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January 15, 2007

The "All Or Nothing" Myth

As follow-up to the post below, I want to play around with the idea that the medical industrial-complex will attack any serious health reform with total ferocity, and so would-be reformers should simply try and legislate them out of existence, knowing that that's the path of maximal efficiency. Look at the Clinton push, these folks say. They tried to compromise and were torn apart for it. Single-payer style solutions, by contrast, are simpler, and will be easier to sell.

It doesn't necessarily follow that since liberals have lost when they've sought compromise, they'll win with the opposite stance. It could be that a proposal closer to single-payer would've been even more disastrous. Indeed, what always strikes me about this argument is that the attitudes of the American people towards massive government regulation are largely ignored. Single-payer isn't simply blocked by industry despite overwhelming public support. It doesn't garner much support. As Chris reminds us in comments:

On the idea that single-payer will sell because it's simple to explain, Oregon had a single-payer health care bill, Measure 23, on the public ballot in 2002. It failed by 21.5% to 78.5%. California had a single-payer bill, Proposition 186, on the public ballot in 1994. It failed by 27% to 73%. If this is such a great idea that everyone supports and is so easy to sell, how come it's failed among the public by 50 points in two Blue states?

And here's a November 2006 poll on the question:

"Which of the following approaches for providing health care in the United States would you prefer: replacing the current health care system with a new government run health care system, or maintaining the current system based mostly on private health insurance?" Options rotated. N=478, MoE ± 5 (Form B).

Replace Maintain Unsure

11/9-12/06 39 51 10
11/7-10/05 41 49 10
11/7-10/04 32 63 5
11/3-5/03 38 57 5
11/8-11/01 33 61 6

Those aren't slam dunk numbers. Quite the opposite, in fact. In every poll, a plurality favors the retention of the private system. In four of the five, majorities do. And think back to the Clinton battles. A common element in the case against The New Republic is Betsy McCaughey's No Exit, a massively influential article published during Andrew Sullivan's watch that charged -- inaccurately -- that the Clinton plan would bar individuals from seeking private insurance if they were unhappy with the government's coverage. There would, in other words, be "no exit" from the system. This was roundly denounced as a smear job. "Roundly," because it was a hugely influential and effective attack, and so it enraged lots of people. The idea that Americans would be trapped in an untested, possibly awful government system was a powerful argument against the reforms. "Smear job" because it was untrue -- the legislation would have done no such thing.

But if liberals are going to sign the insurance industry out of existence, it will be true. It won't be a smear. And while we think the end of insurers will be a good thing, history suggests that Americans may disagree, at least initially, at least while our option is unproven (and any new program -- even if it's an expansion of an old program -- covering a previously uncovered demographic is unproven). Our anger at Betsy McCaughey's article, and at The New Republic for publishing it, suggests that we, on some level, know that.

Now, many will argue that it's a framing argument, that we need to call Government Care Medicare and Americans will sign up in droves. Maybe so. But even given the familiarity of Medicare, will expanding the program be more popular if we tie it to the end of all current insurance options, opening ourselves to the argument that, if this goes bad, Americans will have no recourse? Again, I'm open to evidence in the affirmative. But demanding the end of private health insurance and believing it will be not only popular, but more popular than alternative proposals, strikes me as something we should be examining, not assuming. I see little evidence for it in the history of health reform, or current polling. But I would, of course, like to be proven wrong.

January 15, 2007 in Health Care | Permalink

Comments

Basic negotiating theory states that if you want 100, your opening offer should be for 125. If you open at 50 year are most likely to get 25, and quite possibly you will get zero as you opponent will smell weakness.

Testing this theory in practice, for the last 6 years at least (and I would argue 12 years) the Radical Republicans have opened every negotiation demanding 200, if not 20,000. They have ended up closer to 100 in astonishingly high percentage of the "negotiations".

So regardless of what we suspect will happen, both in theory and practice I think it is a bad idea to open at 30 or 40 when we are seeking 95.

