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March 04, 2006

No Truce with the Insurance Lobby!

By Neil the Ethical Werewolf

Unlike many of the people who talk with Ezra about setting up a better health care system, I know very little about how you get enough corporate interests behind the proposal.  I suppose that when Mark Schmitt talks about "building political groundwork" for getting them behind it, part of what he means is stuff like what Maryland did to Wal-Mart in saddling them with some of the state's health care costs, and thus making them more likely to support some kind of national health care in the long term.  I'd like to know more about what things we could do to bring more of these interests to our side. 

As far as I can tell, though, the one interest with whom there can be no truce is the health insurance lobby.  The horrendous negative-sum game of spending money to push the costs of health care into someone else's lap will have to be eliminated if we're going to get total costs down, and that's basically what these guys do for a living.  Any attempt to control this problem will antagonize them and make them blow lots of money on scaring people away from your plan.  I propose that we screw them as much as possible. 

I'm guessing that the intensity of the opposition that they'd be able to rally against a particular reform package doesn't correlate in any linear way with the extent to which it'd harm their interests.  Once you've proposed something that harms them, they're going to throw Harry and Louise ads at you until they kill your proposal, or until you pass it.  Fight them small, and they'll push back hard -- so you might as well fight them big.  There's also the fact that they're such an entrenched part of the Republican coalition that they're going to be shooting against you whether you do anything or not.  So there doesn't seem to be any point in going any less than full-force against them.   

Regular readers will know that everything I say bears some relation to John Edwards, and this post is no exception.  Edwards hasn't come out with a view on health care reform yet, but I have hopes that he'll someday be the guy to really stick it to the insurance companies.  He's probably going to be their least favorite Democrat from the beginning -- after all, he has a well-tested ability to make a big health insurance corporation look every bit as bad as a big health insurance corporation is.  He used to make his living convincing North Carolina juries to give his clients their money, and he did a frighteningly good job of it.  So for him, more so than any other Democrat, there can be no possibility of a truce here.  Edwards and the insurers are natural enemies who can never be at peace, and I long for the final battle that is their destiny. 

March 4, 2006 in Health Care | Permalink

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Tracked on Mar 4, 2006 8:41:39 PM

Comments

Neil: I sure wish it could be possible in the early 21st century to get the health care insurers out of the system, BUT...

please see my comment on Ezra's "How Scared Are We", below (and the link therein to another comment of mine in the Mea Culpa post of Ezra's.)?

You can't just wave a magic wand and eliminate major corporations like Blue Cross, United Health Care, etc.

Not only would they call what you propose socialism (or worse), but Wall Street would be in an uproar. There are probably trillions of bucks in capitalization of these insurers.

Please tell me how you take the businesses away from them without compensation? - Even if that were politically possible.

Posted by: JimPortandOR | Mar 4, 2006 7:44:19 PM

I guess I should have mentioned (emphasized the no-takings without compensation clause of the Constitution) the legal barriers in trying to just strong-arm the health insurance industry. Any plan to do so without compensation would not get past any Federal Court. The SCOTUS might not allow it WITH compensation, arguing that nowhere in the Constitution is there grounds to get the federal government into the health insurance business.

There are hundreds of companies involved health insurance provision. The bill to buy them out (compensation for public condemnation of their business) would be staggering, and litigation would be ongoing for many, many years.

Posted by: JimPortandOR | Mar 4, 2006 7:53:14 PM

Jim, if you save GM by killing Blue Cross, what will Wall Street do? I'm guessing they'll be happy that you saved GM, on balance. But I'm not sure, and I'd like to hear what Schmitt and friends have to say on this kind of thing.

If I understand single-payer properly, you're basically having the government provide a particular resource -- a fairly generous health insurance package -- to everybody. It so happens that this is the resource provided by a bunch of existing companies, so it makes them largely obsolete. You don't have to pass any laws specifically relating to existing insurance corporations, unless you go the Canada way, which you don't have to and Ezra warns us against. So it's not like we're taking their businesses away without compensation -- we're just giving people the same thing they sell, for free.

