Health care reform from scratch

[Startraveler]

A while back I asked for alternative ideas to improve the U.S. health care system. Perhaps unsurprisingly, there weren't all that many. But let's try and return to that line of thinking. The Republican line recently has been that we should start over from scratch. So perhaps we, the bipartisan UM community, can come up with some common ground on what we want reform to look like. If there's actual discussion (really mulling the consequences of ideas), this might be useful.

Last night in a "response" to the State of the Union that was mostly devoid of policy ideas, Virginia governor Bob McDonnell mentioned the GOP's solutions website. Here the Republicans have a health care proposal that's meant to be an alternative to the bill passed by House Democrats, H.R. 3962. And their ideas are worth discussion. So I want to walk through their summary of their bill, though slightly out of order, and give my thoughts on them. If anyone wants to get into the actual text of their bill we can do that, too. Hopefully this is something of a catalyst for discussion of what ought to be in a reform bill. So let's look at their proposals (I'm ignoring "Lowering health care premiums. The GOP plan will lower health care premiums for American families and small businesses, addressing Americans’ number-one priority for health care reform." because that's a goal, not a policy proposal):

• Allowing dependents to remain on their parents’ policies. The GOP plan encourages coverage of young adults on their parents’ insurance through age 25.

This is a fairly common sense idea that both sides appear to be able to agree upon. That's why this appears in the Democratic bills, as well (the only difference being that the Dem bill uses 26 as the age).

• Prevents insurers from unjustly cancelling a policy. The GOP plan prohibits an insurer from cancelling a policy unless a person commits fraud or conceals material facts about a health condition.

Again, a common sense insurance market reform that both sides can agree on. Obviously the Dem bill also ends rescissions. The GOP substitute also eliminates annual or lifetime spending limits in insurance plans, just as the Democratic bill does.

• Establishing Universal Access Programs to guarantee access to affordable health care for those with pre-existing conditions. The GOP plan creates Universal Access Programs that expand and reform high-risk pools and reinsurance programs to guarantee that all Americans, regardless of pre-existing conditions or past illnesses, have access to affordable care – while lowering costs for all Americans.

This is a slightly different approach from the Democratic bill. The Dem bill immediately creates a national high-risk pool (in this sense the two proposals are very similar) but this is meant to only be a temporary solution. In the Dem bill, the high-risk pool is meant to be a band-aid that lasts only until the Health Insurance Exchange (the new, transparent marketplace for individual insurance policies) is created in 2013. At that point, high-risk individuals enter the same marketplace as everyone else and are able to choose the insurance policies they want. The high-risk pools in the GOP alternative are only required to carry 2 different plans, in essence permanently limiting the insurance options of this group of people.

Permanent federally-funded risk-pools are better than nothing for people with pre-existing conditions, etc but I'd prefer to see a proposal that integrates them into the same marketplace as everyone else and provides them the same insurance choices as everyone else. Still, this is a starting point of commonality, as both the Republican and Democratic bills contain a new high-risk pool program.

• Ending junk lawsuits. The GOP plan would help end costly junk lawsuits and curb defensive medicine by enacting medical liability reforms modeled after the successful state laws of California and Texas.

The GOP consistently presents this as some kind of silver bullet for cost containment but most analysis suggest it's anything but. The CBO analyzed the likely cost savings of a national package of reforms that's almost exactly what the Republican substitute proposes (i.e. a $250,000 cap on noneconomic damages, a cap on punitive damages, fair share rules, etc) and found that it would reduce spending by 0.5%. In the grand scheme of things, that isn't particularly impressive (given that health care spending grows by something like 6 percent annually, on average). What we need to be doing to control costs is finding ways to "bend the cost curve," as it's generally described. There are some useful links on that in this thread.

That said, this isn't an argument against some form of liability reform. It's just pointing out the obvious reality that liability reform by itself doesn't come anywhere close to bending the cost curve.

