The Contingency of Health Care

Yesterday, I considered the possibility that one might get a law past that covers all of the currently uninsured by that does so on terms that are extremely favorable to the insurance industry -- basically a whole porridge of mandates and subsidies paired with fairly weak regulatory measures. Ezra Klein says a system like that would still be a step on the road to a better health care system overall, since eventually the simple reality that there's a need for cost controls would kick in.

Maybe so. What's more, obviously delivering health care to the uninsured would be a good thing even if it's done in a somewhat wasteful manner. The point is simply that the push among progressives to make universal health care priority number one is not, in practice, the same thing as a push to make fighting the insurance companies priority number one. In practice, if you define the short-term goal as "universal health care" and elevate its priority to the point where you're willing to make large expenditures on its behalf, the easiest way to do that is to buy off the affected companies and it seems to me that, primary season posturing aside, this is the direction in which political strategy is evolving.

And if I were in charge of things, this isn't the direction I would choose -- why not spend the billions on preschool and mass transit? Why not buy off the agribusiness interests instead of the health care ones and formulate a farm policy that prioritizes healthy heating for the public? I'm not someone who accepts the logic of "this money you're proposing to spend on health care would be better spent on preschool and therefore I'll oppose your health care bill even though preschool is not, in practice, on the table as an alternative" -- large social forces have pushed political priorities in this direction and that's the way it is. But America has a screwed-up health care finance system today and is likely to continue to to have a screwed-up system even if Klein-style optimism about the short-term prospects for big-picture reform proves correct.

Photo by Flickr user Waldo Jaquith used under a Creative Commons license

Comments

Matt, the problem with your approach for the last couple of postings here is that you're confusing health insurance with healthcare.

There is absolutely no reason to involve health insurers in negotiations about how to get people health care. They're not in the business of healthcare, they're in the business of healthcare denial - that is, after all, how they make money.

Edwards proposal is the right tack. Start opening up a public entity to compete with them. Their business model can't compete with an agency that's explicitly designed to provide people access to doctors.

Posted by justinb | January 24, 2008 1:23 PM

> Maybe so. What's more, obviously delivering
> health care to the uninsured would be a good
> thing even if it's done in a somewhat wasteful
> manner.

Still wondering where the primary care physicians (and/or senior nurses) are going to come from to handle the workload when the 40 million who are currently underserved hit the system...

Cranky

Posted by Cranky Observer | January 24, 2008 1:30 PM

the easiest way to do that is to buy off the affected companies and it seems to me that, primary season posturing aside, this is the direction in which political strategy is evolving.

It seems a bit more complex than that to me. Justin B is right on--the problem is that insurers are allowed to game the system in order to maximize their profit.

I don't see how they can be "bought off," unless one's plan calls for the government to just pay the insurance companies the $400-$1000 (and up) that would be the monthly premium for a self-insured individual. And that's a fairly large amount of money when you talk about a nation of 300 million.

Posted by James Gary | January 24, 2008 1:32 PM

Well, I agree that it's pretty hard to "buy off" the health insurance companies at any reasonable price.

But as I've previously suggested, it wouldn't be too expensive to just "buy off" the health insurance company CEOs. And there are certainly lots and lots of recent examples in which corporate CEOs gladly stabbed their own companies and shareholders in the back for some quick personal cash...

Posted by RKU | January 24, 2008 1:36 PM

formulate a farm policy that prioritizes healthy heating for the public?

I think you meant "healthy eating," but all the same, if the US public would get more heated about health care policy, it would be a very good thing. You have no idea what fools you look to the rest of the world because of this.

Posted by sunsin | January 24, 2008 1:51 PM

I don't see how they can be "bought off," unless one's plan calls for the government to just pay the insurance companies the $400-$1000 (and up) that would be the monthly premium for a self-insured individual. And that's a fairly large amount of money when you talk about a nation of 300 million.

Isn't that price so high b/c of the risk pool problem? Self-insured individuals pay high premiums b/c they have to pay the rate of the riskiest member of the pool. With a mandate, everyone just pays the average rate, which is quite a bit lower, I believe.

Still wondering where the primary care physicians (and/or senior nurses) are going to come from to handle the workload when the 40 million who are currently underserved hit the system...

Maybe this issue calls for more analysis. But I imagine some of the shift could come from ER doctors that don't have to treat as many, "I use ER as my primary healthcare b/c I can't afford to pay for anything else" patients.

Posted by mpowell | January 24, 2008 1:51 PM

And if I were in charge of things, this isn't the direction I would choose -- why not spend the billions on preschool and mass transit?

