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Is Low Medicare Overhead A Myth ?
One thing that has been mentioned in the debate over health care reform is the idea that Medicare has a much lower overhead than private insurance companies so to switch over to a government system would save money. But one of the problems is that this assumes the current overhead would remain the same if millions more joined the system.
As has been pointed out by some of the opponents to a government system, part of the reason that overhead with Medicare is low is because the costs of treatment are high. Most people on Medicare are older and thus have more health problems, accordingly it costs less as a percentage of those costs to manage the overhead.
For example consider two people, Charlie and Grandpa Joe.
Charlie is 25 and on private health insurance, Grandpa Joe is on Medicare.
During a given year it costs $ 50 in overhead for both men to cover the basic record keeping.
Charlie has $ 1,000 in medical services and it costs $ 100 for the overhead. So his total cost is $ 150, his percentage though is 15%.
Grandpa Joe has $ 20,000 in medical services and it costs $ 550 for his overhead. So his total cost is $ 600, or four times higher than Charlie. But as a percentage of total services he comes out at 3%.
If you put Charlie and his friends on a Medicare style system, the costs are likely to rise.
Obviously this is but one point, but is is one worth considering as we continue in the health care debate this fall.
142 Responses to “Is Low Medicare Overhead A Myth ?”
GD, that's just downright depressing.
GD- I agree with PM that those stats are depressing.
I guess my impression of fraud being more prevalent in the Medicare system is due to most reports of organized fraudulent conspiracies being committed against Medicare, not against private insurers. That suggests to me that the people who conpire to commit widescale fraud find it easier to get paid for false claims through Medicare than through a private insurer. It might also suggest that the total dollar amounts are more significant, although that depends on the number of events- and your data shows that a lot of individuals finding unethical doctors to submit smaller scale fraudulent claims could potentially add up to just as large of a problem. I'm not sure how to find the data on which is 'worse' overall, or if such data even exists.
I don't recall supporting any known bill. I have steadfastly called for a public option, but I've never gone past the general discussion. This discussion was about allowing a public option or not. You seem to resist any call for that option. My disagreement with your objections have been made on a point by point basis. The only straw man arguments going on are couched in the hypothetical worries that the public option wouldn't work, wouldn't be affordable, or wouldn't allow the free market to solve this crisis.
The free market has had every opportunity to rectify the situation, and they have simply increased costs year over year. During that time, PIs have systematically lobbied against real reform and true competition – see the retail drug prices for medicare part D for one of many examples.
So, we're once again confronted with a proven system that expends an overhead of 3.5% and your fears that the public option available to all Americans would be disastrous. The PIs you have consistently supported have been found guilty of fraud, but you wish to keep your faith in them to make things right. The flat line costs over an entire lifetime demonstrate a mathematical and economic certainty for patient costs while the current system demonstrates wildly changing outflows that can cost people their very homes on an everyday basis.
You say reducing costs is the best way to get the uninsured covered, but if PIs and their track record are all we are to rely on, I ask where's your concern in that? Their profits are a direct function of the amount in play, so why would they consider lowering costs if it meant a corresponding lowering of profits?
The argument remains a proven system that can be improved and the PI system where increased costs reward the check writers. Unless you can show that PI's profits have dropped year after year, you'll have a hard time convincing anyone that private industry is interested in lowering costs or improving care. They are not a solution.
“the plan is considered a Trojan horse for single payer”
As I've correctly noted, in this case it's a Trojan horse with bright lights and loud alarms announcing it.
So is any other incrementalist maneuver, even the less universalist alternatives (Medicare down to age 55; Medicare for children as “dependent care”; Medicare absorbing Medicaid and perhaps also offered to the unemployed in place of COBRA as a “safety net” enlargement). In this case (2009 and the “public option” it's a Government Motors fake “competitor” to private parties, openly intended to “crowd out” the private parties a la S-CHIP expansion.
The PIs you have consistently supported have been found guilty of fraud, but you wish to keep your faith in them to make things right.