The Democratic House bill contains incentive payments for states that have or develop alternative liability laws (i.e. experiment). The caveat is that it doesn't offer incentive payments for alternative liability laws that cap damages. There are a lot of ways to reform liability laws but capping damages is one of the more popular ideas, at least in GOP circles. Still, to pretend there's no common ground here would be incorrect. And frankly, I doubt the "no caps" provision is non-negotiable, if the GOP is willing to enter into negotiations in good faith.

There's certainly room here to work toward a compromise.

• Encouraging Small Business Health Plans. The GOP plan gives small businesses the power to pool together and offer health care at lower prices, just as corporations and labor unions do.

This is, in part, a similar rationale to that behind the creation of the Health Insurance Exchange in the Democratic bill: the Exchange, which is initially open to individuals and very small businesses and gradually opens to larger and larger businesses, beings to blur the lines between the individual, small group, and large group markets by opening the benefits enjoyed by the largest groups to smaller groups and individuals. So I'm not sure why coalescence around some sort of Exchange-like structure wouldn't be fairly natural.

• Encouraging innovative state programs. The GOP plan rewards innovation by providing incentive payments to states that reduce premiums and the number of uninsured.

This is one that on its face seems like it could be uncontroversial (reward states that come up with ways to reduce premiums or the number of the uninsured or both) but I have some concerns about it. The GOP substitute doesn't seem to have anti-dumping provisions to go with its high-risk pool program (the Dem bill does), which concerns me. A state might be able to bring down premiums by relaxing its insurance regulations and allowing insurers more latitude to get rid of riskier or more expensive clients (some states have guaranteed issue laws, which keep insurers from denying people coverage and community rating laws, which keep them from varying rates between people by too much). So conceivably a state could streamline its insurance market (and bring premiums down for people in it) by making it easier for insurers to turn down or eject people from insurance pools; these people would then presumably end up in the high-risk pool, supported by federal funds but deprived of choice in the insurance market (since they'd no longer be in the insurance market). Thus a cursory reading of their bill suggests that states might be able to receive incentive payments for doing shady, undesirable things.

Still, this is likely salvageable (it may not even be that bad) and there may be ways to integrate it into existing Democratic proposals (although the coverage incentive payments wouldn't be necessary under the Dem bill since it approaches universal coverage).

• Promoting healthier lifestyles. The GOP plan promotes prevention & wellness by giving employers greater flexibility to financially reward employees who adopt healthier lifestyles.

This is another issue that seems fairly bipartisan. The Democratic bills also incentivize wellness programs, though in a slightly different way. The Republican substitute allows group health plans to vary premiums and cost-sharing by up to 50 percent of the value of the benefits under the plan based on participation in a standards-based wellness program.

The Democratic House bill provides grants to small employers to cover half the costs of standards-based wellness programs.

• Enhancing Health Savings Accounts (HSAs). The GOP plan creates new incentives to save for current and future health care needs by allowing qualified participants to use HSA funds to pay premiums for high deductible health insurance.

I imagine there's room for compromise here (though I'm not sure this is much a solution to anything).

• Allowing Americans to buy insurance across state lines. The GOP plan allows Americans to shop for coverage from coast to coast by allowing Americans living in one state to purchase insurance in another.

This is the big one and it's very important so I've put it last.

In part I'm going to quote things I've already said. The sale of insurance across state lines is an idea that, if done wrong, could potentially be a policy disaster. Unfortunately the Republican proposal is the wrong way. The Republican substitute plugs in the text of an existing bill: H.R. 3217, John Shadegg's Health Care Choice Act of 2009. It's very important that the background here is understood.