Because these other items -- while (along with lots of others) important, aren't as critical. To paraprhase Krugman, lack of universal health care access is the gaping hole in America's safety net. Ezra is quite right: we ought to get everybody insured at the first possible moment. Other necessary reforms -- especially those involving cost containment -- will follow.

Edwards proposal is the right tack. Start opening up a public entity to compete with them.

I like Edwards's proposal a lot. But Hillary's and Obama's plans are similar, and all three include a public sector Medicare-style option; Edwards isn't alone in this regard.

Posted by Jasper | January 24, 2008 1:52 PM

Oy. Did you read the comments on the last post ?
Your idea just doesn't work. The insurance
companies would be happy to take your dollars to
insure the poor. What they won't do, in the absence
of legislation that ties their hands, is to take
your money to insure sick (or very high-risk)
people. Unless you give them the full cost for
such people - in which case the idea devolves into
single-payer but with a bunch of middlemen taking
a profit but assuming no risk.

If you want universal coverage then you're going
to be fighting the insurance companies tooth and
nail. There's no way round that. And the issue
is what happens to people with high expected
healthcare costs, not what happens to the poor.

Posted by Richard Cownie | January 24, 2008 1:55 PM

justinb is right.
the problem is that insurers make their money by denying care.
the problem in this country is not health insurance, it is the system of actual care.
over the years i know that i've gone through nightmares trying to get my insurers to cover basic stuff. fortunately, i've never, on a personal level, had to wrestle with an insurer on a major issue, but i also know that many people have had that kind of nightmarish experience.
and back when i handled a few medical malpractice cases, or with any matter regarding an insurer, frankly, the biggest problem was always the insurance company and their drag-it-out-til-the-last-dog-dies strategy.
what sense does it make to simply continue a system that rewards that kind of intransigence and causes those who are supposed to benefit to go through untold traumas?
when are supposedly smart people going to understand that basic fact: health insurance is not health care.

Posted by frankie d | January 24, 2008 2:01 PM

With a mandate, everyone just pays the average rate, which is quite a bit lower, I believe.

Probably. You may properly conclude that the insurer would prefer a system where the insured pay more to one where the insured pay less. Also, under a mandate, the insurers will also be paying out quite a bit more in claims.

It is for precisely these reasons that, barring a sudden burst of Christian public-spiritedness on the industry's part, insurance companies are likely to oppose any mandate-based system.

Posted by James Gary | January 24, 2008 2:07 PM

one might get a law past that covers all of the currently uninsured

One might get a law passed and then its passage would be in the past.

Posted by jonm | January 24, 2008 2:12 PM

Doctors in picture: "Now where did that white bag go??"

I love that 'hide the white bag' gag.

Posted by jim | January 24, 2008 2:13 PM

"With a mandate, everyone just pays the average rate, which is quite a bit lower, I believe."

I think you're misunderstanding the terminology:

A "mandate" forces every individual to buy health
insurance somehow, on pain of some kind of penalty
(just like the need for thrid-party auto insurance).
It does nothing to the insurers.

What you're talking about is "community rating":
forcing the insurers to offer the same premium to
everybody in a certain group/class/region,
regardless of their *individual* health status
and risk factors. And that's precisely what the
insurers are going to fight, because accepting
an average-health premium to insure someone with
above-average-expected-healthcare-costs is a way
to lose money.

Posted by Richard Cownie | January 24, 2008 2:24 PM

why not spend the billions on preschool

Uh, because nothing in the world could be less necessary?

Posted by Shinyk | January 24, 2008 2:26 PM

I like Edwards's proposal a lot. But Hillary's and Obama's plans are similar, and all three include a public sector Medicare-style option; Edwards isn't alone in this regard.

It's different enough to make it better, IMO. The Obama plan doesn't allow individuals to join the public pool, as long as their employer offers insurance through work.

In other words, the Obama plan is explicitly designed to allow the private health insurance industry to keep doing exactly what it's doing today, with no ramifications for poor performance, pricing, or anything else. It's goal in life is to get it past the army of insurance lobbyists, because it doesn't have any teeth that might bite insurers.

Posted by justinb | January 24, 2008 2:38 PM

A "mandate" forces every individual to buy health insurance somehow, on pain of some kind of penalty (just like the need for thrid-party auto insurance). It does nothing to the insurers.

Sure it does. It gives them lots of new business. More business = bigger profits.