Cranky

Posted by: Cranky Observer | Jan 15, 2007 10:49:19 AM

Focusing on what progressive reforms can be accomplished now is not the same as "compromise." When we compromise, we negotiate with the other side and offer them concessions. That means our ultimate goal is what's really on the table, and it is the caricature of this ultimate goal - universal healthcare coverage - that is presented by our opponents to the public.

If we go to the insurance industry, ask them what reforms they would be willing to live with, and write a bill that does exactly that and no more, the insurance industry will send their shills out to the TV shows and op-eds crying about 'socialism' and 'faceless bureaucrats in DC making your healthcare choices.' In this regard, then, compromise is not possible.

However, offering a plan to insure all the nation's children, or to offer an adequately-funded Medicare/Congressional Health Plan to anyone who wants to buy in - with subsidies for the poor - is not compromise. It's just a program, a bill, a proposal. It can be debated on its merits. When the right attacks it, the response is to question why they don't want to help poor people and why they want to restrict people's choices. After all, if Congress' health plan is good enough for Congress, isn't it good enough for all of us?

It's much easier to defend, it would accomplish needed reforms and would put us a giant step closer to instituting the full range of reforms that the American healthcare system so desperately needs. And it does all this without having to 'compromise' with the other side.

Posted by: Stephen | Jan 15, 2007 11:25:20 AM

"But demanding the end of private health insurance and believing it will be not only popular, but more popular than alternative proposals, strikes me as something we should be examining, not assuming. I see little evidence for it in the history of health reform, or current polling. But I would, of course, like to be proven wrong."

How 'bout we create a Medicare insurance plan which is in competition with private insurance.

Then there's no need to abolish private insurance - you just let it wither on the vine.

Posted by: Petey | Jan 15, 2007 11:29:22 AM

Take a look at the wording of the poll question.

"replacing the current health care system with a new government run health care system, or maintaining the current system based mostly on private health insurance?"

I'd bet most people interpret that first option to mean government not only pays the insurance costs but runs the actual provision of care. No wonder so many didn't select that option in the poll. Who wants to have the people who brought us FEMA running your doctor's office?

If the poll had been worded something like "replacing private health insurance with government provided insurance available to every American regardless of income or pre-existing health conditions while keeping health care providers in the private sector," the response would have been much more positive.

That poll is an example of how the insurance industry and the right wing will try to frame the debate to maintain the status quo rather than proof the public won't support change.

Posted by: Ron | Jan 15, 2007 11:32:05 AM

Actually, Ron has it almost right- I would change the wording to "would you prefer the private healthcare insurance that you have now or would you be willing to change programs to a extremely low monthly cost program like medicaid?" if the democrats wanted to win- and that's a big if to me- they would begin a push poll campaign asking this kind of question and more. use the tactics of the right (because they are really marketing tactics) for the purpose of winning positions on the left (because we have the solutions that Americans really want if we explained it to them in a way that is emotionally appealing). the problem with all of this, as I said else where is that we don't take into account perception or leadership gaps. single payer in CA failed because of what reason? don't just tell me it failed- tell me what was the campaign that preceeded it because that maters A LOT. maybe the program with this was that it was called single payer rather than the California Medcaid for All program. if you market this a certain way, you will get one answer, and if you market it another way, you will get another. the lesson of madison avenue is that marketing is as important to selling an ideal as the benefits that the ideal with bestow. that's why a bad product can beat a good one-- perception over substance.

Posted by: akaison | Jan 15, 2007 11:55:40 AM

Why not make it even simpler - Medicare for All. People know Medicare and they trust it for the most part. It'll be a lot harder for the insurance industry to demonize the extension of a program that already exists and works well. Framing is a big part of the solution here. And, as noted above, it's bad negotiating tactics to ask for half a loaf from the outset.

Posted by: Josh G. | Jan 15, 2007 1:17:24 PM

How 'bout we create a Medicare insurance plan which is in competition with private insurance.

I agree with this approach. The implication is that Medicare could, presumably, undersell private insurers because (1) Medicare doesn't have to (or expect to) make a profit and (2) its administrative costs are claimed to be lower.