Posted by: Neil the Ethical Werewolf | Mar 4, 2006 7:57:12 PM

Dear Mr. Werewolf,

You call the-game-of-pushing-health-care-costs-into-someone-else's-lap horrendously negative-sum.

Is not universal coverage or any system of government financing a game of taking health care costs off the individuals' laps and pushing them onto the public lap?

If no, please explain.

Trapier K. Michael
www.marketplace.md
www.blog.marketplace.md

Posted by: Trapier K. Michael | Mar 4, 2006 8:46:50 PM

Jim, if you save GM by killing Blue Cross, what will Wall Street do? I'm guessing they'll be happy that you saved GM, on balance. But I'm not sure, and I'd like to hear what Schmitt and friends have to say on this kind of thing.

I think you're on the right track here. It's precisely why we need to get GM and others on board. The health care insurers are a powerful group, but if you have the rest of the business world aligned against them, they won't stand a chance.

Posted by: gswift | Mar 4, 2006 11:43:51 PM

Is not universal coverage or any system of government financing a game of taking health care costs off the individuals' laps and pushing them onto the public lap?

I think the point you're missing here is that it's not very productive to have a business, that's in the business of providing health care, doing everything in its power to avoid the costs of providing said health care.

If we have the government assume the responsibility for this role, there won't be the same conflict. The government doesn't have any motive to assume the responsibility for health care while simultaneously trying to shuttle the costs elsewhere.

Posted by: gswift | Mar 4, 2006 11:50:55 PM

Is not a federal military or any system of government defense a game of taking personal security from the individuals' laps and pushing them onto the public lap?

If no, please explain!

Posted by: Ezra | Mar 5, 2006 1:17:28 AM

Is not a federal military or any system of government defense a game of taking personal security from the individuals' laps and pushing them onto the public lap?

Yes, it is....and it's a game that has been played for thousands of years in most all countries and is part of our psyche and culture. Cradle-to-grave guarantees by government for all citizens are not. What would be next? Big government guaranteed life insurance? This is the stuff of the Soviet Union of the 1960's.

Even the liberal presidential candidate Senator John Kerry was not for the single-payer big government guaranteed health insurance plan that pushed this onto the public lap. I'm really not sure who is howling about this much other than you and
THESE GUYS
.

Posted by: Fred Jones | Mar 5, 2006 8:17:42 AM

"As far as I can tell, though, the one interest with whom there can be no truce is the health insurance lobby."

You define yourself in politics by the enemies you choose.

Democrats need to take a lesson from Republicans in the way they demonized trial lawyers. The GOP took a risk in taking on trial lawyers head on because by energizing trial lawyers, they guaranteed a steady stream of money to the Democrats.

But the GOP also picked up big benefits by their decision. By choosing an unpopular enemy, they helped to define themselves in a popular way. And that definition helped re-inforce larger narratives the GOP has been trying to spin.

Likewise, taking on the health insurance industry head on will present risks for Democrats. But the upside in being able to better define the party, and re-inforce larger narratives greatly outweighs the risks.

Posted by: Petey | Mar 5, 2006 10:54:38 AM

Like all other societal issues, the health care system will FOLLOW THE MONEY! The insurance, pharmaceutical, hospital, HMO and medical associations are paying dearly (over $100M in yearly campaign cash) to keep the system just as it is: Inefficient and profitable. Same is true in Canada where the moneyed interests want to defund their system and drive the public toward privatization. Anything, it turns out, to get needed health care.

The logical approach is a Medicare-for-all system where the public covers the entire bill. Not employers. We pay anyway when employers add their costs to the price of their product and we pay at the cash register. Let's eliminate the middle-men and do it right.

But as mentioned above, we may have to get the politicians off the health care payroll before we can accomplish that.