What you're talking about is "community rating": forcing the insurers to offer the same premium to everybody in a certain group/class/region, regardless of their *individual* health status and risk factors. And that's precisely what the insurers are going to fight, because accepting an average-health premium to insure someone with above-average-expected-healthcare-costs is a way to lose money.

Huh? Unless the government legislates the rate, insurers will just set the average premium at the rate necessary to maintain their profits. If you can't afford that rate, the government will subsidize you--or so Hillary and Obama are promising.

I think a strict mandate is bad policy and a big political loser. Assuming Hillary wins in November, the mandate will be the first thing to go when her health care plan goes through the political wringer.

Posted by Mixner | January 24, 2008 2:41 PM

A "mandate" forces every individual to buy health insurance somehow, on pain of some kind of penalty (just like the need for thrid-party auto insurance). It does nothing to the insurers.

Thanks for clearing that up--I was under the same misunderstanding. But this makes the ongoing debate much more absurd. Am I really supposed to believe that the large number of uninsured Americans don't have insurance because they don't want it, and that requiring them by law to buy it will solve the problem?

Posted by James Gary | January 24, 2008 2:42 PM

To paraprhase Krugman, lack of universal health care access is the gaping hole in America's safety net.

No, it really isn't. Universal health care would do little or nothing to improve either the health or the financial security of the American people.

Posted by Mixner | January 24, 2008 2:49 PM

"Huh? Unless the government legislates the rate, insurers will just set the average premium at the rate necessary to maintain their profits. If you can't afford that rate, the government will subsidize you--or so Hillary and Obama are promising."

Well, yeah. If the government promises to pay
whatever premium the insurers choose, then the
insurers are going to set a high rate. Not just
"the rate necessary to maintain their profits".
Why would they stop there ? The sky's the limit:
if Halliburton and Blackwater can charge billions
on uncompetitive unaudited contracts, everyone else
wants to come to the party as well.

So, by reductio ad absurdum, Matt's plan of
"buying off" the insurers doesn't work. The
insurers have to be rather tightly regulated
and constrained. And as far as I know, all the
Dem plans work that way: the big difference
between Obama and Clinton is on whether you
impose a mandate on individuals, or no. But
either way, if you want universal coverage -
meaning coverage of the sick and high-risk in
particular - then you're going to have to *force*
the insurance companies to do that, and they're
going to fight you.

To put it in its simplest terms: the goal of any
progressive healthcare plan must be to provide
healthcare to everybody, *especially* the sick;
insurers make money by providing as little
healthcare as possible, while getting as many
premiums as possible. Those goals are directly
in conflict. A fight is inevitable.

Posted by Richard Cownie | January 24, 2008 3:03 PM

So, by reductio ad absurdum, Matt's plan of
"buying off" the insurers doesn't work. The
insurers have to be rather tightly regulated
and constrained. And as far as I know, all the
Dem plans work that way

Where do any of the Dem plans say they will prevent insurers from charging premiums sufficient to remain profitable?

To put it in its simplest terms: the goal of any
progressive healthcare plan must be to provide
healthcare to everybody, *especially* the sick;
insurers make money by providing as little
healthcare as possible, while getting as many
premiums as possible.

No, insurers make money by getting people to buy a service that costs them less than they charge for it. An insurer who provided "as little healthcare as possible" (zero) wouldn't stay in business very long. An insurer who provided less health care than his competitors for the same price, or the same health care for a higher price, might last a bit longer but would also tend to lose business to those competitors.

Posted by Mixner | January 24, 2008 3:17 PM

allow the private health insurance industry to keep doing exactly what it's doing today, with no ramifications for poor performance, pricing, or anything else.

It's strange that Progressives think that the "Health Care Crisis" would be over if only the insurers would begin behaving honestly. This is simply magical thinking. If it were the case that insurer overcharge was the nation's number one problem, average Joe and Jane would opt out of health insurance, pay cash at the Doctor's office/Hospital and be better off for it. Obviously, that's unaffordable, so insurance-based solutions represent a complete misunderstanding (and probably worsening) of the situation--the cost of Health Care drives the crisis. Health Insurance is immaterial.

And what would controlling the cost of Health Care require? Hard caps on hospital charges, medical supply company goods, hazardous waste companies, as well as salary cuts for nurses and Doctors (including price caps for any privately owned practices) and probably even federal involvement in the pricing of medical schools. No congressman will go along with any of that out of fear of attack ads (as Schwartzenegger found out when he attempted to extract concessions from the Nurses' union).