Hemm, you keep repeating this. I'm sure there are cases of PIs being intermediaries in defrauding the govt but I haven't seen that to generally be the case at all. Can you please provide some evidence of this being the massive problem that you seem to think it is? What I see is healthcare providers forming conspiracies to defraud Medicare and other public insurers, and then the individuals defrauding both private and public providers with the collusion of unethical doctors. Where is this massive defrauding of Medicare BY private health insurance companies? I say there's far more evidence that Medicare administrators have been ineffective gatekeepers, than there is for the private insurers acting as middlemen in fraud schemes.
You say reducing costs is the best way to get the uninsured covered, but if PIs and their track record are all we are to rely on, I ask where's your concern in that?
Strawman again. I never said that PIs track record operating under the current system is what we should rely on- in fact the opposite, I've pointed out repeatedly how the environment needs to be reformed to restore competition to the health insurance market.
I have steadfastly called for a public option, but I've never gone past the general discussion. This discussion was about allowing a public option or not.
The general discussion was actually about whether or not it's true that Medicare has such vastly lower administrative costs than private insurance does. And implicit in that argument (for those who say that it does) is that a publicly run health insurance option could also have these low admin costs. One thing I pointed out early in the thread is that at bare minimum, the only people who can credibly use that argument in support of their preference are the ones who support single payer- because the article I quoted much farther up in the thread showed that the admin costs throughout our system are higher than countries like Canada and that much of the reason for that is that healthcare providers have to deal with multiple complex systems. Public option as part of a mix of insurers only makes that problem worse, not better.
Medicaid-fraud informants to be rewarded with Pfizer settlement
http://www.miamiherald.com/business/story/12168…
Medicare Fraud Strike Force Operations Lead to Charges Against 32 Doctors and Health Care Executives for More Than $16 Million in Alleged False Billing in Houston
http://www.stopmedicarefraud.gov/pr20090729.html
Doctors, health care executives accused of Medicare fraud
http://www.cnn.com/2009/CRIME/06/24/medicare.ar…
There's three from google serch” medicare fraud health care
880,000 hits, these came from page one.
Um, what do those cases have to do with private healthcare insurers?
This is what I keep pointing out- these are all cases of systemic abuse of Medicare by healthcare providers, not private health insurance companies (they're neither on the giving or the receiving end of the fraud you're pointing out.)
That suggests to me that the criminals who do this stuff are finding Medicare to be an easier target- and I believe that is because there are extra admin costs by the private health insurance companies to screen for that kind of widespread abuse. What is harder for the private companies to screen for is the death by a thousand paper cuts of individual fraudulent claims of the sort that GD pointed out.
CS
Our conversation started when you question my overhead for PIs. The argument I was making that you commented upon was pointing out why the public option (medicare) actually benefited from this article's numeric analysis. I believe, despite your objections about fraud, I have made that case.
You have also said the way to fix the problem is to increase competition. How are you going to do that? What private industry solution will increase competition? What government solution will increase competition? Again I ask, what changes is an industry willing to make that reduces costs when their profit is a function of the total cost?
I'm sorry, Hemm, but you and several other commenters seem to develop amnesia about all previous conversations we've had. You don't remember any of the numerous times that I (or a few other conservative commenters like Dr. J) have posted long comments about all of the fixes we think would actually help?
Again I ask, what changes is an industry willing to make that reduces costs when their profit is a function of the total cost? Profit isn't a function of total cost- it's a function of how much efficiency they're able to squeeze on their expense side. Without competition, there's no incentive to work toward that, but if insurance companies were forced to compete more as they did in the past, there'd be more incentive for reducing actual costs of healthcare that they pay out-and on down the line, as doctors and other providers would be forced to seek efficiencies as well.
I have to go out for a while, but let me know if you decide to respond to my question about what role you think that private health insurers had in any of those fraud cases you cited.
