Why we need the public option.

[JDPriestly]

I posted this before as a response to someone's e-mail a couple of times and someone suggested that I post it as a separate thread:

The idea behind the health insurance companies was that they would create a pool of consumers to purchase health care services from providers at lower prices. Thus, insurance companies would take in relatively small monthly payments from many, many people and then negotiate low prices to purchase services from health care providers.

The problem is that, in reality, to create a pool of subscribers large enough to leverage good price deals with the providers while still managing the risks, an insurance company has to get a huge percentage of market share. If a company can't get a large enough market share, it can't compete.

Thus, mega-insurance companies emerge and dominate the market. Very soon, fewer and fewer companies are in the market and before long there is no or very little competition.

And without competition, there is no incentive for insurance companies to negotiate effectively with providers (such as pharmaceuticals), and a huge temptation for insurance companies to switch from competing in terms of offering lower prices to competing in terms of amassing huge profits and paying management huge salaries.

So, inherent in the whole idea of health insurance is the incentive to
1) create a huge pool of subscribers
2) get a monopoly or dominating share in the industry and thus abolish and avoid competition
3) take profits rather than give lower prices.

Thus, a monopoly on the health care insurance business is probably the only way to insure that people get good health care for a reasonable amount of money. In the health care sector, private companies can't work. They will always seek to grow, grow, grow in order to maximize profits. They will always deny care in order to maximize profits. They will eat each other up. They will spit out the lives of their customers.

How do those who oppose a public option or a government-run single payer plan hope to circumvent these facts of business life.

[madfloridian]

1. Recommended

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[justinaforjustice]

9. Medicare for All Will Win, Ditch Public Option. n/t

[andym]

2. This is a clear and concise. K&R n/t

[NanceGreggs]

3. Excellent summary!

:kick: & REC'D!

[chknltl]

4. KnR Thanks for posting

[AdHocSolver]

5. There is another aspect to private insurance companies that hasn't been addressed.

Insurance companies amass huge amounts of capital that needs to be invested to earn more money. They don't just stuff it in a mattress.

Insurance companies will invest in pharmaceutical companies. In creating a formulary, an insurance company can steer drug purchases to the pharmaceutical companies in which they have money invested, or in which their executives have money invested. Instead of an incentive to save money on drug purchases, the insurance company makes profit on their drug company stock ownership.

The insurance companies, in competing for business from the large corporations, will offer the big companies better coverage at lower cost, and make their profit by charging small businesses and families higher premiums, with bigger co-pays and deductibles. In effect, small businesses and individuals are subsidizing health insurance for the large corporations.

The idea that co-ops of consumers buying insurance in an exchange will save consumers money is pure fantasy. The insurance companies will tacitly work together to deny any savings to the members of these co-ops. Without a public option, small businesses and individuals will be priced out of the market. Saying that people with pre-existing conditions can't be excluded is a fraud. They will be priced out of the market. There has to be a public option.

[JDPriestly]

10. Thanks. You are so right.

As they do with pharmaceuticals, medical insurers invest in other businesses related to medical care and again, their patients are referred to the businesses that the mother insurance company invests in. This further feeds the monopolization.

The worst of it is that, as we see, the insurance companies are able, because of their financial clout, to control government. The insurance companies have more influence in D.C. than we do -- more by far. And a lot more in Obama's White House. So we are really not getting very far in asserting our interests in a D.C. that was taken over by these private health care companies long ago.

[eridani]

6. Unfortunately, there is no legislation that proposes such an option

The HR 3200 public option will not be available until 2013, and very few people will be allowed to apply.

A simple way to get a public option is to allow people who want it to enroll in Medicare, starting now.

[druidity33]

7. not quite true...

What about HR676?

:)

[eridani]

12. True, but we don't have the votes yet to get it passed. n/t

[druidity33]

13. that's lame. nt.

[eridani]

14. Indeed. Our legislators are terrified of teabaggers bashing even a weak public option

They are going to have to develop far more spine to stick up for single payer.

[many a good man]

8. The only tenable alternative to PO or SP

The largest possible risk pool is the best way to distribute risk and have the power to negotiate lower prices with providers. There is a way to achieve this goal without dumping all the insurance companies.

We can treat the entire US population as a single risk pool. Define the standard basic coverage and raise taxes enough to pay for it. Then divide up the population among the existing insurance companies and divide up the money proportionally.

Guarantee small, reasonable profits based on outcome targets. Companies can add premium gap policies. These gap policies will take the place of health benefits now given by employers and unions who can afford it. This plan could only pass if Democrats started negotiations from the position of single payer and were willing to compromise down to this plan in exchange for the survival of insurance companies.

[JDPriestly]

11. Obama's blunder (neither the first nor the last)

not pushing for Medicare for all or single payer from the get go. Of course, I have to say this because Obama is such a likable guy, but we don't know to what extent he was in the firm grip of the insurance industry before he decided to run.

Once again, what did Michelle Obama do for a living before Obama ran for president? Wasn't she involved in hospital management of some kind? For a non-profit or for-profit? What is the story on that?