plan are assured the reductions are hypothetical:
But it is important to note what wasn’t included yesterday. None of the interest groups signed up for a specific number; no one is saying who will sacrifice what, or how much. All are promising to “do our part,” but the actual share of the $2 trillion that would fall on each pair of shoulders was not laid out. What would make up the substance of the plan? That remains to be seen. How would the private sector be held accountable for this promise to reduce costs? That, too, remains to be seen.
As you might expect the Wall Street Journal is beyond skeptical:
Democrats have now acknowledged that the managed care dream will work only if government is the one doing the managing. That is, we can only control costs with a new government entitlement. More is less.
But you can only allocate a scarce resource in two ways: market prices or brute force. In health care the brute force will come as price controls and waiting lines for rationed services. The implicit assumption in the providers’ deal announced yesterday seems to be that the private companies will do the price controlling so the government won’t have to do it for them.
But when the savings prove illusory, as in the past, the feds will step in and order them to do so. To win a false reprieve for themselves and give cost cover to the politicians, these private CEOs are offering to make themselves even more unpopular with patients. By that point, most patients will have no choice but to assent, since most of them will be in one government program or another.
Just to recap my own position in bullet form:
- Healthcare costs too much in the United States. That’s the reason so many people are uninsured and unless we bring costs down not merely reduce their rate of increase that’s not going to change.
- Insurance plans have little motivation to control the costs of what they’re insuring. That’s the nature of insurance.
- There is no way to mandate universal coverage in the United States. Our circumstances are unique. We’re the only country in the world that shares a 1,500 mile land border with a country with a per capita GDP a quarter ours.
- Keeping our costs down by importing healthcare professionals from Third World countries where they’re desperately needed and more frequently than not educated with public money is immoral.
- The process by which we got where we are today began more than a century ago first by giving physicians the gatekeeper role for pharmaceuticals, then by severely restricting the number of physicians graduated by our medical schools, and was kicked into hyperdrive 40 years ago when Medicare was enacted. That’s when salaries in the healthcare sector began to grow substantially faster than those in the rest of the country.
- We can’t reduce costs by mandate. However, we can further reduce supply that way.
The only solution that I believe will really work to solve the structural problems with our healthcare system are a dramatic revisiting of the way services are delivered, starting with medical education and proceeding right along to who performs services, what degree of training is required, the role of automation in providing healthcare services, and what sort of oversight is required.
There is precedent for this kind of a revolution. It’s the kind of thing that happened just about a century ago and it’s high time we begin the process again.