 |
The Wall Street Journal’s Assumptions, Deceptions, and Lies |
 |
Not that we expect anything less from the Wall Street Journal’s editorial page, but still, it’s worth rebutting their latest untrue, misleading screed against the public health insurance option.
First, competition. They say:
This public option will supposedly “compete” with private alternatives. As President Obama likes to put it, those who are happy with the insurance they have now can keep it — and if they happen to prefer the government offering, well, gee whiz, that’s the free market at work. The reality is far different. Not only will the new program become the default coverage for the uninsured, but Democrats intend to game the system to precipitate — or if need be, coerce — an exodus to government from private insurance. Soon enough, that will be the only “option” left.
Um, nobody has proposed making the public health insurance option the “default” for the uninsured. Where did that fact come from? Thin air?
Next, funding:
A public program won’t compete in a way that any normal business would recognize. As an entitlement, Congress’s creation will enjoy potentially unlimited access to the Treasury, without incurring the risks or hedging against losses that private carriers do. As people gravitate to “free” or heavily subsidized care, the inevitably explosive costs will be covered in part with increased outlays to keep premiums artificially low or even offer extra benefits. Lacking such taxpayer cash, private insurance rates will escalate.
While the details of how a public health insurance plan will compete fairly with private plans is still up in the air, it doesn’t look like anyone is proposing funding a public health insurance plan with unlimited resources. In fact, it’s likely the subsidy program to make health insurance affordable will be totally separate from the public health insurance plan. As Len Nichols at the New America Foundation and Jacob Hacker at the Institute for America’s Future have proposed (and thus representing a pretty broad ideological swath), a public health insurance plan would not be able to dip into the federal treasury at will. In fact, Hacker proposes that subsidies go to whatever health care plan a person has, meaning if they keep their private insurance, the government will actually pay private companies.
Next, price negotiation:
Much like Medicare, overall spending in the public option will be controlled over time by paying less for medical services, drugs and technology. With its monopsony purchasing power, below-market fees will be dictated on a take-it-or-leave-it basis — an offer hospitals and physicians won’t be able to refuse. Medicare’s current reimbursement policies pay hospitals only 71% of private rates, and doctors 81%, according to the Lewin Group.
Here, the Journal isn’t so much lying as misleading. You see, private insurance already has monopsony power. Most regions in America have little to no competition in health care at all. As Joseph Paduda at Managed Care Matters points out:
As noted previously, there’s another reason the arguments against a public plan don’t stand up. Opponents complain that the government’s market power would allow it to dominate a market, thereby making it impossible for a private plan to compete.
The reality today is that almost every market is already dominated by a very few health plans, so much so that in most markets, there really is very little market competition amongst health plans.
Here are a few factoids using 2005 data; if anything there has been more market consolidation, so these percentages are even higher today…
- 96% of HMO/PPO markets are deemed highly concentrated
- 99% of HMO markets are highly concentrated
- in 96% of markets, at least one insurer has share higher than 30%
- in almost two-thirds of the markets, at one insurer has share greater than 50%
- in a quarter of the markets, one insurer has share at or above 70%.
What does this mean for you?
If anything, a robust public plan would add competition to many markets, competition that would, if anything, increase consumer and provider choice.
Then, there’s the misleading “crowd out” statistic:
In a recent analysis, Lewin estimates that enrollment in the public option will reach 131 million people if it is open to everyone and pays Medicare rates. Fully 119 million people will shift out of — or lose — private coverage. Everything depends on the payment levels that Congress adopts, as well as the size of the eligible pool. But even if a public option available to all takes the highly improbable step of paying at some midpoint between private and Medicare rates, nearly 68 million people will still be crowded out of private insurance. The nearby table summarizes Lewin’s eye-popping findings.
As I predicted, what the Journal, and every conservative who will ever quote this Lewin Group study, fails to mention is that there is a choice here. In no implementation of the public health insurance plan would anyone be forced to choose it. The plans would be offered in an exchange, side by side, and likely the level of subsidy wouldn’t depend on which plan is chosen. If someone chose to enroll in the public health insurance plan, then it would be a choice freely taken. As Igor Volsky at Think Progress pointed out, what the Lewin study really says is that the public health insurance plan would be hugely successful:
The keys here are competition and choice. Conservative critics will surely hijack the study to argue that ‘millions of Americans will lose their health insurance coverage,’ but the reality is much more democratic: if millions of Americans are not satisfied with private insurance and believe that a public option would offer better quality at lower costs, then they will stop rewarding private insurers for providing expensive inferior coverage.
Then there’s the lie about regulation:
Congress will finish the job with regulatory changes. Under the aegis of a level playing field, all private plans will be forced to offer benefit packages similar to those in the public option. They will also be required to accept all comers, regardless of pre-existing conditions, and also be forced to offer similar rates to all enrollees, ending the ability to manage risk through underwriting. Any private plan will essentially become a public utility where government decides what products it must offer and how much it can charge.
While Congress will likely push for this, the fact is, the insurance industry has already agreed to these regulations. This is not an attack by Congress on the insurance industry if the industry has chosen to accept these proposals.
What the Journal fails to accept is that a public health insurance plan competing on a level playing field with private insurance is indeed possible. All they can marshal is fear to rebut that fact, because they can’t point to one study, even by an overtly conservative think tank, that says a level playing field is not possible.
And really, that’s a smokescreen anyway. The Journal, and all conservatives, aren’t really concerned with a level playing field. They were just find giving private insurance a 13% subsidy when it came to Medicare. They are concerned that a public health insurance option would be so good at keeping us healthy that people would actually want to be on it. That would cut apart the threads of their ideology, and it’s something that they just can’t let happen.
(also posted at the NOW! blog)