If insurers are, in the opinion of single payer advocates, just parasites that add no value, Medicare should be able to put them out of business with lower prices. I think the insurance industry might be willing to take on this competition if: (1) Medicare is not allowed to deliberately underprice its product and make up the shortfall with general taxpayer revenue, (2) it must price to breakeven at least, and (3) it must raise its rates as necessary to make sure it continues to break even.

By the way, the insurance that Congress and other federal employees have is private insurance, not Medicare or Medicaid. It is paid for by the employer, which, in this case, also happens to be the taxpayer. Personally, I think taxpayer funding with a premium support payment or voucher sufficient to buy a basic plan provided by private insurers (for the non-Medicare eligible population) and the opportunity to buy a more robust plan for a higher out of pocket premium payment would be far preferable to a single payer government monopoly, even if it means that administrative costs will be slightly higher. Premium support is the approach that Wisconsin is taking, which requires a 14% payroll tax (12% employer and 2% employee paid) to finance.

Posted by: BC | Jan 15, 2007 1:26:52 PM

by the way-as an analogy, to let you know just how powerful perception is- I am attorney. I see this sort of thing all the time. Someone will hire BigLaw Firm X over smaller or medium sized law firm Z. Why do they do this? because of perception. They pay a higher costs, and get less benefits because they despite being supposedly rational actors, indeed, are not always rational. The amount of waste in corp america where hundreds of billions are not always spent in the best way is a result of the fact that even the most rational actors in the world can still act based on perception versus reality. If these relatively sophisticated consumers can be hoodwinked and bamboozled, then why do we think that a slick marketing ploy by the the right over 30 years can have the same effect on discussions of healthcare? people can know what they want- as the polls show, and still based on the conditioning they have had be willing to come to the trough to drink the water. That's why this is a perceptional and leadership gap to me. The issues I mention can be overcome, but it requires a lot of leg work and hustle. The same that you would expect to find trying to convince an institutional client to go with you rather than the largest firm on the block.

Posted by: akaison | Jan 15, 2007 1:31:43 PM

bc- I have never known any one to be okay with increased competition or someone cutting into their profit- what business is this that is okay with the idea? i am not disputing the ideas that you mentioned- just the idea that insurance companies will be agreeable to it. i think its flawed to think they have any interest in competition. competition is a public interest. profits are the corporate interest. I think people need to stop confusing the two.

Posted by: akaison | Jan 15, 2007 1:35:02 PM

Starting with a position that most people will see as unreasonable or a nonstarter isn't such a great strategy either.

Medicare for all isn't a bad thing and might not have that problem, but it, or anything like it, would make the "no exit" attack actually true (more or less), as Ezra was saying above. That would probably be a problem.

I think the insurance industry might be willing to take on this competition if: (1) Medicare is not allowed to deliberately underprice its product and make up the shortfall with general taxpayer revenue, (2) it must price to breakeven at least, and (3) it must raise its rates as necessary to make sure it continues to break even.

I don't think insurers would consider this very long before breaking out Harry and Louise, because there'e no provision for a profit margin, or taxes, and once in place, the laws could too easily be changed to fund Medicare at a loss. They would legitimately argue that competition with a governmental agency isn't really competition.

Posted by: Sanpete | Jan 15, 2007 1:38:30 PM

Posted by: Ron | Jan 15, 2007 8:32:05 AM

"replacing the current health care system with a new government run health care system, or maintaining the current system based mostly on private health insurance?"

I'd bet most people interpret that first option to mean government not only pays the insurance costs but runs the actual provision of care.

And if they don't interpret single-payer as government-provided health care after the single-payer proponents have present the plan to them, they certainly will after the insurance lobby is done with it ... because they certainly have people in their employ who can read that same poll.

Posted by: BruceMcF | Jan 15, 2007 1:38:57 PM

"Medicare for all" is essentially what they have in Canada. In fact, I think their system is even called Medicare. It is not difficult to come up with reasons why this would be an incredibly hard sell politically. It would put the entire U.S. private health insurance industry out of business, or at least massively reduce their role. Health care providers would likely face significant cuts in income and profits. It would be a massive, unprecedented increase in the federal budget, many hundreds of billions of dollars a year at least, with the obvious risk of massively increasing the deficit. And it would create plausible fears of rationing, waiting lists and loss of choice among consumers. Do you really think such a plan this has a snowball's chance in hell of being passed into law?