Some people erroneously believe that some federal law prevents insurance from being sold across state lines. This is false. There isn't a federal law the prohibits the interstate sale of insurance. What does exist is the McCarran-Ferguson Act that essentially says states get to regulate insurance companies. The reason insurers can't operate across state lines is because state laws don't allow this. States are free to pass laws allowing insurance policies from other states to be sold within their borders. Indeed, over the past few years several states have considered bills doing exactly this (including Colorado, Pennsylvania, and Vermont). These bills have failed (with the exception of a bill that passed in Rhode Island two years ago examining the feasibility of allowing insurance plans sold in Connecticut and Massachusetts to be sold in that state). They failed because states generally don't want to cede sovereignty over their insurance markets to other states, which is what the across-state-lines proposal demands.

What advocates of across-state-lines insurance selling are calling for is a new federal law that essentially forces states--against their will--to allow the laws of other states to extend into their state. Essentially, this proposal allows health insurance companies operating under the laws of a "primary state" to sell insurance policies to people in "secondary states." The laws of the secondary state don't apply to the policy because only the primary state from which an insurance policy originates can regulate it. So let's suppose I live in Maine and I find an insurance policy that a company based in, say, South Dakota is offering. Right now I can't buy that insurance because the South Dakota-based company isn't licensed in Maine and likely isn't in compliance with Maine insurance regulations. But if the Republican substitute became law, that South Dakota-based insurance could be sold to a Mainer, slithering into the state surrounded by a cocoon of South Dakota state law protecting it from Maine's regulators. A hint of the potential problems with this sort of idea can be gleaned from the notice that the law would require the insurance company to provide me:

This policy is issued by [name of insurance company] and is governed by the laws and regulations of the State of South Dakota, and it has met all the laws of that State as determined by that State’s Department of Insurance. This policy may be less expensive than others because it is not subject to all of the insurance laws and regulations of the State of Ohio, including coverage of some services or benefits mandated by the law of the State of Maine. Additionally, this policy is not subject to all of the consumer protection laws or restrictions on rate changes of the State of Maine. As with all insurance products, before purchasing this policy, you should carefully review the policy and determine what health care services the policy covers and what benefits it provides, including any exclusions, limitations, or conditions for such services or benefits.

To really dig down int the dangers of this proposal, let me share the Parable of the Credit Card Industry. Once upon a time, banks faced the same quandary that health insurance companies face today. States could protect their residents with anti-usuary laws that limited the interest rates that banks could charge on credit cards. But in 1978 a Supreme Court decision, Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp, ruled that nationally-chartered banks were subject only to the anti-usury laws of the state in which they were chartered. Thus an anti-usury law in Maine couldn't necessarily protect a Mainer from outrageous credit card interest rates if the bank that issued the credit card was based in another state. Rather, that Mainer would be at the mercy of the laws of that other state.

The result of this decision was exactly what one might expect. Certain states, looking to attract banks to relocate to them, repealed their anti-usury laws altogether. Thus states like South Dakota (now you know why I used South Dakota as an example) and Delaware that fostered a loose or nonexistent regulatory atmosphere became hubs for the credit card industry. Here's a typical example: not long after Marquette, Citibank charted a subsidiary in South Dakota through which to issue its credit cards. I won't go into the abuses of the credit card industry here but I'll note that Marquette is guilty of enabling those abuses. The moral is that deregulatory steps that prevent states from protecting their residents and effectively level the regulatory playing field at the lowest common denominator have enormous destructive potential.

What does this suggest about allowing health insurance companies to sell policies across state lines? It indicates that states would have an incentive to relax regulations to attract insurance companies and insurers, in turn, would have an incentive to relocate to the state with the most lax laws. But consumer protections exist, as the name would suggest, to protect consumers and abruptly shedding them is dangerous. The dirty little secret about a health insurance pool is that the healthy people subsidize the less healthy people; if a healthy person gets ill or injured, they in turn are subsidized.

