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My employer used to offer three health care plan options—Cigna, Premera and Group Health. They just cancelled all but Premera. So much for “choice” and “competition.” The reason why they eliminated choice ought to be obvious—by giving Premera a much larger captive risk pool, they likely got a much lower per capita price for the insurance. Eliminating choice and competition is saving them a lot of money. And now Vanna, tell our contestants what they will win if they correctly answer the grand prize question “What is the biggest and cheapest possible risk pool of all?”
The answer is obvious—the entire population of the country. Large risk pools that reduce choice are cheaper by nature, which is why health care risk sharing trends toward being a natural monopoly, like the provision of electrical power. And any natural monopoly which is not either owned by or regulated by the public will inevitably screw consumers big time just because they can.
The last time a big state gave in to the ridiculous argument that deregulation, fragmentation and “choice” was the answer to reducing energy prices, we had Enron and Reliant withholding power from the California market to jack up prices, causing a major energy “crisis.” Few in the mainstream media noise machine bothered to point out that none of the cities with municipally owned utilities had any “brownouts.”
Yet the President and even Congressional members of the Progressive Caucus are spouting bullshit about how more use of “competition” and “choice,” that is to say creating as many smaller risk pools as possible, is the way to hold down health care costs. The reality is that all private health insurance, whether for profit or non-profit, currently operates on the Enron/Reliant business model, and current health “reform” offers nothing but throwing our tax dollars at Enron/Reliant and asking them to pretty please not charge members of the public as much.
It is a general economic principle that competition in the area of what should be public goods does nothing but drive costs skyrocketing upwards. If you aren’t familiar with the studies demonstrating that communities of similar size with more than one hospital have health care costs that are much higher than those communities with only one hospital, you could at least apply basic common sense to the issue.
If Seattle had three competing for-profit fire departments, fire protection costs would rise dramatically, as the public would have to pay capital and operating costs for three duplicate sets of equipment. If a new hospital opens in a town with one hospital, the public is not going to obligingly start to have more heart attacks. Both hospitals will have fewer patients per item of capital equipment, and will dramatically raise prices to compensate.
Therefore it ought to be obvious that current health care proposals cannot possibly work, because Congress and the administration flat out refuse to regulate health insurance. (Requiring a higher medical loss ratio is in no way shape or form regulation—there is no enforcement mechanism, and it is much too indirect.) Single payer (HR 676/HR 1200), which is health care that is publicly funded and privately delivered, is the best solution that has been legislatively proposed so far, although it is not the only way to reign in the insurance companies.
In Britain and Scandinavia, the government owns and operates the entire system, as is the case with Seattle City Light. However, given that we are having enough trouble just making health care financing rational, changing the entire delivery system as well is impractical and hopeless at this point.
In countries like the Netherlands, Japan and France, universal health care is provided by government regulation of private insurers (and hospitals, pharmaceuticals and health care providers), the way that the Public Utilities Commission regulates privately owned utilities here. In other words, their governments directly dictate what benefits must be offered and what they must cost. That could work here, except that Congress flat out refuses to consider it for the exactly the same reason they refuse to consider single payer. The premiums that the Dutch pay under their mandatory private insurance system are 100 euros/month/adult, with NO co-pays, NO deductibles and NO age rating. This is in the same ballpark as the $125/month/adult proposed in HR 676, or the $100/month/adult proposed by the Washington Health Security Trust. (The Netherlands has, and single payer legislation here proposes, payroll taxes above a certain threshold paid by employers as well.)
Many people argue that we shouldn’t attempt to get single payer all at once. It is certainly possible to start out smaller, but only if there is a government-run program for a risk pool that is large enough. A public option that anyone could join would work, given that about 60% of the population wants government-paid health care. So would gradual Medicare expansion, assuming that the problem of geographic inequities in reimbursement rates is addressed. Of course insurance companies oppose both of those things on the grounds that they could lead to single payer, which is why our bought and paid for representatives eliminated even extremely watered down and restricted versions of these two options, as well as government-negotiated drug prices and drug reimportation. Therefore the issue is not gradual vs. immediate implementation of public control of health care costs; it is how long the public is going to tolerate Enron-style abuse of a pricing monopoly.
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