This is why I'm more fond of Kucinich than of any Democrat. He unapologetically calls for socialized medicine, which does address the actual causes of Health Care cost. Of course, I don't like the inevitable freedom-based and quality-related trade-offs involved in socialized medicine, but that's another discussion for another day.

Posted by Shinyk | January 24, 2008 3:26 PM

Why not buy off the agribusiness interests instead of the health care ones and formulate a farm policy that prioritizes healthy heating for the public?

Personally, I'm very glad that I signed up for that '100% organic natural gas' plan with Xcel last year. My home has never been hotter, and I've never felt better!

Posted by David Samuels | January 24, 2008 3:31 PM

"Where do any of the Dem plans say they will prevent insurers from charging premiums sufficient to remain profitable?"

Not what I claimed. It's just inevitable that there
has to be government oversight and regulation of
the premium rates. That doesn't mean government
will force insurers to set an unprofitable rate;
it does mean that insurers won't get a blank
check.

And none of this is any kind of novel magic. If
you're providing electricity or water or auto
insurance or telecoms services, you face a
similarly intrusive interaction with regulators.
It isn't 1900 any more, Mixner, and for all
GWB's efforts, the Lochner precedent still rules.

Posted by Richard Cownie | January 24, 2008 3:40 PM

"No, insurers make money by getting people to buy a service that costs them less than they charge for it. An insurer who provided "as little healthcare as possible" (zero) wouldn't stay in business very long."

On the contrary, that's *exactly* what they provide
to people with perfect health.

"An insurer who provided less health care than his competitors for the same price, or the same health care for a higher price, might last a bit longer but would also tend to lose business to those competitors."

Actually no. If Insurer A succeeds in getting a
pool of low-risk customers who on average pay
P in premiums but incur 0.8*P in health costs, then
Insurer A makes a profit of 0.2*P. If Insurer B
has a pool of high-risk people who pay P in
premiums but incur 1.6*P in costs, by your theory
Insurer B is doing a great business (because he's
charging the same premium but supplying more
healthcare). But on planet Earth, Insurer A is
making a healthy profit (+0.2*P) but Insurer B
is heading for bankruptcy (-0.6*P).

You see, you're looking at the wrong market.
Individuals most don't have any choice worth a
damn - they can take their employer's plan, or
they can maybe take their spouse's employer's
plan. The big market is between employers and
insurance companies. And the trick for insurers
is to sign up companies who'll maximize P-C.
That's the real market: where insurers bid for
groups of people. And it's optimizing insurer
profit (P-C), *not* health outcomes.

Posted by Richard Cownie | January 24, 2008 3:52 PM

That doesn't mean government
will force insurers to set an unprofitable rate;
it does mean that insurers won't get a blank
check.

Well, make up your mind. You just asserted that insurers will fight community rating because it would cause them to lose money. But they'd only lose money if they were forced to price their community-rated premiums below their costs, which you now admit none of the Democratic candidates are proposing.

Posted by Mixner | January 24, 2008 3:53 PM

"Well, make up your mind. You just asserted that insurers will fight community rating because it would cause them to lose money"

No. I never said they would lose money. My opinion
is that they'll fight it because it won't allow them
to make as much money as they can under the current
regime where they get to deny coverage to the
individuals with the worst healthcare risks, and
more generally play complicated games with their
pricing.

Obviously if they were going to lose money overall
they would just abandon the business and do
something else instead.

But hey, sorry if I'm getting too mathematical
for you with these complex ideas like addition
and subtraction and "big profit better than small
profit".

Posted by Richard Cownie | January 24, 2008 4:03 PM

On the contrary, that's *exactly* what they provide to people with perfect health.

When you find an insurer whose customers are all in perfect health, let me know.

Actually no. If Insurer A succeeds in getting a
pool of low-risk customers who on average pay
P in premiums but incur 0.8*P in health costs, then Insurer A makes a profit of 0.2*P. If Insurer B has a pool of high-risk people who pay P in premiums but incur 1.6*P in costs, by your theory Insurer B is doing a great business (because he's charging the same premium but supplying more healthcare).

No, I'm talking about insurers competing for the same pool of customers, not two different pools with very different risks.

You see, you're looking at the wrong market.
Individuals most don't have any choice worth a
damn - they can take their employer's plan, or
they can maybe take their spouse's employer's
plan.

Er, why isn't that choice "worth a damn?" And that is obviously not their only choice, anyway. They could purchase alternative or supplementary individual insurance. They could decline insurance altogether. And most employers offer their employees a choice of plans with different cost and benefit structures.