Posted by: Incant | Jan 15, 2007 1:50:40 PM

Health care providers would likely face significant cuts in income and profits.

IMO, this one is the killer--and the worst-needed change.

The insurance issue is marginal. The malpractice issue is marginal. (In total, they account for maybe 20% of the cost of medical provision.) The big issue is that costs go up, quickly and relentlessly--and incomes don't. To be able to get medical care significantly more cheaply will mean that providers make less--and providers will fight that change quite fiercely.

Posted by: SamChevre | Jan 15, 2007 1:58:54 PM

thats bullshit- malpractice accounts for less than 5 percent of costs. if we did everything that tort deform people wanted to do today, it wouldn't change the spiraling out of control cost of healthcare. if ezra, you want to understand how to respond to bs its not fact for fact- its calling bullshit to the bullshiters.

Posted by: akaison | Jan 15, 2007 2:02:50 PM

Ezra,

I'm not against incrementalism, Medicare for kids, Medicare for the unemployed, Medicare for clowns, etc. That's all fine and honestly universal health care doesn't all have to be done with a big bang. It just has to be done and the roadblock to be dynamited with either the funky Wyden plans or the single-payer plans is the insurance industry.

So what's your political strategy? How do you sell universal health care that is complicated to explain with a rabid industry attacking you?

Here's my strategy. A simple narrative on our side is 'insurance companies = bad'. They can and will say 'government = bad', which is fine. That's the debate. That debate is harder to have if your plan already works through the private insurance market to deliver universal care.

To pull something out of my ass about the public, my sense is that Americans don't like big government regulating stuff but they don't like big companies run by wealthy executives regulating it either. In other words we need polling on the credibility of the insurance industry.

I bet you'll find remarkably low approval ratings, especially because everyone knows someone who was denied care or fucked over or killed by them. And as for what the 'American public' thinks as a general rule, I think we have to not only consider where people are right now but how they will respond as the arguments play out, and understand that health care is really complicated and small changes in wording of polls can change response rates quite dramatically.

Americans responded to Reagan, but they also responded to Huey Long.

Posted by: Matt Stoller | Jan 15, 2007 2:03:51 PM

Akaison, I wish you would be more careful before accusing people of being dishonest or full of crap. Sam is talking about the costs of insurance and malpractice taken together, and his point is in part the same as yours that they aren't the chief causes of increased costs.

Matt, how do you respond to the "no exit" charge?

Posted by: Sanpete | Jan 15, 2007 2:17:57 PM

Sanpete,

The business model I had in mind for Medicare as a competitor to private insurance carriers is the Postal Service. Since 1971, I believe, Congress has required the Postal Service to operate on a breakeven basis. This model has been in place for 35 years now with rates increasing every two or three years to generate the revenue needed to assure breakeven operations. At the same time Federal Express, United Parcel Service and others have thrived. Even the Postal Service has developed new products along the way (like Express Mail and Priority Mail).

Akaison,

My presumption is that private insurers think they can beat Medicare with better tools to control utilization, manage disease, process claims, identify the most cost-effective providers and steer patients to them, etc. Medicare has the advantage of not having to pay taxes or make a profit, but that is hardly insurmountable. Lots of functions have been outsourced over the years from state and local government to the private sector. Private companies made money, and taxpayers saved money. State Medicaid systems are currently experimenting successfully with outsourcing care management to private insurers, and taxpayer dollars are being saved. In the most recently completed fiscal year, Medicaid spending (state and federal combined) actually declined slightly from the prior year for the first time ever! Part of that was due to Medicare taking over the cost of prescription drugs for dual eligibles, but some of these state experiments are starting to bear fruit.

Posted by: BC | Jan 15, 2007 2:21:47 PM

"Americans responded to Reagan, but they also responded to Huey Long."

