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November 20, 2007

Industry Warms to Health Reform

Good piece in the WSJ detailing a recent PriceWaterhouseCoopers report showing that universal health care may have significant, positive implications for...the health care industry. Which has long been obvious. If an expansion of access is done through private insurance, that's 45 million more individuals purchasing coverage, and many millions more who'll be able to afford prescription drugs, regular treatment, and all the rest. We are, in effect, subsidizing the poor to become health care customers.

Industry has some concerns, however. Mainly, the public insurer being proposed by Democrats. They don't like that idea, and for all the obvious reasons. For all the scary stories about the dystopian hell that awaits us if we nationalize the health care system, the private insurers seem surprisingly loathe to compete against an insurer uninterested in turning a profit. It's almost as if they don't really think that Americans will hate public insurance! What're the odds!?

My hunch, sadly, is that they'll get their way on this. Barring a remarkable Democratic year, or the Democrats showing enough stones to ram this through the Budget Reconciliation process (where it only needs 50 votes), the public insurer may well get bargained away in return for a couple key Republican supporters. It'll be a shame if that happens, as the public insurer will be good for cost control and a damn useful experiment, but the Republicans -- and their corporate backers -- really are worried that if Americans have a choice, they'll choose government. And that's the sort of ideologically transformative occurrence they can't allow to happen.

November 20, 2007 in Health Care | Permalink

Comments

well, duh.

Posted by: pimp hand strikes! | Nov 20, 2007 7:14:37 AM

Ezra,

the private insurers seem surprisingly loathe to compete against an insurer uninterested in turning a profit.

Many of them are non-profit, so its the wrong argument. They are scared of a public health option because it may be able to unfairly compete (insurers can be limited in total number of covered lives in a region, no one is mentioning the same restriction with a public option)-- no different than tech providers that were concerned about the market dominance of Microsoft. Neither are good for competition.

the public insurer may well get bargained away in return for a couple key Republican supporters.

As you know, this has been precisely one of my main criticisms of the big three's plans. If we look at their plans from the standpoint of what they're likely to look like afterwards, there just simply isn't that much there relative to the necessary steps of reform. Their starting points are very timid and unimaginative, and have basically conceded key negotiation to Republicans and special interests before they made their opening offer.

I'm still horriblly disappointed that as a whole, you think these plans are satisfactory. The political climate is unlikely to be more receptive to health care reform in the relatively near future, given political cycles, it'll be another 20 years or so before the "next steps" could be taken. I don't know if its your naivete about these poltical dynamics (thinking that more significant reforms could be implemented earlier) or if the DC establishment has started to pull you in-- i.e. you don't want to ruffle any feathers being the lefty blogger/health care guy who blasted the plans of the big three. Either way, I'm confident you're extremely off in your assessment here that these are satisfactory plans.

Posted by: wisewon | Nov 20, 2007 7:25:43 AM

"an insurer uninterested in turning a profit"

Read - an insurer subsidized by the federal government because it does not have to pay income taxes, borrows money via subsidized debt and God only knows what else.

Posted by: ostap | Nov 20, 2007 8:17:35 AM

As the Democratic Party moves to nationalize health care, the first question is why would anyone go into a health care career. The government is only able to maintain civil servants by paying above market wages and benefits.


How will the government expand coverage and cut costs simultaneously? My guess that it will do it by limiting treatment options and pushing wages down.

Posted by: superdestroyer | Nov 20, 2007 9:20:59 AM

...and God only knows what else.

Shorter ostap: Boo! Communism! Eek!

Posted by: DMonteith | Nov 20, 2007 9:30:42 AM

It'll be a shame if that happens, as the public insurer will be good for cost control and a damn useful experiment, but the Republicans -- and their corporate backers -- really are worried that if Americans have a choice, they'll choose government.

The problem that I see is that the supporters of Government healthcare are saying the wrong things. They need to tell people that we are overtreated not under treated. They need to explain that the insurance companies mostly OK too much treatment and not to little. They must explain that part of the problem is a sort of arms race and that no one is looking to reduce spending. IMO the right amount of spending is what the median American would be willing to pay for a benefit with the existing likelihoods. We spend way more than we should even some of the people who are being treated would not opt to get the treatment if they had to pay for it directly. Our Government already spends more than enough to cover everyone.
The debate focuses on all the wrong issues.

Posted by: Floccina | Nov 20, 2007 9:37:07 AM

the first question is why would anyone go into a health care career. The government is only able to maintain civil servants by paying above market wages and benefits.

Yeah it sure is a shame about all the shortages of doctors in France and Germany and Canada. Oops! What I meant to say was, those countries have similar numbers of doctors per capita that the US does. Silly me!