CS
I'm not going to chasae each of these down, but fr4om the first one:
” Pfizer agreed Wednesday to pay a total of $2.3 billion to settle allegations about the marketing of 13 drugs, including pain reliever Bextra.
Federal authorities said Pfizer paid doctors' expenses to attend meetings at resort locations, where some were treated to massages, golf and other activities — at the same time the company was negotiating deals on past misconduct.”
Do you think those slick deals don't effect our premiums or drug expenses? This is part of the entire bribes to grease the medicine wheel for profit I was referring to. Sorry if you can't see a connection, but I'm not going to waste time assuaging your concerns. There are 880,000 hits to the google search I gave, see if you can find reason to believe that fraud isn't part and parcel of the PI's world.
Hardly any, if you're going at it by trying to bargain with them. It's very hard for existing large companies to change much. They don't want to, they're often structurally unable to, and they'll fight every step of the way.
The allure of competition is that it works anyway, by feeding companies that are unwilling or unable to meet consumers' needs to a bunch of hungry piranhas who can do better.
“DLS, I've shot down your inaccurate points before. I'll do so again.”
You may begin, if that ever becomes the case. (As opposed to my demolishing your misstatements far removed from fact, such as that removing the income cap on FICA will save Social Security…)
“They can TRY to overcharge your insurance company, and if your insurance company has lousy negotiators, that's YOUR problem, not Medicare's “
Oh, so cost-shifting is called “trying,” and if they succeed, that doesn't count. I understand.
Meanwhile, the ObamaCo cram-down of payments (already low) and taking $500B out of the program as part of its fuzzy, flailing effort to cobble together something resembling “paying for the public option” is a laugher to us, but not to the providers. Nor is Pelosi's ominous “there's more they can do” (in reducing what they accept from Medicare in the future) any more reassuring.
CS
Amnesia is clearly a two-way street. I've commented ad nauseum how lobbyist money has systematically removed any attempts to reduce costs in the system. I even mentioned medicare part DS in this thread. Why should the government pat retail drug prices when they but in quantity? Why can't we import drugs from Canada when they cost 40-50% less?
What was your reason against this idea?
Dr J
“The allure of competition is that it works anyway, by feeding companies that are unwilling or unable to meet consumers' needs to a bunch of hungry piranhas who can do better.”
If its worked so darn well, why do costs and profits keep going up year after year. The number of companies decreases as each of the big boys swallows more and more of the insurance pool. Funny though, profits continue to increase, not decrease. If the problem was as you imagined, costs would go down or profits would go down or both. What we do have is costs go up, the number in the pool goes down, and profits soar.
“Final note. We don't have to use speculative numbers here.”
No need. Assuming that a nation-wide federal takeover were at least similar to what's in California now, we already have an idea of what's going on, and government programs present a worse kind of problem than the uninsured. (And perhaps underpayment isn't just “rigging” of public “competition” with the private sector in the case of making the federal public option look better, but in making the private sector be, as well as look, worse.)
• Cost shifting from Medicare and MediCal is substantial. If, in 2005, the revenues
for every California hospital's Medicare and MediCal patients would have been
sufficient to cover these patients' costs, then private-payer patients' revenue-to-cost
ratio would have declined by 10.8 percentage points, from 1.309 to 1.201.
• Cost shifting from the uninsured is minimal. If, in 2005, the revenues for every
California hospital's indigent patients would have been sufficient to cover these
patients' costs, then private-payer patients' revenue-to-cost ratio would have
declined by 1.4 percentage points, from 1.309 to 1.295.
“State health policy reforms that seek to cover the currently uninsured are unlikely to lead to significant reductions in private insurance premiums, at least due to decreases in cost shifting. In contrast, increases in public-program reimbursement rates could have an economically important impact on premiums. …
First, cost shifting from Medicare and MediCal is substantial. Although cost shifting from these public insurance programs does not explain all of 30.9 percentage-point markup that the privately insured paid in excess of their costs in 2005, it does explain 10.8 percentage points, or about 35 percent of it. That is, if the 2005 Medicare and MediCal revenues of every California general, acute-care hospital would have been increased enough to cover these patients' costs, then the aggregate private-payer revenue-to-cost ratio would have declined by 10.8 percentage points, from 1.309 to 1.201.