Posted by Mixner | January 24, 2008 4:06 PM

Maybe I missed something, but Matt and the people who've posted in this thread seem unaware that medical insurance systems similar to the one proposed by Edwards, Clinton, and Obama are used in Germany, the Netherlands, Switzerland, and scores of other countries. Are the people reading this thread aware that the rest of the world exists? Is Matt? Hasn't anybody traveled to Europe? Doesn't anybody know at least one European? Why doesn't somebody report on European medical insurance systems? Why are Americans so parochial?

Posted by Stan | January 24, 2008 4:12 PM

No. I never said they would lose money.

So I just imagined the following, did I?

What you're talking about is "community rating": forcing the insurers to offer the same premium to everybody in a certain group/class/region, regardless of their *individual* health status and risk factors. And that's precisely what the insurers are going to fight, because accepting an average-health premium to insure someone with above-average-expected-healthcare-costs is a way to lose money.

My opinion is that they'll fight it because it won't allow them to make as much money as they can under the current regime where they get to deny coverage to the individuals with the worst healthcare risks, and more generally play complicated games with their pricing.

And what evidence is that opinion based on? Hillary is proposing an individual mandate to purchase insurance, and both Hillary and Obama are proposing economic subsidies and incentives to encourage such a purchase, that would provide the insurers with up to 50 million additional customers. That's a lot of potential for a huge increase in profits.

Posted by Mixner | January 24, 2008 4:15 PM

"No, I'm talking about insurers competing for the same pool of customers, not two different pools with very different risks."

Yes, but that isn't what happens. Insurers don't
treat all people - or even all groups of people -
as having the same risks. They figure out the
likely healthcare costs, on the basis of all kinds
of detailed information about demographic profile,
income distribution, geographical region, sex
ratio etc. And then they quote a premium to try
to maximize their P-C. And they'll be happy as a
clam if they can get the business of many groups
with low expected healthcare costs.

And - as anyone who has dealt with insurance
companies much over the past few years will know -
they also try damn hard to hang onto as much of
that money as possible as long as possible, by
imposing deductibles and copays, denying coverage,
and paying late.

"Er, why isn't that choice "worth a damn?" And that is obviously not their only choice, anyway. They could purchase alternative or supplementary individual insurance"

Because the tax advantages are such that, if it's
available at all, employer-subsidized insurance
is almost always the best buy. And it's how
about 60% of the population gets insured. If
you don't have a working spuse, then you probably
have no other realistic option.

You might get a reasonable deal on individual
insurance if you're healthy and low-risk. But
surely the point of the system should be to
provide health care ? And the people who need
that care are those who are sick or high-risk -
and they are the ones with the fewest and least
attractive options under the current system.

It's a mess.

Posted by Richard Cownie | January 24, 2008 4:21 PM

"So I just imagined the following, did I?"

Pretty damn obvious I meant that they would lose
money on insuring high-risk individuals. Not the
same thing as losing money overall.

Posted by Richard Cownie | January 24, 2008 4:28 PM

"And what evidence is that opinion based on?"

Common sense. If they can get the sugar without
having to swallow the medicine, that's what they'll
aim for. So they'll welcome the mandate and the
subsidies, and fight against the community rating
and other such regulatory measures.

It isn't even their fault. They have a fiduciary
duty to pursue what's best for their shareholders,
not what's best for the nation. But politicians
should do what's best for the nation, and that's
going to mean a fight.

Posted by Richard Cownie | January 24, 2008 4:33 PM

Edwards, Clinton, and Obama are used in Germany, the Netherlands, Switzerland, and scores of other countries.

I don't know about the Netherlands and Switzerland, but Germany has a non-exclusionary decentralized socialist Health system. The German regional and central governments own half the country's hospitals. The majority of Doctors are state employees. When the state sets a low basic price of health care (predicated upon things like low doctor/nurse salaries), private entities have to adhere to the same basic salary structures in order to remain competitive, pushing the cost of Health Care down. No Democrat (save Kucinich) has proposed something like that--nor will they. Since those cost-controlling preconditions do not exist in the US (and since no one's proposing them), any discussion of a German Insurance Mandate is irrlevant to Obama, Edwards, and Clinton's plans.

Posted by Shinyk | January 24, 2008 4:36 PM

Still wondering where the primary care physicians (and/or senior nurses) are going to come from to handle the workload when the 40 million who are currently underserved hit the system...