Seriously, people, spend five minutes on google before you shoot your mouth off about how socialized medicine means x. There are lots of countries that have socialized medicine and the statistics from these countries are easily available on this amazing new thing called the internet.

Posted by: DMonteith | Nov 20, 2007 9:43:00 AM

"There are lots of countries that have socialized medicine and the statistics from these countries are easily available on this amazing new thing called the internet."

That's the thing that fascinates me about discussions on blogs. It's as if some posters think they are talking heads on CNN where one has a passive audience unwilling to relatively quickly with a few clicks determine whether they are full of it or not. I wish in the rest of the MSM there was this quick to use bullshit-meter that one could instantly take what has been said (without having to remember it or mail in for a transcript) to determine whether it's close or further away from the actual fact of the matter.

Posted by: akaison | Nov 20, 2007 10:22:12 AM

I will believe it when I see it. People are not rational actors, and as corporations are overwhelmingly run by people with identical ideologies, Corporations will behave like people. However, as none of us are as cruel as all of us, they will behave as a human without social as well as rational behavior.

Because of this, corporations will likely continue to lose money just to spite their workers, or the people their perceive as their social lessers.

Posted by: Soullite | Nov 20, 2007 10:31:26 AM

If you want to understand how people behave, study psychology. Don't waste your time on economics, it's really much more of an ideology than a science.

Posted by: Soullite | Nov 20, 2007 10:32:17 AM

DMonteith

The last time I looked the U.S. is not Germany or France. The U.S. cannot produce enough nurses or x-ray techs today. They have to import nurses on the Philippines to make up the shortfall.

What do you think will happen when the wages are cut to make up for the revenues shortfalls when the feds cut reimbursement rates to create the funds to cover 40 million uninsured.

Before talking about Germany, why don't you use the internet to look at the job postings for any large city hospital.

Posted by: superdestroyer | Nov 20, 2007 10:36:08 AM

But.... the public insurer is more or less the whole point, particularly with Obama's plan.

Posted by: Anthony Damiani | Nov 20, 2007 10:40:42 AM

The last time I looked the U.S. is not Germany or France. The U.S. cannot produce enough nurses or x-ray techs today. They have to import nurses on the Philippines to make up the shortfall.

What do you think will happen when the wages are cut to make up for the revenues shortfalls when the feds cut reimbursement rates to create the funds to cover 40 million uninsured.

superdestroyer keep in these 2 things in mind:

1. One of the goals of Government provided healthcare will be to reduce the amount of treatment that people receive rather dramatically because (google: Overtreated Brownlee and “Robin Hanson” on healthcare) some of the medical care that we receive is counter productive and much more is un-economical.

2. Most nurses today are over qualified for what they do, so you just lower requirements and you will have plenty of nurses.

IMO We could all be covered for less than Gov. already spends.

Posted by: Floccina | Nov 20, 2007 10:51:53 AM

Wisewon, bravely defending the corrupt HMA's and health insurer's of the nation. I don't think we care if universal healthcare 'unfairly competes' or not. It's hard to care about such a moral argument when you're basically fighting for the right to let some people die so you can make money.

somehow, I doubt we'll ever find government run healthcare adopting a policy of rejecting all claims...

Posted by: Soullite | Nov 20, 2007 10:52:30 AM

Lmao, we can produce enough doctors and nurses. We'd just have to lower the cost of college, especially an education that can take 7 years to complete. But pretending that there's some magic problem with our population that we could never produce enough health care workers, rather than admitting the reality that our government's policies have caused these shortages, is the lamest argument I have ever heard.

Posted by: Soullite | Nov 20, 2007 10:55:07 AM

Soullite there is no reason that one should have to run the anachronistic gantlet that American have run to become doctors in America today. To me the process in America that produces doctors seems like a fraternity hazing designed to build loyalty to the profession. I think that a 5 year under graduate program would be enough to become an MD. Presumably MDs just out of school would start working under a more experienced and capable lead.

Posted by: Floccina | Nov 20, 2007 11:22:26 AM

Soulite,

To become an attending physician (able to bill the government) takes longer than 7 years. It is not only the costs, it is the sacrifice of income while learning how to be a physicians. The government politicies are not the only cause of worker shortage. Remember, all hospitals/providers are paid the same amount even though the cost of operating a hospital in NYC is much higher than say Fargo, North Dakota.

Also, in today's world, a health care facility can only have a one year planning horizon because the government changes the reimbursement rates frequently. One was once a money maker/profitable service to provide can quickly become a money loser (such as what happen to the hospitals that invested heavily in cardiac care).

Also, the government has never lowered demand. Given the political climate in the U.S. and the coming logn termdominance of the Democratic Party, more healthcare will be provided to more people. It is not hard to image that mental health spending will increase massively.