Second, cost shifting from the uninsured is minimal. If the 2005 revenues for every hospital's County Indigent Program and other indigent patients would have been increased to cover these patients' costs, then the aggregate private-payer revenue-to-cost ratio would have declined by 1.4 percentage points (with an upper 95 percent confidence bound of 3.07 percentage points), from 1.309 to 1.295. …
State health policy reforms that seek to cover the currently uninsured are unlikely to lead to significant reductions in private insurance premiums, at least due to decreases in cost shifting. In contrast, increases in public-program reimbursement rates could have an economically important impact on premiums. This is a direct result of the disproportionate share of hospital costs financed by these programs, and the fact that the programs have been bearing a declining share of their patients' costs in California in the 2000s. …”
http://www.cfcepolicy.org/NR/rdonlyres/46C2B526…
And you can always rely on your fellow Demmies, Green Dreams — they know about the problem.
http://www.santacruzsentinel.com/ci_12566468?so…
“Medicare is underpaying physicians between 10% and 25% in 175 higher-cost counties across the nation, creating a 'public health crisis' in which too few doctors accept the federal program, resulting in jeopardized patient care. …
For all seven counties in the state involved in the case (Santa Cruz, Sonoma, San Diego, Marin, Santa Barbara, San Luis Obispo, and Monterey), the amount is about $340 million in underpayments, the most of any other state, de Ghetaldi said.
California is closely followed by Texas with $246 million; North Carolina, $176 million; Minnesota, $164 million; Ohio, $159 million (all in Cuyahoga County); Florida, $150 million; Virginia, $126 million; Wisconsin, $111; Colorado, $83; and Massachusetts, $81 million, according to the lawsuit.”
http://content.hcpro.com/pdf/content/231574.pdf
http://www.healthleadersmedia.com/content/23157…
Or you can look here (California, New York, and Florida are suitable subjects for warning about any federal expansion to come)
https://www.noridianmedicare.com/provider/updat…
You probably wouldn't believe these folks.
http://www.aha.org/aha/content/2008/pdf/081209c…
http://www.aha.org/aha/content/2006/pdf/underpa…
Of course those kinds of deals are a problem, Hemm, where did I suggest otherwise? What I'm asking you about repeatedly in this thread is where you get the claim that PRIVATE HEALTH INSURANCE PROVIDERS are defrauding Medicare. I assumed when I asked for data you'd find some, because I think there probably are a few examples in the Medicare Advantage program or something where private insurers are acting as middlemen and there may be some shady dealings. Instead you came back with examples of other healthcare providers committing fraud, which was what I agreed is the case right from the first time you brought it up.
Why can't we import drugs from Canada when they cost 40-50% less?
What was your reason against this idea?
Simple. If the US starts allowing reimportation, the preferential deals enjoyed in Canada will quickly disappear. Why would the drug companies continue selling the products so cheap there when they are no longer able to recoup their losses by maintaining the higher prices here?
“If its worked so darn well, why do costs and profits keep going up year after year?”
Come on Hemm, I'm sure you know my answer to that. It isn't working because we're not trying it. There's precious little competition in health care.
The barriers to entry are huge. The health care industry is paved with the bodies of dead startup companies unable to break the stranglehold the existing players have. Reform should focus on loosening their grip, for starters by breaking the employer/health-insurer/provider-network triumvirate to make room for consumers and new approaches.