Cranky

Wow, excellent, excellent point, Cranky, one I had not thought of before. In a nutshell, why we are in for a long transition. I had previously been foolishly harping along the lines of the boomers hitting the system and all demanding knee replacements. You've got a much bigger problem right there. There is no way out of where we are except incremental, there's no two ways about it. And it's going to be a very bumpy ride.

Posted by artappraiser | January 24, 2008 4:36 PM

Yes, but that isn't what happens. Insurers don't treat all people - or even all groups of people - as having the same risks.

I never said they did. You seem to have completely lost the point. Health insurers compete for customers, just like other kinds of insurer and other kinds of corporation compete for customers. They don't make money by providing "as little healthcare as possible." They make money by providing health care (or, rather, health insurance) at a quantity and price that best satisfies the demands of the market. It's not exactly rocket science. The same basic principles of supply and demand, competition and choice, goven all other markets. Your "as little healthcare as possible" assertion is just nonsensical. Any insurer who routinely refuses to pay on legitimate claims by his customers, or who charges his customers premiums significantly greater than the market rate, is likely to lose business very quickly to his competitors.

Posted by Mixner | January 24, 2008 5:11 PM

The government caused the entire problem with health care in America by over socializing (with mandates) medicine to the extent it is not completive. The government allows a monopolistic pharmaceutical environment, and the FDA a federal agency failing American citizens and needs be eliminated or completely re-organized; it’s corrupt, and is causing a major impact on the cost of healthcare in America, and we want to exacerbate the problem? http://www.InteliOrg.com/

Posted by Dr Coles | January 24, 2008 6:18 PM

Universal health care would do little or nothing to improve either the health or the financial security of the American people.

Mixner once more proves that s/he doesn't get out much.

Posted by pseudonymous in nc | January 24, 2008 6:20 PM

And pseudo once again proves he doesn't know what he's talking about.

Posted by Mixner | January 24, 2008 6:21 PM

"Health insurers compete for customers, just like other kinds of insurer and other kinds of corporation compete for customers"

But they don't compete for *all* customers; in
particular, if you're facing major surgery or
a chronic condition requiring expensive drugs,
with healthcare costs greater than median
income, then insurance companies can't make
money off you and so won't "compete" for your
business.

So it's impossible to get insurance companies
to provide *universal* coverage, unless you
force them to do it.

Well, I've explained it 10 times. If you still
don't get it maybe that's a problem with the
educational system.

Posted by Richard Cownie | January 24, 2008 6:53 PM

Re: The point is simply that the push among progressives to make universal health care priority number one is not, in practice, the same thing as a push to make fighting the insurance companies priority number on

The idea that progressives should make fighting insurance companies their goal is asinine. As a tactical measure it may be necessary to fight some insurance companies, but I should hope the goal is getting healthcare for everyone, not fighting insurance companies! And if we can get healthcare for everyone why does it matter if someone somewhere makes some money off it?

Re: why not spend the billions on preschool and mass transit?

People are not dying for want of preschools or mass transit. They are dying for lack of healthcare.

Re: Still wondering where the primary care physicians (and/or senior nurses) are going to come from to handle the workload when the 40 million who are currently underserved hit the system...

They're already in the system-- and most of them are healthy young people. So we don't need extra doctors, but we may need somewhat fewer bankruptcy attorneys.

Re: Well, I agree that it's pretty hard to "buy off" the health insurance companies at any reasonable price.

As I mentioned in the other thread the trick is to buy off the big boys (Atena, the Blues, Kaiser, maybe Humana and a couple of others) and separate them from the mid-range insurers who tend to be the most reactionary and engage in the most unfair business practices. The big boys are already quasi socialistic (using group ratings etc.) so they would support many reforms as long as they can keep their market share.

Re: What they won't do, in the absence
of legislation that ties their hands, is to take
your money to insure sick (or very high-risk)
people.

They do this already for most of the population, every time someone signs up for insurance at work. And while workers have to have a minimum standard of health to be in the workforce (though they can still have expensive illnesses) nothing prevents a worker from bringing a seriously ill spouse or child onto his employer's policy. There really isn't that much cherry-picking in the system since most people get insurance at work where they can't be picked out of the mix.

Re: the problem is that insurers make their money by denying care.

