Perhaps it's just political posturing, but on substantive grounds I don't get it. The biggest problems with the proposed reforms have to do with the incentives created by the mandates. That includes the incentives for would-be purchasers (better to just pay the fine and remain outside the pool), the incentives for the subsidized (very high implicit marginal tax rates), the incentives for employers (look for illegal aliens), the incentive for doctors to stop treating Medicare and especially Medicaid patients, and the incentives for the insurance companies (there's probably a way to scare off high-risk customers or otherwise game the customer carry requirements).
There is room for disagreement as to how big these problems are in absolute terms, but still they should be seen as the major problems with the likely bill-to-come, issues of cost aside.
The public option alleviates these problems, albeit in a minor way, by removing some individuals from this circle of possibly unworkable incentives.
I still can see why you might not favor adding a public option to the plan, basically for the usual reasons which plague many government programs. As for the politicians who are drawing a line in the sand at the public option, to me that's just a sign they don't understand the major potential problems in the plan in the first place.
“As for the politicians who are drawing a line in the sand at the public option, to me that’s just a sign they don’t understand the major potential problems in the plan in the first place.”
Grand narratives about government control vs. private control of medical services sell to the voters (across the political spectrum), the gritty details that have to be right to get a good plan do not sell. That should explain most of your puzzle.
It is also the main reason why the side advocating less government control is right: the incentives for getting the details right are simply missing in law making.
Please let me copy my comment to your post on the minarets because it’s relevant for this post too:
Two points. First, your overall lesson is something that any child must learn about social life. It’s too important to be repeated it again and again. But it’s not limited to political life.
Second, upon reading David Kopel’s post
http://volokh.com/2009/11/30/swiss-vote-to-ban-minarets/
I concluded you have missed the most important issue: the big gap between the Swiss public and a Swiss government that has gone too far to accommodate some muslims, in particular the Iranian government. It’s the same as Obamacare. I’d like you to have a referendum on Obamacare.
No. It is a sign that their constituents don’t understand. Politicians don’t mean what they say literally. It’s signalling, something we can read around and behind, right?
In 20 years time, what do you expect the health care market to look like with a without a “public option”. In the former case, I can’t imagine a situation where the PO doesn’t sell below cost, leave only “cadillac” plans as competition, create huge numbers of dependents and become politically untouchable. Basically like the public schooling option. It seems like a perfectly reasonable line in the sand to draw.
As josh hints above, the “public option” WILL result in eventual full government control of the health system. And as Alex K. says it’s easy to sell that idea to poorly informed constituents, even if the rest of the “reform” will probably have the same ultimate effect. If stopping the public option stops the whole train, all the better.
“that’s just a sign they don’t understand the major potential problems in the plan in the first place.”
Of course they do. But without a public option, they cannot push private insurance companies out of business. This is not complicated.
josh: “create huge numbers of dependents and become politically untouchable. Basically like the public schooling option. It seems like a perfectly reasonable line in the sand to draw.”
I agree completely.
The cynicism in this process is palpable.
“noah yetter: “If stopping the public option stops the whole train, all the better.”
I agree, but I doubt it will stop the train. Obama and the left need to show something. Those on the left who claim they won’t support a bill without a public option are posturing.”
Don’t be so sure. Ted Kennedy killed health care in the 1970′s over a similar triviality.
The public option has a risk of carriers pushing bad risks into the pool, UNLESS there is some mechanism to reassess the carriers based on the costs of the public option or unless there is some risk adjustment mechanism.
The opponents of health care reform and of the public option have already done a fine job of creating all the incentives needed to push the bad risks in to the state public option pools.
What else can you call Medicare and Medicaid and public funded clinics and other means of providing care to the people the insurers refuse to cover? 45% of US health care is spent by government to pay for the health care of almost entirely people the private health care market refuses to cover.
At age 62, the private insurer based outside of NH serving customers in more than a dozen states, Anthem, is charging $9400 a year for $5000 deductible, a price I pay only because I have too many assets, but a price I know from experience would increase dramatically if it were my only option at 65 and above and that would in itself bankrupt me, making me eligible for the Medicaid public option.