“The literature provides estimates of the extent of cost shifting in cases where it is theoretically possible. The March 2009 MedPAC Report to Congress: Medicare Payment Policy (Chapter 2A) includes a summary of such evidence. It concludes that the dominant dynamic in the market is that hospitals with strong market power have abundant financial resources. In turn they have a high cost structure (perhaps due to provision of relatively higher quality care) that causes lower or negative Medicare margins. In contrast, hospitals that are forced to run efficiently are adequately funded by Medicare payments. That is, Medicare payments are sufficient to cover costs but some hospitals run inefficiently and make it appear otherwise. Therefore, MedPAC has concluded that increased Medicare payments to hospitals would not reduce rates charged to private insurers. The primary effect would be to induce lower cost operations. “
“Why would the drug companies continue selling the products so cheap there when they are no longer able to recoup their losses by maintaining the higher prices here?”
You think the drug companies are taking a loss on sales to Canada? And why, exactly, would they do that? Pharma companies sell drugs at the price they can get, but they certainly aren't giving away the store in support of Canadian “big government” single payer health care. Are they? Well, if they're such big fans that they give a fabulous deal to ALL single payer systems (yes, they ALL pay less than us), then I'm for joining the club. Heck yeah, I'll take lower drug prices.
I know what Medpac is saying. But I don't trust them fully.
http://www.modernhealthcare.com/article/2009031…
My use of the word 'losses' was a bit misplaced, but still, the point is that a company will bargain with a large contractor for lower prices but they're going to keep in mind that they can make up for that with higher prices charged to other customers. You continually deny that this happens when Medicare negotiates lower provider prices and costs get shifted to other customers (but somehow then say, 'hah, too bad if those other companies can't negotiate as low of a price') but that's exactly what happens. The negotiations with the large single payers include the revenue calculations of what the company can get from other payers as well.
I'm for joining the club
What I'm saying is that once everyone joins the club, it's not a club anymore. The prices then begin to rise for everyone.
I don't see any reason to distrust MedPac and will remind you that this was sworn testimony, unlike the articles you cited.
To me it makes no sense to assume “cost shifting” and it is really an ugly thing to say about private insurers. Cmon. You're arguing that competition and the for-profit model is the way to lower costs, then suggesting that a highly paid insurance company negotiator is going to pay $1.50 for a $1 bandage because Medicare is getting it for $0.85. I say “fire the bum” and get someone decent at his job in that position. Same with that drug company salesman who apparently is giving away drugs because he's so enamored with single payer systems.
These arguments are just weird.
CS, what about WalMart and $4 prescriptions? Surely THAT great deal causes pharma companies to shift costs to everyone else. Right? You can't have it both ways. You appear to be saying that a public option will cost more, but then it would be unfair for them to actually lower costs. OK, so we owe it to someone to continue to pay over 20% more to providers and an extra 17% to insurers. That's your plan?
It would be unfair only if the government did it unfairly, by operating at a tax-funded loss, or by outlawing arbitrage mechanisms like buying cheap drugs from Canada. Of course the expectation is it would do exactly these things, that's the only rationale for its existence.
Patrick,
There are already more than enough comments here on all aspects of your post. I'd like to suggest that you look up the meaning of “specious” as in “specious argument”. You might find your post cited as a perfect example.
You appear to be saying that a public option will cost more, but then it would be unfair for them to actually lower costs.
No, not unfair to lower costs at all, but that lowering should be done through finding real efficiencies, not through price fixing (this is the same point I've tried to raise several times and you don't seem to get it- price does not equal cost.)
When the government negotiates, it often seeks a price that is lower than what the overall average market clearing price would be. The Walmart deal (and other pharmacies now doing this as well), from what I understand, is strictly a volume discount and it's available to those large volume purchasers on a limited number of generic drugs.
Actually very few people commented on the post itself, and I noticed that the first few commenters didn't seem to understand it at all. The point isn't that Medicare's reported overhead is low because of volume- instead, the point is that reporting overhead as a percentage of claims paid out is artificially lowering the reported overhead of Medicare since it pays out a higher claim per capita (due to the population that it serves.) Patrick illustrated this well with his example- the real numbers of the money spent on overhead are higher overall in Medicare, but when you report it as a percentage of the claims the number becomes smaller because the claims are so large. This hides the fact that Medicare is a very, very expensive program, and makes it look like it's a lot more efficient than it really is.