No they don't, and that meme needs to die. Insurers make money by paying out less in claims than they take in in premiums. If they outright deny too many claims they lose subscribers and their premiums. While a few small players practice piranha-style insuring, counting on market churn to keep an endless supply of new subscribers coming in the door as outraged old ones leave (rather like a dishonest used car salesman), most insurers make money by discounting their payouts for services. Next time you get an EOB from an insurer take a good long look at it: the claim was paid, yes, but at far less than the provider billed and while you are on tap for a pre-defined copay, the provider eats the rest of the difference. By the way, this is how public programs, both in the US and abroad, save money too, in fact they are even better at it than the private insurers are. Check out Medicaid reimbursement rates for an example.

Re: Universal health care would do little or nothing to improve either the health or the financial security of the American people.

Their health, maybe not. But their financial security would improve enormously as people would no longer be at risk from crushing medical expenses.

Re: An insurer who provided "as little healthcare as possible" (zero) wouldn't stay in business very long.

While I agree with your underlying principle I don't agree with the conclusion. The country is big enough and the market anonymous enough that piranha-style insurers can survive a very long time and even prosoper (see: Golden Rule, which I believe renamed itself eventually its reputation got so bad). This after all is how used dishonest car salesman, bad but overpriced resturants and other poor deals manage to last.

Posted by Jonf | January 24, 2008 6:54 PM

But they don't compete for *all* customers; in
particular, if you're facing major surgery or
a chronic condition requiring expensive drugs,
with healthcare costs greater than median
income, then insurance companies can't make
money off you and so won't "compete" for your
business.So it's impossible to get insurance companies to provide *universal* coverage, unless you force them to do it.

Your posts are so utterly confused. You make a false assertion ("insurers make money by providing as little healthcare as possible"). I respond, explaining why your claim is false. And then you respond to me as if you had made a completely different assertion ("it's impossible to get insurance companies to provide *universal* coverage, unless you force them to do it") that I didn't challenge. And you do this kind of thing all the time.

Posted by Mixner | January 24, 2008 7:44 PM

Their health, maybe not. But their financial security would improve enormously as people would no longer be at risk from crushing medical expenses.

No, their financial security would increase only modestly, if at all. Crushing medical expenses are rare, and insurable medical bills (the expenses that would be covered by "universal health care") are only part of the typical total costs arising from a serious illness. "Universal health care" won't pay your mortgage or buy your groceries when you lose income because you're too sick to work. It won't pay for childcare while you're in the hospital or at a clinic getting treatment. It won't pay your uncovered medical costs, which can be substantial.

While I agree with your underlying principle I don't agree with the conclusion. The country is big enough and the market anonymous enough that piranha-style insurers can survive a very long time and even prosoper (see: Golden Rule, which I believe renamed itself eventually its reputation got so bad). This after all is how used dishonest car salesman, bad but overpriced resturants and other poor deals manage to last.

Well, like dishonest car dealers and overpriced restaurants, either they don't last long or they survive only by occupying niche markets and exploiting a small and gullible customer base. And even then they would likely run foul of government regulators and consumer watchdogs. If any of the major national health insurers that provide most Americans with their health coverage--Blue Cross/Blue Shield, Cigna, United Healthcare, Kaiser, etc.--routinely refused to pay valid claims or charged excessive premiums they would very quickly lose business to their competitors.

Posted by Mixner | January 24, 2008 8:06 PM

"There really isn't that much cherry-picking in the system since most people get insurance at work where they can't be picked out of the mix"

About 60% of the population gets insurance through
their employers. So yeah, that is "most". But
when the goal is *universal* coverage what matters
is precisely the people who lack coverage -
typically because they're unemployed or employed
in low-status jobs without benefits. Now take
the smaller minority who, in addition to lacking
job-related health benefits, also suffer from
expensive medical conditions and/or high risk
factors. Now we might be getting down to 2% of
the population. But so what ? Universal means
everyone: 98% wouldn't do. 98% especially
wouldn't do if the remaining 2% are all people
who really *need* healthcare.

In other words, you're correct that there isn't
*much* cherry-picking. But as long as there's
*any* cherry-picking allowed, that unfortunate
2% is going to be screwed and it won't be
universal.

Posted by Richard Cownie | January 24, 2008 9:08 PM

"Well, like dishonest car dealers and overpriced restaurants, either they don't last long or they survive only by occupying niche markets and exploiting a small and gullible customer base."

Hilarious. Mixner inhabits some alternate
universe where car dealers set the standards for
integrity and fair dealing ...

Posted by Richard Cownie | January 24, 2008 9:11 PM

Now take the smaller minority who, in addition to lacking job-related health benefits, also suffer from expensive medical conditions and/or high risk factors. Now we might be getting down to 2% of the population. But so what?