If an insurer locates itself in a state that lets it deny coverage to anyone it wants, it can construct a pool of the healthiest, cheapest individuals. Healthy people like it because the plan offers them cheaper premiums, the insurance company likes it because it's profitable (fewer payments for health benefits translates into larger profits). But if these sorts of plans pluck healthy people out of insurance pools all around the country, all of the other insurance pools suffer as they are left less healthy and more expensive. The rising costs of these pools in turn encourage the healthy people who are still in them to shop around for one of the cheaper "healthy people only!" plans and you get what's called a death spiral. It's not implausible to speculate that in some cases the insurance system will simply become unsustainable--numerous states currently operate small high-risk insurance pools--precisely what the GOP proposal will expand indefinitely with federal money--for the "uninsurable" and these operate at a loss. Why would a private insurance company try this, particularly if it can relocate to a place with nonexistent consumer protection regulations? When all is said and done we can end up with fewer insured people and, for many people, higher premiums.

The vaunted benefits of the increased competition associated with this sort of deregulation flow to a specific segment of the population: healthy and easily insurable folks. These people do indeed stand to see cheaper premiums as insurance companies fall all over themselves attempting to attract their business (however, there's still risk associated with cheap, largely unregulated insurance--if they should get sick, they may find that bargain insurance is useless). But everyone else stands to lose, perhaps substantially. Ultimately the issue is that profit maximization and the expansion of health insurance coverage are not compatible in the absence of consumer protections preventing insurers from simply slamming their doors in the face of less profitable prospective customers. The race to the regulatory bottom that bills like H.R. 3217 would trigger is propelled by competitive pressures. In the face of perverse incentives, competition in an unregulated free market isn't always the solution to every problem.

The easiest way to understand the limits of competition here is to realize that competition is based on the idea that a customer wants the product and the seller of the product wants the customer. This isn't necessarily the case with insurance companies--just because someone wants to buy insurance doesn't mean that an insurer wants to allow that person to enter its insurance pool. Instead of competition being based on attracting the most customers, it can become based on attracting a certain kind of customer and avoiding another kind.

That said, this doesn't mean that insurance should never be sold across state lines. What it means is that some sort of regulatory floor (a national level playing field) is necessary to prevent death spirals and races to the bottom. Or you could go the route that the Democratic health care bill went: it encourages the creation of interstate health insurance compacts. This means group of states can get together and agree to allow insurers based in one of them to operate in all of them. The difference here is that this doesn't force states to cede sovereignty or remove their ability to protect their residents from the abuses made possible by states with lax regulations. States get to decide what the common regulatory denominator will be when they enter in the compacts. If they don't like it, they can simply not join.

So now we've walked through the Republican proposals. Aside from that last one, they're not bad and most (I think) wouldn't be difficult or contentious to add to the existing legislation (those that aren't already in it, of course). The problem is that they don't offer a coherent prescription for remedying the ills of our health care system. Moreover, the Republicans boast that this bill is much shorter than the Democratic bill but that assumes a big bill is necessarily undesirable. A bill as short as theirs (219 pages) simply skips huge issues that deserve and require attention. No attention is given to workforce development, comparative effectiveness research or quality improvement, community health centers, improving Medicare (be it plugging the holes in Part D, improving rural access, ending over payments to private contractors in Medicare Advantage, etc), delivery system reform, and so on. The insurance market reforms they include (ending rescissions and benefit caps) are a good start but don't really correct the market failures that create perverse incentives in the insurance market. The result is that the CBO score of the Republican substitute finds no reduction in the percentage of the population without health insurance in 2019.

Real reform needs to start looking at the long-term path the health care system is going to take. That is, it needs to start laying the foundations for delivery system reform and shifts in the insurance market that will make our system sustainable over the next century. Allowing people in their early 20s to remain on their parents' insurance plans is nice but we need to be thinking bigger, too. Do we want the insurance market to look the same in 10 years as it does today (with added restrictions on rescission)? What do you want to see in a reform bill?

[Farmer77]

Ironically I have a paper due Sunday asking me to do this very thing. My proposal is kinda radical I suppose but it makes financial sense. In order to supply total health care to the US population the government needs income right? Well rather than creating new taxes or nationalizing some already existing industry I propose legalizing marijuana. The government could create an entire industry for the growth, packaging, distribution, sale and of course taxation of marijuana. We already have a decent model for the taxation side of things with the tobacco companies and the profits would easily pay for America to completely socialize medicine without the need for the annoying limits which would be imposed through a classic taxation system.