CS
Please remember that the negotiations for medicare part D were non-existent thanks to the Republicans who wrote the bill. Likewise, the blue dogs have pushed for a non-negotiated system in current reforms. It's obvious that lobbied deals keep the US from meaningful savings.
You keep saying that competition is your choice for lowering health costs. Most areas of the country are dominated by one company. In Mississippi, 89% of the small business market is held by Blue Cross. How do you compete out of a monopoly? The start-up costs alone preclude private sector competition, but a public option would immediately open a solely owned market
Hemm, have you really not read the half dozen or so posts I've written when asked (repeatedly) to explain what my solution to the healthcare problems would be?
One of the things I've stressed is that monopolies/oligopolies need to be dismantled through trustbusting regulations.
Another big factor would be allowing purchase of insurance across state lines, because many states (like mine) have more competition since we're not as highly regulated as to the type of policies that can be sold (people have the option of buying more basic policies here since we don't have a hundred mandates for all insurance products to cover everything from in vitro fertilization to full dental and vision.) We have seen recently, new companies and new products coming on the market here which would allow individuals to purchase affordable insurance, and if people in high priced states like NJ, NY, CA, could purchase these products we'd see some real competition.
And of course the other major piece would be to level the tax playing field so that more individuals would be in the position of buying a policy that suits their needs, and putting pressure on the insurers to provide products that meet those needs (and to meet the contractual obligations, which would mean fewer denials of coverage for that which the company agreed to cover.)
S
and you talk of my pipe dreams…
“One of the things I've stressed is that monopolies/oligopolies need to be dismantled through trustbusting regulations.”
Let me demonstrate why that won't work. (I wish it would)
When was the last trust busting measure, that would be the break up of the Bell system. Bell was divided up into regional companies. The only problem is now AT&T owns Southwestern Bell here in the mid-west. We bid contracts to all internet provisioners, and AT&T and SWB “compete.” The contracts are for connections from a site to one of our regional hubs, terminating in an aggregation circuit. All of AT&T's bids came in lower than SWBs, so it sounds like competition is working. Except for the fact those aggregation circuits, which is not factored into the bids. The result, hundreds of AT&T's site circuits all are a few dollars less than SWBs, but AT&T's aggs cost $10k to SWB's $3k. So they win contracts by mere dollars while charging 3 times as much for identical aggs.
Sorry for the geek speak, but I want to show the sham of deregulation and anti-trust when pushed through the sausage maker that is lobbied government.
As it is, where I work still saves our schools millions over direct customer purchases from these Provisioners simply because we are a public option. To put it succinctly, anti-trust merely invokes a false competition while a public option actually reduces cost. I'm all for anti-trust legislation and enforcement, but that legislation results in a false sense of competition that saves tax payers little.
“I want to show the sham of deregulation and anti-trust when pushed through the sausage maker that is lobbied government.”
You're absolutely right. Which is why cost savings from a single payer or a public option will not appear.
Hemm, first of all, one example of a process that may not have been done as effectively as it could have been doesn't exactly prove that there's no way to effectively accomplish the goal.
Second, there are differences in utilities which require infrastructure like the circuits you describe, and other industries like health insurance. Simply breaking up the huge market share that the megacorps enjoy would open up the markets to smaller competitors.
And third, I see Dr. J has responded with another point I was going to make. You seem to think that lobbying is a problem when it comes to any conservative/market based proposal, but for some odd reason you don't see the corrupting influences when policies are created to put all the players under the 'public' umbrella. Why is that?
CS
“Another big factor would be allowing purchase of insurance across state lines, because many states (like mine) have more competition since we're not as highly regulated as to the type of policies that can be sold (people have the option of buying more basic policies here since we don't have a hundred mandates for all insurance products to cover everything from in vitro fertilization to full dental and vision.)”
This may demonstrate the problem, but I'm all for significant safeguards to counter these problems.