Clearly the private insurers would be willing to cover only a very small share of those over age 65 if Medicare weren’t available.
mulp: “Clearly the private insurers would be willing to cover only a very small share of those over age 65 if Medicare weren’t available.”
That’s not clear to me. I think private insurors would gladly cover those over 65 – as long as they were allowed to charge premiums which properly reflected the risks they were assuming – and as long as they were allowed to tailor health insurance policies to individuals based on the medical conditions of those individuals. Of course, if private insurance for those over 65 were priced to cover medical costs, most seniors would be priced out.
Not just holding the line, but supporting they best plan for our nation moving forward. It’s already been working for years in some states. http://cli.gs/z3AtaY/
Tyler wrote:
As for the politicians who are drawing a line in the sand at the public option, to me that’s just a sign they don’t understand the major potential problems in the plan in the first place.
I have to agree with the cynical comments here, Tyler. Surely you don’t think the politicians sit in their offices and think, “Hmm, what can I do to make the world a better place?”
I’m not sure of the particular motivations of various politicians, and what makes them say the things they do. But I am sure that they are not analyzing the health care bills the way you apparently believe they are.
I agree incentives are important here. The complaint about the public option is that it will drive out private insurance and be a back door to a virtual single payer system. But for that the public plan is so popular that the public is willing to vote it massive subsidies to undercut private insurance.
On the incentives, its clear they are going to be tweaked dozens of times in the future so they should be taken with a grain of salt. The penalty will be made harsher or else the rules against discriminating against pre-existing conditions will be made looser. There’s probably a good argument, though, that these should be phased in gradually as everyone gets used to the program and we can observe how it works in real life.
The fact remains that big insurance by refusing care to patients and reimbursement to doctors over typos has ticked everyone off. They have a monopoly over the whole process and a well financed lobby team (including Lieberman’s wife) and representatives on both sides of the isle.
A friend of mine recently laid off just he and his spouse is paying $2,500.00 dollars a month for his COBRA. Health insurance costs more than his mortgage. Anyone taking up the insurance industry’s cause doesn’t know what they are talking about.
If you think the insurance companies are going to voluntarily lower their cost while having a monopoly over the process – you are being disingenuous †¦Over 60% of all US bankruptcies are attributable to medical problems. Most victims are middle class, well educated and have health insurance – (The American Journal of Medicine)
The insurance companies and their representatives in Congress would love to perpetuate a business model that is crippling our overall economy – a bunch of great Americans aren’t they?
90% of the wealth concentrated in 1% of the population is no way to run a country but a heck of a way to establish a royalty ruling class. Yacht sales can not sustain 350 million people. I’m for the public option, competition and a level playing field or break up the big insurers like we did AT&T.
A slavish focus on profit margin might be good for the individual or a business, but it is one helluva lousy way to “govern” a Country. The GOP being a wholly owned subsidiary of Corporate America has a hard time with that concept.
Paul Burke
Author-Journey Home
boonton: “And why should anyone care about this?”
Without competition, there is little incentive for improving or even maintain quality. Democrats are claiming that the private insurance industry needs competition, and that has been their justification for the public option. Republicans proposed interstate sales of health insurance to ensure competition.
boonton: “That’s not going to happen unless the minor public option on the table today turns out to be the most fantastic thing in the world”
It doesn’t need to be fantastic in order to crowd out private insurance. It just needs to be priced much lower, which it will be.
Very few Democratic or Republican elected officials believe the public option will be minor. The Democrats are gleefully anticipating a new government mega-program. The Republicans are scared to death of it.
What I think is overlooked in the criticism of the current bill is an understanding that no reform will be perfect. The bill, though, does seem to leave open lots of room for tweaking in the future (and tweaking will happen….Medicare today looks very different from Medicare of 1973). The public option seems like a worthwhile experiment that could be either increased if it proves worthy or simply left to wither as a rarely used option (as it has been so far in Medicare D). I’m skeptical that the armchair theoriests really know what the implications of it will be….hence there’s a good argument IMO for letting it go through and tweaking in the future as circumstances reveal themselves.
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