So, that's a very small percentage of the population. And even for that small percentage "no health insurance" does not mean "no health care." As I have already explained to you, free or low-cost health care services are available to the indigent and uninsured through a large network of public and private programs and health facilities.

Lack of health insurance just isn't a big problem in America.

Posted by Mixner | January 24, 2008 9:33 PM

"Lack of health insurance just isn't a big problem in America."

Oh yeah. And you can always trust what a car
dealer tells you. Very funny.

Posted by Richard Cownie | January 24, 2008 9:39 PM

And Mixner once more seems to think that other countries are figments of the imagination. My guess: Mixner is 5 years old. Or lives in his mother's basement.

Posted by pseudonymous in nc | January 25, 2008 12:44 AM

And Mixner once more seems to think that other countries are figments of the imagination.

I do so love your bizarre non sequiturs, pseudo.

Posted by Mixner | January 25, 2008 1:23 AM

Re: Crushing medical expenses are rare

Medical bills (not just lost time from work) are a factor in about a third of all bankruptcies. I know you have quoted lower figurse in the past, but your figures omited medical bills charged on credit cards. And while $100,000 medical bills may be rare, for many people a $5000 bill may be enough to push them over the edge.

Re: Well, like dishonest car dealers and overpriced restaurants, either they don't last long or they survive only by occupying niche markets and exploiting a small and gullible customer base.

I disagree. If you have constant flow of new customers it doesn't matter if your old customers never come back. Example: We stayed in St Augustine FL a couple of years ago and ate at a resturant that was located just off the interstate on "hotel row". The place was overpriced and awful-- Taco Bell would have been better. We mentioned this to the hotel clerk (a chatty sort) the next morning checking out and she told us that everyone complains about that place, but it stays in business because there's always out-of-towners like us who don't know any better and it's very convenient to the hotels and the freeways.
There are many businesses which exist in that manner. I could give other examples. Don't let ideology blind you to reality. Bad businesses, like parasites, can thrive if they can attach themselves to a steady flow.
By the way, I agree about the large national insurers who write mainly group policies. They do need to keep their reputations intact. If you read the rest of my post you will note that I argued against the people who claimed insurers only make money by denying claims.

Re: But as long as there's
*any* cherry-picking allowed, that unfortunate
2% is going to be screwed and it won't be
universal.

I don't disagree with you. I was disagreeing with the blanket statement that everyone is subject to this sort of practice. I am a strong proponent of community rating. Since insurers who practice this with their group underwriting have no trouble making a profit, community rating who not sink the insurance industry.

Posted by JonF | January 25, 2008 6:39 AM

"community rating who not sink the insurance industry."

No, and I never said it would. But the insurers
would prefer not to have it, and will fight
against it.

Anyhow, I think there's a bit more cherry-picking
than you think. If you work for a business with
few employees, and someone incurs a lot of
health costs, then next year the premiums will
go up. So the whole thing you're paying for is
for the insurers to accept risk; but they're
very disinclined to accept any significant
degree of risk for any length of time. It's
hard for me to see what useful function they
really serve to justify the billions of dollars
they skim off.

Posted by Richard Cownie | January 25, 2008 8:44 AM

jonf,

Medical bills (not just lost time from work) are a factor in about a third of all bankruptcies. I know you have quoted lower figurse in the past, but your figures omited medical bills charged on credit cards.

According to this study, medical bills are a contributing factor in only 17% of personal bankruptcies. And no, that does not omit bills charged on credit cards. Where are you getting your "about a third" claim from?

And while $100,000 medical bills may be rare, for many people a $5000 bill may be enough to push them over the edge.

If someone's economic circumstances are so fragile that an unexpected expense of just a few thousand dollars is enough to plunge them into bankruptcy, then they are at serious risk of that fate from any number of causes--loss of their job, a car accident, theft or burglary, a sick parent or child who needs their attention, an unexpected home repair bill, a tax bill, etc., etc.--and health insurance would do little to improve their financial security.

I disagree. If you have constant flow of new customers it doesn't matter if your old customers never come back.

Then show me some examples of these alleged medical insurers who behave like dishonest car dealers and get away with it. Evidence please. Facts and figures. Not guesses or undocumented assertions.

Posted by Mixner | January 25, 2008 11:49 AM

Ah, Mixner, so embarrassingly cloistered that s/he thinks pointing out the existence of other countries with other health care systems is a non sequitur. Go and suck up to McArdle some more: you're in much better company with Ms. Poverty Sensitive Sunglasses.

Posted by pseudonymous in nc | January 25, 2008 1:08 PM