“Competition across state lines sounds great in theory. The problem is it becomes “a rush to the bottom.” Insurance Companies will move to states with the least regulations. You buy insurance thinking you're covered, as your state requires, but it's not required in the state where the insurance company is located. Patients get less coverage, outrageous “out of pocket” expenses, but pay the same premiums; this increases the profits for insurance companies.”
http://tpmcafe.talkingpointsmemo.com/talk/blogs…
The other aspect of this is once again political on the conservative side. You are advocating abolishing a states rights issue here by allowing companies to circumvent state requirements. I'm not sure you'll find willing conservatives to back this.
Just which state laws would be over ridden by this change? Lastly, we only need to look at the gasoline market to see how one national market actually increases consumer costs. Maybe you remember “gas wars,” I certainly miss the days when stations actually competed on price points to keep customers. Now, the city-wide price of gas goes up at the same moment, and certain regions of a state pay significantly more than others based not upon supply and demand but upon the economic status of the area. Health care, if it's a commodity as you assert, will be manipulated just as effectively.
The other aspect of this is once again political on the conservative side. You are advocating abolishing a states rights issue here by allowing companies to circumvent state requirements. I'm not sure you'll find willing conservatives to back this.
McCain ran on this (and I don't recall any opposition to it on the conservative side.)
My congressman, Tom Price, introduced HR 3400 which has 30 cosponsors, and includes this provision (as does the corresponding Senate bill introduced by Jim DeMint.) I don't recall whether or not HR 2520 (Paul Ryan's bill) has this in it or not.
Just which state laws would be over ridden by this change?
Why would state laws be overridden? This is no different than any other corporate regulations- each state determines their own rules, and then companies decide if they want to locate there. Meanwhile, customers can do business with whomever they choose.
Besides, it's a bit disingenuous for Dem politicians to posture as though buying across state lines would represent some kind of dangerous, Wild West, unregulated environment for health insurance when those same politicians currently have the luxury of buying across state lines through the FEHBP. Like they always say, why shouldn't every American have the ability to get the same quality and choice that they enjoy for their own health insurance?
CS
You are demonstrating that famous amnesia again. When have you ever heard me say that I was ok with lobbying of any kind? It's hard to carry on a conversation when you keep trying to toss in partisan snipes not grounded in fact.
“Simply breaking up the huge market share that the megacorps enjoy would open up the markets to smaller competitors.”
And your proof of that comes from what crystal ball? my comments are based upon the gas and internet markets.
which example do you cite for this miraculous change where smaller companies without the vast startup capital needed to compete nationally? If gas and internet need infrastructure, health companies need lots of capital. Small companies can't compete in states due to startup costs, why do you assume they could do anything nationally?
You are demonstrating that famous amnesia again. When have you ever heard me say that I was ok with lobbying of any kind?
It's not amnesia. I'm pointing out that I don't think I've ever seen you bring up the same concern of how money influences politicians who are operating a publicly run system. Your concerns about lobbying, while well taken, are always about how this will cause any private market solution to fail.
If I'm wrong and you've expressed the same degree of concern about how corrupt the GSE entities are, and how that corruption leads to the failure of those public entities, for instance, then I'll stand corrected if you show me where you've ever commented on those problems.
why do you assume they could do anything nationally?
Why would they initially have to do anything nationally? It would be better for consumers if a number of smaller companies begin locally and then the strongest competitors would begin to grow and attract customers from other states/regions.
CS
So a company moves to a “friendly state” with no requirements and sells coverage to a state that does have these regulations. Which state laws do you choose to ignore? I don't believe you have clarified this little problem.
Couch this argument as a 2nd amendment case involving concealed carry, and you see the problem. My state lets me carry, so I have the right to carry in your state. Selling health insurance originating from a friendly state to a regulated state is the same issue.
CS
You've obviously not been in any threads discussing cap and trade or global warming. Mikkel can attest to the science of politics I have ranted against.
