Today's New York Times has an article that defines exactly where the line in the sand will be in the debate over health care reform. It's not whether insurance will be mandated. It's whether the government can compete in the game.
All of the major bills floating around committee call for some kind of federal coordination of various health plans that works to lower costs, improve quality, and insure all or most American residents.
We heard a lot about "individual mandates" during the election. Hillary and Edwards were for them, Obama was against. Individual mandates means that health insurance would be compulsory for all Americans; an issue that roils many with a libertarian bent.
I'm for mandates, on the grounds that the redistributive functions of insurance don't work unless rich, healthy people subsidize poor and sick people. If it's ever going to make a difference, health insurance reform require all people to sign up for a plan. We'll have to sacrifice a bit of liberty in order for all of us to have the freedom to see the doctor. That's life in the big city.
The insurance companies are for mandates as well. They've even agreed to "community rating," where they wouldn't be allowed to exclude or overcharge an individual for their own medical status. Everyone would have the same premiums. Why? They did the math and saw that a law requiring that everyone be insured would be a goldmine-- the ultimate captive audience. Of course they're for the individual mandate. They'll even throw the lawmakers a bone and cover the sick, so long as nothing else big changes.
The real line in the sand is over whether the government can compete with its own plan. The fact is that government insurance schemes have lower overhead and massive bargaining power. The government doesn't answer to shareholders, or pay its executives 8-figure salaries. By some reckonings, private insurance spends ten times the amount on overhead than Medicare. It can cut deals with providers and suppliers that no private entity could dream of. It doesn't need to profit, just to stay within budget. In the words of the Times article,
"That is what worries insurers, employers and Republicans. "
While I can't figure out why employers are so worried about a public option, I can certainly understand the other two interest groups.
Insurance companies are interested in reform policy that is the best deal for the business they are in. That's what any business interest worth its salt would do, there's no moralizing here. The thing is, this particular business interest isn't my interest, nor is it the interest of the American public. The public option is an option. If private insurance companies can change their business practices in a way that can compete with the government, I'm all for them. If not, they can find something else to do. That's capitalism.
For all the bombast about how market-driven competition would ultimately lower health care costs, you'd think the free marketeers would be confident that their products would blow the big, bureaucratic government plan out of the water. They're scared because the public option calls the bluff of market fundamentalist-oriented health reformers, and threatens the privileged position that private insurers currently enjoy.
All businesses would rather not compete. Competition takes away profit. We have antitrust laws precisely to ensure that they have to do it because we've seen the danger of monopolies. Having a public option available to purchasers of health insurance fosters that spirit of competition. A public option is the only compromise between either a cartel of private insurance plans, or a monolithic federal plan.
Why should we be forced to pay more for insurance coverage than we have to? Is it based on some abstract principle derived from an Ayn Rand novel? Is it a full employment act for insurance executives?
Personally, I'd rather have bureaucrats design my coverage.
At least they're answerable to a congress I elect, rather than shareholders who are in it for the investment.
At least they'd be putting the quality of coverage ahead of their profitability.
At least my premiums would pay for coverage, rather than golf retreats and corporate jets.
At least they'd have an interest in keeping me healthy and out of the hospital instead of denying my claims when I'm just a little bit sick, or biding their time until I switch coverage and become someone else's problem.
...but that's my opinion, and that's my choice. If you think differently, by all means, sign up for a private plan.
If American enterprise is so dynamic, let's give them a challenge. If they lose, it's fine with me, so long as everyone's covered. The only way to ever really settle the public-private debate is to let the best insurance scheme win. That's the American way.
