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Posted by on Jul 31, 2009 in Health, Politics | 26 comments

Health Care Debate: What I Don’t Understand

As Members of Congress prepare for what might be their favorite time of year — the extended August recess, scheduled to start tomorrow for the House; and August 8 for the Senate — they do so with a flurry of progress on health care reform but not the hoped-for, full-chamber, final votes on definitive bills.

Accordingly, during this recess, I hope one or more of our elected officials — or their staff, or the countless “interests” vying to get their attention on health care reform — will take some time to consider and clear up the following points of confusion.

From the debates I’ve followed at this site and elsewhere, it seems clear that individuals who favor a “public option” for health care reform argue for such an option because they believe it will provide much-needed competition to private-sector insurers. Borrowing a line straight from the bible of free-marketeers, these public-option advocates proclaim: “More competition is good because more competition will help drive down costs.”

In turn, many of the same, public-option advocates argue against the concept of health insurance cooperatives because the latter (they say) would not have enough “scale” to drive down costs.

Later, if pressed, these public-option advocates will confess their belief that — while a public option is a reasonable “compromise” — scale is so important to the overall equation of affordable, universal health care, that a single-payer, all-government/all-the-time system is really the best way to go.

What I don’t understand about those arguments is their failure to acknowledge and/or address the intrinsic conflict between “scale” and “competition.” Typically, more of one means less of the other.

A government monopoly is still a monopoly. “Yes,” single-payer advocates might respond, “but government is intrinsically good because it operates in the best interests of the many, while business is intrinsically bad because it operates in the best interests of a few; therefore, a government health care monopoly would make decisions that are more fair, more just, than a private-sector monopoly.”

Perhaps. But without competitors, government monopolies still lack what private-sector monopolies lack, namely: ample incentive to control costs or innovate or encourage innovation among others. I would argue that a failure in any one or more of those areas is neither fair nor just.

Granted, on certain challenges, it is hepful to find a balance between scale and competition. Too much of one can be counterproductive. Too much scale can lead to monopolies or virtual monopolies. Too much competition (in a market where scale has indisputable benefits) can lead to inefficiencies and missed opportunities.

So I’ll concede this much: It’s legitimate to simultaneously advocate more scale and more competition, seeking an ideal blend or balance of the two. What I won’t concede — what I think remains a subject for legitimate debate — is this: If they operate under the same essential rules (e.g., no exclusion for pre-existing conditions, etc.), which course of action achieves the better blend or balance between scale and competition: One, DC-centric public option … or three to four dispersed health-care cooperatives?

Phrased differently: If we assume health care cooperatives are structured in effectively the same way as the public option — i.e., they’re essentially the same device — is it better to have one or several of these devices, competing against not just the private sector but against each other?

I don’t have the answer, but I would appreciate a substantive debate on these grounds, rather than a debate that starts with “the public option is great idea because it represents more competition” and ends with “health care cooperatives are a bad idea because they don’t have enough scale” — with little to no objective data attached to either claim.


Addendum: While he doesn’t address the debate I’ve suggested above (i.e., single public option vs. multiple cooperatives), Andrew Sullivan does offer this round up of pundits who either favor or are not dead-set against the public option, including Sullivan himself, David Brooks, and the consistently impressive Nate Silver.

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