So, to be clear, I'm the one who offered an amendment that would limit all lobbying to be limited to $10 and no bundling. I beliece you may have actually commented upon the thread at the time.
Hemm, first of all, no state is currently unregulated and despite the clever machinations of the 'race to the bottom' meme, there's no incentive for a state to underregulate- its own citizens would not allow that to happen.
I'd also add that I think it's perfectly appropriate to add a level of federal regulation mainly to mandate capital reserve requirements- and it may even make sense to have an FDIC type of program which the insurers would pay into in exchange for having their reserves insured.
Second, you're ignoring the fact that people DO in fact purchase across state lines NOW. The example I gave is that federal employees currently enjoy this privelege. So clearly, we've established a precedent that puts aside your concealed carry analogy- the regulations apply to the insurer, not to the purchaser of insurance. The appropriate analogy would be gun purchasing laws- each state can make them as lax or onerous as they wish, and consumers can cross state lines to purchase from a state that has fewer restrictions.
I'm the one who offered an amendment that would limit all lobbying to be limited to $10 and no bundling.
What you are not getting is that I'm saying that you limit your concerns to 'lobbying'. I don't think I've seen you acknowledge all of the incestuous dealmaking that goes on between incumbents and the players involved in publicly held bureaucracies.
The money problems are there regardless of whether or not the policy involves private ventures or public ones, in other words. Do you agree with that? If so, then you can't keep using the argument about how lobbying is a deal killer for all market based solutions, without addressing the issues of money as it affects public plan solutions.
CS
“It would be better for consumers if a number of smaller companies begin locally and then the strongest competitors would begin to grow and attract customers from other states/regions.”
so they spontaneously erupt in these first states like mushrooms? And they can compete with a blue cross in one state? Fat chance. The population in one state isn't enough to make that company viable. What economic theory of markets make you believe such a fable. You may as well advocate a car company in each state.
I'm not actually saying that startup companies would have to limit their customer base to one state (with the internet, if interstate purchase was allowed, that's completely unnecessary.) I do think that there may be a business model that could potentially focus on the customer service of serving local communities.
But the main point is that startup companies just have to find a niche- they don't need to start off as large as BCBS. Their smaller size and ability to sell policies based on individual need would be their main marketing tool- and in particular, there's certainly a market for affordable, basic (not gold plated) policies.
As for 'springing up like mushrooms', they'd come about just as any other business startups. Entrepreneurs see a need and decide to risk capital to meet that need because they bet that it will be profitable. Do you disagree that there's currently a need?
CS
“
The money problems are there regardless of whether or not the policy involves private ventures or public ones, in other words. Do you agree with that? If so, then you can't keep using the argument about how lobbying is a deal killer for all market based solutions, without addressing the issues of money as it affects public plan solutions.”
First, the incestuous nature of our government/business sector is legend, and if you wish to start a 20 point plan to reshape government to once again make it responsive, I'm all for it.
BUT, that an avoidance of the problems your solution does not address. Antitrust, states rights, and lobbying are all part of what we are dealing with now. You've more than once accused me of pie in the sky solutions, but I submit that you are doing the very same thing now. None of your solutions have been shown to work in the past, or they run smack into logistical problems right now that you fail to solve. I like your goals, I just don't see any real answers to the problems I've raised.
Look, I'll make a deal; you give me the public option and I'll back the opening up of national markets. The public plan must be free to work as medicare does, and your national market strategy can use home state rules. That leaves only about ten thousand details, but do we have a deal in principal?
The public plan must be free to work as medicare does
What the heck does that mean? Why would I agree to a public option that isn't required to balance its books, and that draws massive subsidization from taxpayers?
And why are you so wedded to public option anyway? What is the selling point that you feel makes it nonnegotiable as part of the solution?
“f you wish to start a 20 point plan to reshape government to once again make it responsive, I'm all for it.”
Certainly, here's mine:
1. While we implement the 20 steps, minimize the impact of the problem by restricting government's power.
2. Think up 18 more steps.