Health Care That Is Just Too Good

What opponents of the "public option" are saying now.

Posted by Brooke at Jul 03, 2009 06:00 AM |
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Taking the health care reform debate on the road, President Obama spoke today at a town hall meeting in Annandale, Virginia. Asked about a single payer system—as he so often is—he answered—as he so often does—that our system of employer-funded health care is just too entrenched to be replaced. You know—just like how dangerously irresponsible banks are too big to fail, or coal-burning power plants are too widespread to be closed, or the US had already committed too many resources to Vietnam to consider pulling out, or how DVDs would never catch on because we’d all invested in VCRs.

What does it mean when the immensity of a problem becomes the main justification for it to be perpetuated? We’ve taken the lesson not to change horses in the middle of a river to heart—even if, say, the river turns out to be an ocean and we could ride a dolphin, instead.

But with so many in power declaring single payer dead due to political inexpediency, attention has shifted to its little sister, the “public option.” (“Public option” refers to a public and universally available plan that would compete on an insurance exchange with private plans. Obama, like many economists and analysts, seems to recognize that it’s an absolutely crucial part of real reform, saying today that it’s the only chance for the “competition and choice” that would drive down costs and “keep insurers honest”).

Now, though, opponents are trying to use similar not-quite-logic to cripple the public option. Only this time, instead of telling us that the problem is too big to be fixed, they’re saying that the solution is too good to work. Senator Olympia Snowe (R-Maine), the only Republican on the Senate Finance Committee not to categorically oppose a public plan, is considered a key swing vote. On Monday, she told the AP that she would support a public option if it only came into existence after private insurers fail to get costs down to a pre-set “trigger” level by a certain date. Her concern, she said, is that "if you establish a public option at the forefront that goes head-to-head and competes with the private health insurance market ... the public option will have significant price advantages.” After all, she continued, "I don't think we can entirely depend on the private insurance market to deliver. They haven't delivered thus far, and that's why we're in the predicament we're in today." So we should keep our terrible system while giving them one more chance to get it together?

In June, Senator Charles Grassley, also a Republican on the Senate Finance Committee, said in an interview: “So then what's wrong with what you call a public option? What's wrong with it is the Lewin Group that studies health care deeply, they have estimated crowding-out of about 119 million people. Well, you crowd out 119 million people out of private health insurance, then everybody else's rates are going to go up. And eventually you won't have your own health care system -- health insurance system that you want to keep, as the president promised. That's what we find wrong with it.” Orrin Hatch has echoed his numbers. The problem with Grassley’s statement, though, is that what he calls “crowding out” really means that those 119 million people would choose a strong public plan over their private insurance. Why? Because it would be cheaper.

If you were only following this issue according to what the public option’s opponents were saying, this is where you would start getting confused. Hadn't they been saying that a public plan would mean rationing, bureaucracy, and socialized medicine? Why, then, would so many people want to join it? The answer is that it was becoming clear to many that a bad plan offered as an option posed no real threat, because people would simply choose not to join it. The scare tactics weren’t working.

So the conversation began to change. As the New York Times noted, the new warning was that a public plan would be too good: “[C]ritics argue that with low administrative costs and no need to produce profits, a public plan will start with an unfair pricing advantage. They say that if a public plan is allowed to pay doctors and hospitals at levels comparable to Medicare's, which are substantially below commercial insurance rates, it could set premiums so low it would quickly consume the market.”

“Yeah, don’t throw us into that briarpatch,” responded Steve Benen at The Washington Monthly.

From the perspective of the insurance and health care industries (or of a lawmaker who benefitted from their lobbying dollars) that sounds scary, indeed. But to those actually concerned about whether the system makes sense, whether it’s affordable, or whether it gets better medical care to patients, it doesn’t seem like a problem so much as what we’ve been hoping for all along.

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