[Cadetak]

Ironically I have a paper due Sunday asking me to do this very thing. My proposal is kinda radical I suppose but it makes financial sense. In order to supply total health care to the US population the government needs income right? Well rather than creating new taxes or nationalizing some already existing industry I propose legalizing marijuana. The government could create an entire industry for the growth, packaging, distribution, sale and of course taxation of marijuana. We already have a decent model for the taxation side of things with the tobacco companies and the profits would easily pay for America to completely socialize medicine without the need for the annoying limits which would be imposed through a classic taxation system.

Redo your paper...seriously, it not only would fail miserably but is realistically never going to happen.

[Farmer77]

Redo your paper...seriously, it not only would fail miserably but is realistically never going to happen.

The marijuana cash crop is somewhere around 38 billion dollars annually. Combine that with a Harvard estimation that we could tax marijuana to the amount of 6.2 Billion dollars a year and you have a serious revenue source. Polls (including those done by the AARP, PEW, CNN, and the JAMA) repeatedly show overwhelming support for the legalization of marijuana for medicinal purposes. So a little public education could go a long way. Now I live in Alaska where pot is legal and the majority of people consider it slightly less harmful than alcohol, so my perspective might be a little more logical and reasoned than most, but I believe the majority of Americans are ready to end this prohibition which costs America 7.7 billion dollars annually in law enforcement expenses. The majority of which are non violent offenses.

Now we know marijuana is the largest cash crop in America so prohibition clearly does not work. We also know that our health care system is in tatters with many americans choosing weekly between medicines they need and paying for food and rent (i'm one of them) so why not capitalize on the chance to create a revenue stream for the american government that can meet the needs of its citizens without the burden of excessive taxation of annoying limits on health care choice?

I didnt vote for Obama but I liked his message of Hope and Change. I would love to see more americans ACTUALLY believe in that.

[Caesar]

Ironically I have a paper due Sunday asking me to do this very thing. My proposal is kinda radical I suppose but it makes financial sense. In order to supply total health care to the US population the government needs income right? Well rather than creating new taxes or nationalizing some already existing industry I propose legalizing marijuana. The government could create an entire industry for the growth, packaging, distribution, sale and of course taxation of marijuana. We already have a decent model for the taxation side of things with the tobacco companies and the profits would easily pay for America to completely socialize medicine without the need for the annoying limits which would be imposed through a classic taxation system.

How about adding prostitution and dog fighting? J/K

I think we should focus more on bringing the costs down

[Cadetak]

The marijuana cash crop is somewhere around 38 billion dollars annually. Combine that with a Harvard estimation that we could tax marijuana to the amount of 6.2 Billion dollars a year and you have a serious revenue source. Polls (including those done by the AARP, PEW, CNN, and the JAMA) repeatedly show overwhelming support for the legalization of marijuana for medicinal purposes. So a little public education could go a long way. Now I live in Alaska where pot is legal and the majority of people consider it slightly less harmful than alcohol, so my perspective might be a little more logical and reasoned than most, but I believe the majority of Americans are ready to end this prohibition which costs America 7.7 billion dollars annually in law enforcement expenses. The majority of which are non violent offenses.

Now we know marijuana is the largest cash crop in America so prohibition clearly does not work. We also know that our health care system is in tatters with many americans choosing weekly between medicines they need and paying for food and rent (i'm one of them) so why not capitalize on the chance to create a revenue stream for the american government that can meet the needs of its citizens without the burden of excessive taxation of annoying limits on health care choice?

I didnt vote for Obama but I liked his message of Hope and Change. I would love to see more americans ACTUALLY believe in that.