Posted by: superdestroyer | Nov 20, 2007 11:23:05 AM

Soullite there is no reason that one should have to run the anachronistic gantlet that Americans have run to become doctors in America today. The process in America that produces doctors seems like a fraternity hazing designed to build loyalty to the profession. I think that a 5 year under graduate program should be enough to become an MD. Presumably MDs just out of school would start working under a more experienced and capable lead.

Posted by: Floccina | Nov 20, 2007 11:25:16 AM

I can't go into everything that's discussed here because I am not an expert, but it should be noted that the number of healthcare professionals is kept artificially low in the U.S. Pretty much an open secret in the industry, and asked any pre- med. So, when someone uses that as an excuse as to why we shouldn't go for universal healthcare, as others have mentioned, that's kind of laughable on its face. The easy solution to that issue is to build more medical schools rather than try to increase demand by limiting supply, not, we can't have healthcare. OT: the cost of education is another one of the forces squeezing the middle class in this country. I know this guy who is conservative who like many conservatives is kind of a bit of a hypocrite. He says the government shouldn't cover the cost of his education, but so what is he doing? he's going to Europe because he can to get his education practically for free (by American standards).

Posted by: akaison | Nov 20, 2007 11:30:04 AM

by the way- that kind is going to school to become a doctor. we should separate out what people say in idealogical theory versus what they mean in actual application. i know several people who are against government healtcare, but are taking advantage of their ability to get healthcare from the state at a cheaper rate. people can tend to talk out of the both sides of their mouths-- which complicates the polls and our understanding.

Posted by: akaison | Nov 20, 2007 11:33:56 AM

floc- what you mention is true of many professional degrees- there is no reason at all for example- except tradition at this point- why lawyers need to spend 4 years in undergrad and 3 in law school. this drives up the cost unnecessarily and limits the options after graduation for what one can do with a law degree. many things i supect in this country are based on intertia rather than it being the best way to get things done. even if one is conservative in terms of politics there ought to be a way to acknowledge the flaws in how we educate people for professional positions.

Posted by: akaison | Nov 20, 2007 11:37:28 AM

Remember, all hospitals/providers are paid the same amount even though the cost of operating a hospital in NYC is much higher than say Fargo, North Dakota.
Posted by: superdestroyer | Nov 20, 2007 11:23:05 AM

So what? The dang gubmit already pumps "free" money into hundreds of hospitals around the country because otherwise these hospitals would not exist - there simply aren't enough paying customers in places like, say, rural North Dakota to sustain a fancy hospital without some hefty government (maybe you would prefer "socialist") support. Without this government ("socialist", eek!) support, people would have to drive many many many miles to get to an emergency room, if they could make it there at all. Or they could rely on their town's Rescue Squad for emergency care, yet another dang gubmit giveaway!

Posted by: chowchowchow | Nov 20, 2007 11:44:45 AM

I'm still horriblly disappointed that as a whole, you think these plans are satisfactory. The political climate is unlikely to be more receptive to health care reform in the relatively near future, given political cycles, it'll be another 20 years or so before the "next steps" could be taken.

wisewon: it seems to me the healthcare crisis in this country is intensifying yearly. The utterly bleak economics of providing healthcare and insurance are pushing the collapse of the system along continually, without respite, and with little regard for the ebb and flow of political and business cycles. I can't envision any circumstances whereby something magically materializes to transform the dysfunction of the system and remove that pressure. In short, as long as we get a plan in place that is truly universal in its coverage, I see absolutely no prospect that pressure won't continue to increase for more reforms if the initial UHC plan we adopt is less than perfect (I reckon imperfection is a pretty safe assumption). The economic facts on the ground are simply to powerful to allow for a twenty year political holiday from the healthcare crisis.

Posted by: Jasper | Nov 20, 2007 11:58:32 AM

Flocc, you may well be correct. Perhaps medical school is a bit too stringent, and that is indeed part of our artificial shortage of healthcare workers. going ot school for years and having most of your classes as electives before you even enter medical school is a waste. I shouldn't have automatically jumped at such a simple option when a more comprehensive approach could yield better results. Ideally, college could be made cheaper AND the college experience of medical students could be more narrowly tailored to actual be about medicine. Obviously, the later would effectively cause the former.

Posted by: Soullite | Nov 20, 2007 12:13:56 PM

Howeve,r super, your arguments are self serving and moralistic. They do not make logical sense. There is no inherent need for sacrifice amongst med students. They should not be paid like shit for years before being able to get a good job. This is done to prevent lower income people from entering that profession, that is what internships have ALWAYS done. Everyone here knows that the supple of medical workers are kept artificially low, as much as you pretend otherwise.

Posted by: Soullite | Nov 20, 2007 12:16:29 PM

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