Opinionated @ CFE

A Summation of the Health Care "Reform" Bill


Dear Congressional Democrats,

After spending years talking about how evil insurance companies are, your “solution” to ever-increasing health care costs  is to mandate that we do business with this “enemy” and give them a large chunk of taxpayer dollars. Every time you spread the meme that the Republican Party is nothing but a bunch of corporate shills, I hope they pull this one up to show that you’re just as bad as they are.


A pissed-off taxpayer

P.S. Bob and I disagree on how to fix health care, but we agree that your bill sucks.

6 Responses to A Summation of the Health Care "Reform" Bill

  1. I share the concern about whether relying on the private system is a good idea, and have my fair share of specific concerns about the recent legislation as well.

    But I really can’t think of any other option I’d consider viable if we’re going to try to expand access. I haven’t come across anything yet that leads me to believe a more hands-off market-oriented approach can be created which will function without the flaws from the last few decades, even if you start by pulling every known cost-control idea. And the other way–expanding *truly* public programs–is a non-starter for the same reason that Democrats are, as you observed, also essentially a pro-business-interest party (which they will almost necessarily remain without a sea change in both American political culture and election funding).

    If you’ve seen something I haven’t that suggests there are politically attainable possibilities either direction that’ll expand care, I’m all ears, but I’m also skeptical.

    • W, there is a problem with your comment which I’d like to quickly address.

      The bill does a lot of things, but one thing it doesn’t do is “expand access.” Access to health care has never been denied because of a lack of money. Millions of Americans may go in debt because of health care costs, but despite this, they are still given access. Whereas, in countries with socialized systems, health care actually is denies and access decreased (i.e. Canada). Not trying to pick at semantics, but I think it’s important to draw this distinction.

      Also, this bill will increase costs precisely because of the big-bad insurance companies which will continue to dominate the market. The regulations imposed by the bill will have the most detrimental effect on the smaller insurance companies and on entrepreneurs, not the infamous giants of the industry. This will diminish competition and facilitate the strangehold current health insurance giants have on the market today.

      That aspect alone is enough to convince anyone that Obamacare is the wrong direction for America.

      • FF, I am familiar with cases where care has been limited or unavailable to people based on lack of insurance and means tests, and that’s before you consider self-rationing by people who are principled enough to not rack up bills for services they’re either unable to estimate costs for or know they’re unable to pay.

        I also think you’re trivializing going into debt. The levels we’re talking about for any catastrophic event are crippling for most middle and lower class households in a lot of cases and a major cause behind bankruptcy. Which we all pay for: unpaid debts show up in prices for products, services, and of course, lending costs.

        I have not seen an exposition of how this will hurt entrepreneurs. So far, I actually see an advantage for entrepreneurial individuals and very small businesses who will now be able to get group ratings while they’re working on bringing their idea to market.

        I think you’re correct about the inherent problems with the big bad insurance companies, though, but as I’ve said elsewhere, in a business where customers who need your services are a liability, I don’t know that private solutions are ever going to address this.

  2. I don’t think it’s an issue of over-regulation or under-regulation; it’s an issue of bad regulation. I think it’s a boneheaded thing that insurance companies are exempt from anti-trust regulations when they control so much of the markets they serve and consequently are responsible for the skyrocketing costs we’ve seen. On the flip side, the current regulatory structure actively discourages any kind of creative solutions to expensive insurance plans and shuts out competition. It’s the exact same issue the telecommunications market has: a few powerful market incumbents have created just the right kind of regulatory environment to ensure that everyone needs their product and there’s limited competition to drive down prices. This is the byproduct of having a pair of corporatist parties in power no matter how each of them may posture themselves.

    I don’t have much hope of seeing any kind of real reform or change at the federal level. The parties are too hopelessly captured by moneyed interests.