I understand the idea the problem is its application. Specifically the "marijuana business" being fully government owned and operated...which is not how this country works. We can't get a government runned insurance company/plan off the ground which is gives little hope for the government acting as drug dealers. The idea would never even be considered let alone actually come into being.

Think about, if health care was funded by marijuana profits...you would have to encourage people to smoke weed so you can bankroll the project. That's silly.

The only way to do it would be to legalize it, allow capitalism to take is course and then tax the companies and the product itself(like tobacco). Trouble with that is two fold, one as you have shown wouldn't be enough money on weed tax alone, you'd again have to promote usage to fund healthcare, and also if it gets taxed too much or the price is too high? Keep buying the better cheaper stuff from the same drug dealer.

Even so you can't get it past the American people, we have a mess of trouble with medical application of marijuana...the push to decriminalize it is slow...to make it fully legal? That ain't happening anytime remotely soon.

Seriously the basis of your solution can be sumarized as...America becomes a drug dealer to itself and funds health care through promotion of marijuana.

[Cadetak]

How about adding prostitution and dog fighting? J/K

I think we should focus more on bringing the costs down

I can give you the number of a guy in brooklyn

[Caesar]

I can give you the number of a guy in brooklyn

WOOOOOOOOOOOOOOOOT

[Cadetak]

WOOOOOOOOOOOOOOOOT

lol jk I don't even live in New York, or do drugs.

The way your post was written and what you were replying to made it look like you wanted the price of marijuana to go down

[Farmer77]

I understand the idea the problem is its application. Specifically the "marijuana business" being fully government owned and operated...which is not how this country works. We can't get a government runned insurance company/plan off the ground which is gives little hope for the government acting as drug dealers. The idea would never even be considered let alone actually come into being.

Think about, if health care was funded by marijuana profits...you would have to encourage people to smoke weed so you can bankroll the project. That's silly.

The only way to do it would be to legalize it, allow capitalism to take is course and then tax the companies and the product itself(like tobacco). Trouble with that is two fold, one as you have shown wouldn't be enough money on weed tax alone, you'd again have to promote usage to fund healthcare, and also if it gets taxed too much or the price is too high? Keep buying the better cheaper stuff from the same drug dealer.

Even so you can't get it past the American people, we have a mess of trouble with medical application of marijuana...the push to decriminalize it is slow...to make it fully legal? That ain't happening anytime remotely soon.

Seriously the basis of your solution can be sumarized as...America becomes a drug dealer to itself and funds health care through promotion of marijuana.

Let me start by saying I do realize how "pie in the sky" this is. But you seem to be missing the numbers: MASSIVE amounts of Americans smoke marijuana now, how many more do you think would do it if they knew it was legal? As far as going to a drug dealer for the marijuana, why would you? If you can pick it up at 7-11 on your way home without risk of prosecution for tax evasion why would you even mess around with going to a drug dealer. Seriously when was the last time you called up a moonshiner to buy drinks for your dinner party?

IMO this would eliminate much of the special interests which are the true reason we cannot get a comprehensive healthcare bill passed.It just seems to me that this kind of out of the box thinking is what is needed here in America.

Edited January 29, 2010 by bigtroutak

[Caesar]

lol jk I don't even live in New York, or do drugs.

The way your post was written and what you were replying to made it look like you wanted the price of marijuana to go down

Its probly cheaper to smoke crack then smoke cigarettes

[Startraveler]

Uwe Reinhardt has a wonderful little blog post up today that makes the point that there's no such thing as "simple" health reform. Worth reading.

[Cadetak]

Let me start by saying I do realize how "pie in the sky" this is. But you seem to be missing the numbers: MASSIVE amounts of Americans smoke marijuana now, how many more do you think would do it if they knew it was legal? As far as going to a drug dealer for the marijuana, why would you? If you can pick it up at 7-11 on your way home without risk of prosecution for tax evasion why would you even mess around with going to a drug dealer. Seriously when was the last time you called up a moonshiner to buy drinks for your dinner party?

