Public option vs. non-profit option

[Recursion]

Here is how I understand the difference between the House and Senate versions of the bill currently on the question of a public option:

The House bill creates a government-run health insurance program to be available as an option in the exchange.

The Senate bill authorizes the government to contract an organization to run a non-profit health insurance program to be available as an option in the exchange.

Both plans would negotiate prices with providers like any other insurance plan; neither would be run for a profit. To me the big problem with our health care system is the massive waste that is insurance companies' profits. A company that doesn't have to chase profits is a great start in bleeding that out of the system.

What is so important about it being run by the government as opposed to an independent organization? In either case it's a chance for people to get health insurance without making a for-profit insurance company even richer.

[zaj]

1. This counts as a public option, to me...

... if it plays a similar role. I've wanted to learn more about this, but haven't seen it covered anywhere.

Great thread.

[Oregone]

Illustrates how the public option is an amorphous shadowy entity devoid of any true meaning

As Ive called it before, moron bait.

[TwilightGardener]

2. I actually think it's a good idea, and I hope it turns into something

really beneficial in terms of competition and cost control.

[Warpy]

3. Health insurance worked when it was non profit.

So did hospitals when they were run by doctors instead of MBAs.

Freed of the necessity of turning a profit for stockholders, they focused on the primary job of delivering safe and effective health care.

[Recursion]

5. Yeah, Blue Cross used to be great before they went for-profit

Come to think of it, every non-profit I deal with is better than the for-profit competition it has.

[DJ13]

4. What is so important about it being run by the government as opposed to an independent organization?

Which would be easier to reform by Congress in the future when the need arises, a program ran by a private company, or a government ran program?

Placing the supposed cost containment of the Senate bill into private hands pretty much ties the hands of a future Congress from going back and easily modifying the program.

Its far easier to reform a government ran program than to deal with corporate lobbyists protecting their cash flow.

[Recursion]

7. It depends

Government bureaucracies can get entrenched and be difficult to change, too; they don't have campaign dollars but they have equally effective ways of stonewalling reform attempts. And a contractor faces the threat of losing the contract to a competitor. But, I do see your point; it would be harder for the most part to regulate.

[TwilightGardener]

12. Wouldn't the government dictate the terms of the program?

I have military dental care, but we go to civilian dentists and orthodontists, and my claims are processed through United Concordia, a private company under government contract. Works out fine for me.

[Statistical]

6. Sure. If you believe that I got a bridge to sell you.

Non-profit doesn't mean no waste.

Sorry the company contracted will do everything possible to raise "costs". Oh this isn't profit. This is a cost.
Rising salaries, new computers, new buildings, ways to funnel money or assets into profit portion of the company, million dollar bonuses, all of this is "cost" not profit. See the contract is "non profit" everyone winz.

There are many govt contracts (especially military contracts) which are "cost plus". The govt pays actual costs + a fixed profit. The goal was to reduce fraud, waste, and abuse. Guess what happened? Costs went up. Holy moley did they go up, sometimes 20%-30%. The costs under the older contract vs new "cost plus" contract jumped 30%. Same system, same project, 30% higher costs. Kinda weird that now that the company has a fixed profit their "costs" went up 30%.

I worked on one of those contracts. Very easy to convert money = costs into assets and then move those assets into another portion of the company thus reducing costs in that part of company and improving overall profits.

For example. EDS has a helpdesk contract for govt. They decided a required COST was to replace all lcd with new lcd. It likely was buried on page 684 on a 2328 page contract. They then sold the older monitors to another subsidiary of EDS. Thus that subsidiary didn't need to spent $x million on new LCD thus their cost went down and profit of EDS went up.

No "profit" involved but plenty of extra cost for taxpayer.

[Recursion]

13. I've only worked cost-plus in for-profit companies

At the nonprofits I've worked for we've always had contracts just for cost, and we always had to try to keep that reasonably low so that we wouldn't get underbid the next time the contract comes up. But with no shareholders (this is a non-profit, remember), there's no particular incentive to drive costs up.

[Statistical]

16. Except the Senate bill says "non profit plan" not "non profit organization".

Since almost all major heatlhcare providers are for profit companies they would simply run this "non profit" plan within a for profit company.

If you don't think costs will rise then like I said I have a bridge to sell you.

They will raise costs because it is very easy to hide "unofficial" profit in higher costs.

[Somawas]

17. Quite right. In fact, "non-profit" doesn't mean "non-profit."

There is no meaningful oversight of non-profits by any sort of regulators. Except that the IRS wants to be sure that they don't distribute profit to shareholders. Blue Cross/Blue Shield of orth Carolina is still a non-profit Blue. It behaves no differently from Cigna/Wellpoint/United Healthcare. Its rates aren't cheaper, its coverage is no better, and it runs on denying care/benefits.

[Motown_Johnny]

8. what will be the salaries of the people running the non=profit and what will

their overhead percentage be?


If these numbers are higher than the ones for Medicare and/or Medicaid then we have a problem.



It is easy to not make a profit when you hike your own salary to eat up some more cash.

[Recursion]

10. I've pretty much only worked for non-profits

I mean, I guess the execs got paid pretty well, but not millions. I like non-profits: I like working for them, I like patronizing them when possible, and in my experience they're pretty efficient and generally do their job better than for-profit companies.

[Motown_Johnny]

14. if that is true with the new providers of medical coverage then we don't have a problem

[Recursion]

15. Well, obviously the proof of the tree is in the eating and all...

...this could be a total fiasco if the contract is done badly, but it could also be a good thing. I'm not sure who's up for bidding for it? Kaiser?

[Eric J in MN]

9. The salaries of federal employees can't be higher than the president's, by law.

The salaries of executives at a non-profit branch of Blue Cross Blue Shield are unlimited.

[Recursion]

11. Yeah, salaries of executives really aren't the problem

Sure, they're ridiculous and immoral, but a few million going to the heads of organizations isn't the issue -- a few hundred billion going to shareholders is.

[Eric J in MN]

18. The problem with private health insurance isn't just...

...what percentage of gross goes to big executive salaries.

It's the motivation it gives executives to see that claims keep being denied so that the money stays at the organization.

[Statistical]

19. It would be contract. They wouldn't be federal employees.

Check the salaries of executives at govt contractors they are far higher than any federal employee.

[Eric J in MN]

20. Yes, that is my point about why the House public option is better than the Senate's OPM plan. NT

NT

[Statistical]

21. We are in agreement then. I guess I misunderstood.