Letting Insurance Write the Bill: How Bad Is That?
By: emptywheel http://emptywheel.firedoglake.com/2009/09/10/letting-insurance-write-the-bill-how-bad-is-that/Thursday September 10, 2009 8:51 am
Ezra has written a thoughtful follow-up to my complaint that discussions of the role of insurance company in writing our legislation neglect to discuss profit. I agree with parts of it and disagree with others. The most important point Ezra makes--which explains his focus on providers to the exclusion of insurance companies--is this passage:
a must read in it's entirety...Of course, that's not entirely right. Patients whose health care is provided by their employer "like the health system better when it's got unlimited amounts of money flowing through it." Patients who have to pay out of pocket--like many of the ones who will be mandated to buy insurance--don't really like that so much. And it's not just patients and providers that like a system that's got unlimited amounts of money flowing through it. So do insurers (assuming you understand this to be a system as a whole). Even assuming insurance companies only make that 3.3% profit and setting aside things like huge executive incomes, the insurance companies have an incentive to have as much money flowing into the system that it can take its 3.3% profit on.
And that's one of the baseline problems with letting the insurance companies write the bill: they have just as much incentive as providers to see that as much money gets flowing into the system as possible. And, they have an incentive to make sure that as much of the money put into the system as possible stays in their pocket. For those affected by the mandate who will not be subsidized or will only be partially subsidized, it is actually the patient, and not the insurance company, with the most urgency to cut the amount of money flowing through the system. But the patient doesn't get to write the bill; the insurance company does, and it appears that it is with these patients that the insurance companies stand to make some of their highest profits. That's one of my gripes with the Max Tax. It sets out-of-pocket caps higher than other bills and
sets lower amounts (73% if they are to be subsidized) that insurers have to cover. The result will be that more middle class families go into debt. As it's written, the Max Tax (frankly, most the bills) amount to a mandate that is simply not affordable for some middle class families. But the Max Tax throws in a bit more mandated costs that will go to insurance company profitability. The extra thousand or more dollars included for insurance companies means a lot to a family otherwise faced with surviving off of less than $8,000 for utilities, transportation, education, clothing, and debt. To me, you don't have to get any further than this money--taken from middle class families who will still go into debt under this scheme and giving it to insurance company profit--to demonstrate "how bad it is" that the insurance company wrote the bill. The other big difference with a bill written by insurance companies is that it includes no apparent means to challenge the insurance companies to limit how much money they ask to be put in the system in the first place--something the public option would help to do. Now, Ezra argues the exchange will be enough to bring costs down.
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