IMO this would eliminate much of the special interests which are the true reason we cannot get a comprehensive healthcare bill passed.It just seems to me that this kind of out of the box thinking is what is needed here in America.

The taxes from marijuana wouldn't cover the cost of healthcare.

[SilverCougar]

I dunno.. it just might.

Then again I think part of the reason they will never legalize pot is well.. we see how easy it is for kids under 18 to get normal cigs..

*sighs* Regardless..

[+Sherapy]

I dunno.. it just might.

Then again I think part of the reason they will never legalize pot is well.. we see how easy it is for kids under 18 to get normal cigs..

*sighs* Regardless..

good golly girl Silver, me thinks your RIGHT...

[sam12six]

The biggest problem I have with the so-called health care reform is that it's mostly health insurance reform (with the implication that the health care industry would reform itself once insurance is under control).

Insurance is out of control and needs reforming. I don't know anyone who disagrees with that and would fight that.

It's when you mandate that people will be forced to carry this insurance that people have a problem with it. That's no different than the government forcing everyone in the country to buy a Ford and calling it traffic reform. They just haven't demonstrated to most of us that the changes do anything more than help Ford's bottom line.

For real health care reform, it's all about out-of-control costs.

The simplest answer is a completely socialized program. Whether you feel like that's a good thing or not, it's pretty clear that getting such a program passed in today's political climate in the US is pretty much impossible.

The alternative I'd suggest is establishing government clinics/hospitals that treat any citizen for no/very low prices for routine medicine.

This would enable the government to mandate the costs of meds/equipment from medical vendors. The cost would be far less than a normal hospital/clinic (that would still be in business). This forced competition would drive prices down in the normal hospitals.

Now, the problem with my proposal politically is that it's still a form of socialism (in that it's the government using the authority and money of the people to affect change in the economy). I just think things have gotten to the point where the health care providers and health insurance industry are so strong that no change can come about without such government intervention. People aren't going to boycott emergency rooms...

[Startraveler]

Insurance is out of control and needs reforming. I don't know anyone who disagrees with that and would fight that.

It's when you mandate that people will be forced to carry this insurance that people have a problem with it. That's no different than the government forcing everyone in the country to buy a Ford and calling it traffic reform. They just haven't demonstrated to most of us that the changes do anything more than help Ford's bottom line.

The problem with most criticisms of the mandate is that people are pulling it out of context and treating it like some isolated policy that someone inserted into the bills for its own sake. The reality is that it's a necessary complement of the guaranteed issue and community rating features of the bills. That is, if we want:

1. To retain a system of private insurance
   
2. Give everyone access to that insurance and eliminate things like pre-existing condition exclusions; and
   
3. Charge everyone similar amounts so as to eliminate gender discrimination and reduce premium disparities by age and health status

then a mandate has to be part of the package. Otherwise the incentives of such a system can put it on a path toward unsustainability (i.e. "death spiral).

I see that you disagree with (1) but, as you note, more efficient alternatives are not politically viable in the United States.

I agree with you that, while insurers are the ones that get demonized the most, it's the providers who are driving the cost increases in the system. And somehow there needs to be a politically viable way to pressure them to bring down costs. The public option proposal--as originally proposed, with its reliance on Medicare reimbursement rates--was designed to squeeze providers and most polls showed it to be a pretty popular idea. But even that simple small step met huge opposition in Congress so I can only imagine what would happen to a proposal for government-staffed health care providers (there are increased funds for Community Health Centers in these bills but those aren't quite the same thing).

[sam12six]

The problem with most criticisms of the mandate is that people are pulling it out of context and treating it like some isolated policy that someone inserted into the bills for its own sake. The reality is that it's a necessary complement of the guaranteed issue and community rating features of the bills. That is, if we want:

1. To retain a system of private insurance
   
2. Give everyone access to that insurance and eliminate things like pre-existing condition exclusions; and
   
3. Charge everyone similar amounts so as to eliminate gender discrimination and reduce premium disparities by age and health status

then a mandate has to be part of the package. Otherwise the incentives of such a system can put it on a path toward unsustainability (i.e. "death spiral).