Glad to hear you're finally on the Edwards bandwagon, Matt.

Posted by: Petey | Jan 15, 2007 2:23:45 PM

>> Health care providers would likely face
>> significant cuts in income and profits.

> IMO, this one is the killer--and the
> worst-needed change.

Which is larger: the number of primary care providers, or the number of specialists? Given the structure of the industry, I think you would find that primary care providers (internists, family practictioners, pediatricians, primary care nurses, PAs) would see their income go up somewhat and their professional lives get quite a bit more pleasant. Perhaps concentrate on selling them and then let numbers do their work.

Cranky

Posted by: Cranky Observer | Jan 15, 2007 2:39:04 PM

BC, the Postal Service would be very hard to create today if UPS, FedEx and private mail carriers for letters that don't even exist now were already here. Medicare, with its competitive leg up from its governmental status, would take away much of the insurance industry, and insurers know that. I don't think they would accept it. They will accept subsidized mandates for universal insurance, though, and trade it for mandated community rating.

Posted by: Sanpete | Jan 15, 2007 2:40:56 PM

if they are unwilling to look up the numbers and make outrageous claims about malepractice being the cause of healthcare industry problems then they are being dishonest- that's my polite way of saying they are lying. if you dont like that, tough. but i am not willing to play your cordially game why peo just make shit up.

Posted by: akaison | Jan 15, 2007 2:50:21 PM

Cranky,

Getting primary-care providers on-board would certainly help.

I'm not certain, though, that it will be possible; I think that many of the most sensible cost-containment moves (requiring states to allow any medical practitioner to practice in their state if they're certified for the services they provide in any state--so, e.g., midwives could practice in NY with a California license) will not be in the interests of a significant number of current PCPs.

Posted by: SamChevre | Jan 15, 2007 2:51:28 PM

I have to take the position that if we don't go for single payer from the start we won't achieve anything. Single payer is unpopular in large part because the American public doesn't even know what it means. I consider myself well informed but the first I heard the term was on the blogosphere. Democrats and liberals arn't out there making endless cases for change, there is no drumbeat for reform. Clintoncare didn't go down institutionally, after all; the Republicans gunned for it heavily and specifically. A Democratic congress with a Democratic president might just be able to do it, or something like it.

Posted by: Sandals | Jan 15, 2007 2:54:40 PM

bc- my central thesis wasn't against or for this policy or that- it questions the ideal that the insurance companies want competition. i think that is the part of yoru comments which is just false on its face. if they want competition, prove that to me because the point being made by matt, and one which i agree with, is that the insurance companies have zero interest in competition no matter what you think. its not in their interest because the bottom line is to make money, not to have competition. i dont know any business that wants competition. competition is a government thing. its a thing of the public interest through concepts like antitrust law, fair trade, etc as an analogy. it's not what businesses want. whether or not they think they can compete better is irrelevant to the question of do they want to compete at all. right now they know they dont have to compete at all- whats the incentive to create competition for them in terms of their bottomline? i dont see it, and you so far haven't shown it. i doubt frankly you will be able to do so- you can show how the government (with its other interests) can never theless benefit from private sector tactics, but you can not show that the private insurance companies will benefit by having fewer premiums paid to them, and at a reduced rate at that.

Posted by: akaison | Jan 15, 2007 2:58:08 PM

akaison,

Let me repeat myself, in language that is hopefully not too complicated for you to understand.

The costs of insurance (administrative costs) might be 5%, or 14%, or 22%; which of those numbers is right IS NOT THAT important. The costs of the medical malpractice system might be 2%, or 20%; again, which of those numbers is right IS NOT THAT important. Costs are increasing 15% a year; even if the highest number is correct in each case, and the proposed reform fixes that problem entirely (so the cost is 0), the best we can get is that we pay the same amount for health-care in 2010 that we'd otherwise have paid in 2008. That's a little bit of a help--but it's not enough to make everything better. To really make things better, we need to actually push costs down in ways that ARE going to affect providers.

Posted by: SamChevre | Jan 15, 2007 2:58:23 PM

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