Posted by: Jack Lohman | Mar 5, 2006 12:46:14 PM

I think I basically agree, but I do wonder about the issue of compensation. It seems to me that, both on a basis of legality and on a basis of essential fairness, the government would essentially have to buy out the entire health insurance industry, as well as give pretty substantial severance packages to those working there who would be left unemployed, in order to get in a single payer system.

I would imagine this would be incredibly expensive. Are there any good discussions of this issue by supporters of single-payer?

Posted by: John | Mar 5, 2006 2:11:00 PM

Neil,

There is no reason to destroy Blue Cross. Take a look at how Medicare actually works. The processing of claims is not done by a government agency, rather CMS contracts with private insurance companies such as Palmetto and Nationwide to handle these tasks.

Posted by: Vadranor | Mar 5, 2006 2:18:45 PM

gswift says "the government doesn't have any motive to assume the responsibility for health care while simultaneously trying to shuttle the costs elsewhere."

But yes they do. Just look at the recent Canadian Supreme Court ruling that declared Canada's socialized payment system unconstitutional. The case involved a patient who had been denied services by the government and made to wait months for a hip replacement he wanted immediately.

This governmental tactic of denying access to public services is just as much an effort "to shuttle the costs" of healthcare somewhere else - except that here that somewhere is nowhere.

Trapier K. Michael
www.marketplace.md
www.blog.marketplace.md

Posted by: Trapier K. Michael | Mar 5, 2006 2:19:09 PM

Re: "Is not a federal military or any system of government defense a game of taking personal security from the individuals' laps and pushing them onto the public lap?

If no, please explain!"

That is a very clever way of saying healthcare is a 'public good' just as national defense is one; you are very clever, Ezra, perhaps the most clever blogger I read.

BUT...I object to the argument that health insurance, as a good, shares the same properties as national defense making it a public good.

If you procure yourself with national defense - say you are Jack Bauer of the show 24 and are capable of protecting America single-handedly - then I naturally enjoy National Defense too. In fact, there is no concievable way to design National Defense as a good such that you, Ezra, can have it and I cannot.

This does not hold with health insurance. We know that it is very possible for me to have health insurance while you do not. This blog makes very clear the difference between the health insurance 'haves' and 'have nots'. This, in fact, is the central argument for nationalizing healthcare: to remedy the fact that some have health insurance and some do not.

You have stuffed a strawman, Ezra, and/or don't understand simple economic definitions.

Trapier K. Michael
www.marketplace.md
www.blog.marketplace.md

Posted by: Trapier K. Michael | Mar 5, 2006 2:35:04 PM

The negative-sum game I'm talking about, Mr. Michael, is one that arises when insurance companies avoid paying $1000 for a sick person's health care by paying an actuary $500 to figure out that the person will be sick and deny him coverage. A single-payer system with universal coverage saves you this $500.

Posted by: Neil the Ethical Werewolf | Mar 5, 2006 2:43:31 PM

I agree that this is bad. I am by no means a supporter of big insurance. But neither am I a member of the universal coverage coalition.

I think there will be huge problems anytime anyone but the individual recieving care and treatment makes his/her own decisions and spends his/her own money.

~TKM

Posted by: Trapier K. Michael | Mar 5, 2006 3:50:22 PM

"I think there will be huge problems anytime anyone but the individual recieving care and treatment makes his/her own decisions and spends his/her own money."

So then you must have big problems with the current system where decisions are made by insurance companies and money is spent by insurance companies.

I'd guess you're a member of that microscopic coalition of folks who think the Bush HSA push isn't utterly insane...

Posted by: Petey | Mar 5, 2006 3:57:05 PM

Trapier,

Your post regarding a strawman makes no sense. What you are doing is saying that because we have a system now wherein some people have insurance and some do not, we shouldn't create a system wherein all people have health insurance.

It would, in fact, be quite easy to create a situation in which defense is provided for some and not for others. Let's say that North Dakota only accounts for 1% of the money that the federal government receives, while Montana accounts for 5%. When the hordes of rampaging Canucks finally cross the border, burning and pillaging, Washington could decide to send 5 times the troops to Montana, even if there's more Canadian Berserkers laying waste to Grand Forks than all of Montana.