You're right. If you're trying to accomplish all 3 goals and force insurance companies to operate in such a way as to charge the same rate to all customers, regardless of risk (and guarantee that high-risk customers can't be denied insurance), you have no choice but to subsidize the companies to allow them enough profit to stay in business. The only 2 ways to do this are either direct tax-and-spend or forcing people to patronize those companies.

I see that you disagree with (1) but, as you note, more efficient alternatives are not politically viable in the United States.

I only disagree with 1 if you're trying to insist on 2 and 3. To my way of thinking, it's impossible to take a private company and force it to accept customers it doesn't want at prices that aren't profitable and have it remain a private company, since without the government intervention the company will quickly die.

If the government is going to subsidize the entire money end of health care, going through the insurance companies at all doesn't make sense. Having a purely government-run program would accomplish the same thing while removing a layer of profit from the picture.

I agree with you that, while insurers are the ones that get demonized the most, it's the providers who are driving the cost increases in the system. And somehow there needs to be a politically viable way to pressure them to bring down costs. The public option proposal--as originally proposed, with its reliance on Medicare reimbursement rates--was designed to squeeze providers and most polls showed it to be a pretty popular idea. But even that simple small step met huge opposition in Congress so I can only imagine what would happen to a proposal for government-staffed health care providers (there are increased funds for Community Health Centers in these bills but those aren't quite the same thing).

It's not the providers who are driving the costs up, it's the system:

People pay their money to the insurance company to be able to afford medical treatment.

The insurance company pays the providers with money from their customers. They don't care what the costs are because their business model is simply charge customers enough to cover the costs, plus their profit goal.

The providers get supplies (meds, specialized equipment, etc) from vendors. They don't care what the costs are because their business model is simply charge the insurance companies enough to support the costs, plus their profit goal.

The vendors are the biggest beneficiaries of the system. They have gotten accustomed to raping the providers price-wise (the same way people rape the government on contracts) because no one negotiates with them (And often, the government prevents competition in the form of generic drugs or alternate equipment).

I've worked with GE on their prenatal monitoring systems (the best, from what everyone says). These consist of a network (just a normal computer network), plus the specialized monitors. There is no negotiation on the install of such a system - the hospital shows GE where the beds are and GE gives them a quote - it's either take it or become noncompetitive technology-wise. In every major facet of the hospital operation, there is 1 company that has a stranglehold on the business. There's one major manufacturer of hospital beds that gets 95% of the business, one major manufacturer of imaging equipment that gets 95% of the business, etc.

As for the monitors themselves, I guess they can charge whatever people will pay thanks to their uniqueness. The problem here is that they also mark up the standard network components (mark up like 1000%, seriously). The only hospitals who negotiate on this at all are huge hospitals that are part of a larger care group (And even these can only negotiate to the point of choosing their own vendors to do the actual work. They still have to pay the incredible markups on the equipment).

I've redone a sleep lab in a hospital and after seeing that the 4 new cameras would cost somewhere in the neighborhood of $10,000, gave them an alternate quote using less costly but better equipment that came in at about a 3rd of that. Their answer - we need to stick to the same manufacturer as the original cameras, here's ten grand.

This process is pretty typical. The reason is that the people who put the money into the system (the insurance customers) never deal with those making the first, biggest pile of profit (the vendors). Everyone in between doesn't really care because it's not their money.

The only way to break this cycle is for someone with enough power (the government in my suggestion) to step in and negotiate for the customers. Down the road, hopefully the health insurance industry would be brought into line with the other insurance industries, meaning their only purpose is to guard against catastrophic loss.

You don't put in an automotive claim to buy gas or rotate your tires. You don't file a homeowners claim to paint your house or pressure wash your driveway. You shouldn't need to put in a health claim because your kid broke a finger or caught the flu.