  3. I don’t think it’s just the regulatory structure that shuts out competition. I think it’s probably inherent in the market. Absent some kind of substantial collective bargaining power, providers are more or less price setters, particularly for the kind of expensive and catastrophic care for which insurance matters. That means you either have a public price control regime… or the advantage inherently goes to insurers who have enough market power to bargain. If you’re an insurer, you have to get there as soon as possible or you will pay out more in medical losses than your competitors do even if your risk pool is comparable in makeup. And the kind of market power that lets you do that bargaining probably only comes when you’re bordering on anti-trust size (providers sometimes tell players with 20-30% of the market to go to hell… fragment that market and their negotiating power goes down). They may suck (and I hate ’em as much or more than most), but they’re the only player in the private system really able to exert downward pressure on costs.

    But for me that isn’t the biggest problem with the insurance business, which is this: customers who really need the service are a liability. This makes it fundamentally different from just about any other business I can think of: broadband, automobiles, restaurants, mp3 players… all markets where a customer who wants what you’re selling is a revenue opportunity and where they have other choices if you don’t meet their needs. Insurance… well, once you *need* it, it doesn’t matter whether or not your current insurer (if any) meets your needs. Nobody else is going to want your business. Not at premiums which are going to make you a net liability, anyway. I don’t think any market where customers who need the service are a liability can optimize on quality of service. In fact, it seems likely the incentives are optimized the other way.

    (This is actually my biggest problem with the current bill. On the face of things, it does present an opportunity for competition with an unprecedented level of portability: if it’s all community rating and you can’t be discriminated against on your health condition, well, switching insurers if you’re dissatisfied should be pretty easy. I think, however, it’s likely some insurers are going to play games with their customers: you *want* someone who is a net liability to consider switching. One way to make your risk pool better than a competitors is going to be to make people who are no longer assets miserable enough to go somewhere else. If I’d been drafting the legislation, I might have done something crazy like say that past premiums are tied up in some sort of asset that goes with customers when they move. Now *there’s* incentive to keep your customers happy.)

    If you’ve got ideas of specific creative plans which address this fundamental customer-as-liability problem, I’m interested.

    • Allow me to pull a very personal example: Shauna’s emergency appendectomy. The hospital wanted to bill $33K for the procedure. The insurance company “negotiated” the price down to $11K. We paid under $1K. This causes a number of problems.

      First off, what does an emergency appendectomy really cost? I’m sure that Joe Average can’t walk in and get a price of $11K, but does it really cost $33K to get that done? It seems rather unlikely. This lack of pricing transparency only furthers problems with cost controls.

      Second, why you do think the hospital set the price so high? They had to have known what the insurer will and won’t pay, so it seems kind of silly to shoot the moon like that… unless they know that the insurer will always pay ~33% of the quoted cost. In order to be paid fairly by the insurance company, they have to raise the price for everyone else. I’m sure they probably cut some deals for cash patients, but I’m willing to bet it’s not a 2/3 discount.

      These two things are only serving to increase pricing. The insurance company has an incentive to drive pricing lower and lower and medical providers need to earn a certain baseline to stay in business. In the end, they take it out on the uninsured.

      I would argue that the broadband business is treating customers in the exact same fashion. For a while, Comcast was kicking off customers who used “too much” of their supposedly unlimited Internet. Now almost all providers are moving into the territory of caps and overages. Don’t like it? What choice do you have when it’s Ma Bell and CableCo as your only wireline choices? You can’t even really escape it by accepting inferior wireless options either. Clearwire (and by extension, Sprint 4G) seems to be the only broadband company who actively encourages you to use as much as you want. This is a clear result of a lack of competition.

      I actually laid out a number of changes that I think would improve health care in this country: http://opinionated.coolestfamilyever.com/2009/09/14/i-want-health-care-reform-too-bad-im-not-getting-it/

      What we need is a combination of better pricing transparency, less insurance influence in pricing, and public policy that encourages better long-term health. Some relatively minor adjustments could have some great-long term effects on the health care market as a whole.

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