It's like this comment of yours:

Is not universal coverage or any system of government financing a game of taking health care costs off the individuals' laps and pushing them onto the public lap?

Since the "public" is merely a way of talking about all of the individuals living in this nation, I'm not sure how this accounts for a transfer of costs. Making every individual responsible for every individual's healthcare is actually the best way to lower each individual's healthcare costs. The insurance industry itself proves this, as they are always trying to increase the numbers in their groups, since that defrays the costs of those who consume the healthcare among not only them but also many who do not. Since most everyone is going to go through periods where they consume quite a bit and periods where they do not, nationalizing healthcare would be fair and cost-effective. What it will not do is pay dividends on stock, which is why we have our inefficient, bloated and ultimately doomed-to-collapse system.

Posted by: Stephen | Mar 5, 2006 4:30:05 PM

But the GOP also picked up big benefits by their decision. By choosing an unpopular enemy, they helped to define themselves in a popular way. And that definition helped re-inforce larger narratives the GOP has been trying to spin.

As I recall, attempts to tar John Edwards with "trial lawyer" went nowhere. I think the whole "trial lawyer" thing might be useful for whipping up factions within their base, but doesn't really get them anywhere in elections.

Posted by: gswift | Mar 5, 2006 9:46:39 PM

Just look at the recent Canadian Supreme Court ruling that declared Canada's socialized payment system unconstitutional. The case involved a patient who had been denied services by the government and made to wait months for a hip replacement he wanted immediately.

It did no such thing.

What that decision said was that it was unconstitutional to deny people the option to buy private health insurance for a procedure just because it was covered by the national health system.

So in Canada now private clinics will operate along with government provided services, just as it's already done in many Europeans countries. From what I can tell, this seems to be the best approach.

Posted by: gswift | Mar 5, 2006 9:58:00 PM

This, in fact, is the central argument for nationalizing healthcare: to remedy the fact that some have health insurance and some do not.

And...do you object to this idea? The problem with American healthcare is that it makes neither moral nor economic sense. No moral sense because about a quarter of our population doesn't have ready access to first-world healthcare - and no economic sense because people will have access to that care in emergencies only. The old line about an ounce of prevention being worth a pound of cure really is true. But when that ounce of prevention costs a working-class family 2% of a very tight budget...and 19 times out of 20 nothing's wrong anyway...it makes economic sense to take that chance and forgo regular checkups. Which means that family #20 is bankrupted by medical costs that are passed on to hospitals and ultimately the rest of us, all because somebody didn't put down $500 a year for annual checkups.

And don't even think about the disastrous effects this has on small business:

"I've got the money and the training to launch my own business, but I don't have a spare $10,000 a year to insure my family."

"I've finally started my business, but I can't hire any full-time employees because I can't afford to pay THEIR healthcare."

Posted by: Kylroy | Mar 6, 2006 10:59:14 AM

Jesus, did someone bring up the Takings Clause?

Do really think that means the government has to reimburse you when it passes that eliminates a business opportunity you've been using? If you realy want to be bold, you should file a takings claim for all the taxes you pay (hey, your money is your property!)-- see how far that gets you.

There are many little niches of opportunity that, really, exist at the sufferance of the government. I know someone who was making thousands of dollars a week running a storefront video poker parlor in Texas-- until the state legislature shut those down a few years ago. The state didn't send out checks to the folks it put out of business, and likewise here, the Feds won't reimburse insurers. So the health insurers are going to be nuked-- they've had a good run.

Uncle Sam already provides universal health insurance to those over 65-- From a constitutional perspective, nothing changes if the eligilibity age is dropped to birth.

Posted by: beowulf | Mar 7, 2006 1:07:49 PM

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Posted by: peterwei | Oct 22, 2007 7:25:55 AM

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