Recently some Republicans opposing health care reform have been arguing against mandates on principle, claiming that the requirement to purchase health care insurance is a requirement being imposed upon them by Democrats. It is true that some Democrats support mandates, but others oppose it . After all, this disagreement over mandates was one of the significant differences between Obama and Clinton during the primary campaign. Such Democrats, however, are not the only ones who support mandates.
Until Republicans decided to use this as a last chance to argue against health care reform, most Congressional Republicans backed the individual mandate. The real driving force for mandates came from the insurance industry, which saw this as a way to increase the number of customers. Republicans, being firmly in the pocket of the insurance industry, went along.
Democrats who support the individual mandate also desired that it be coupled with a public option to guarantee that, if people are required to purchase insurance, they have at least one reasonable option. Naturally the insurance industry, and therefore the Republican Party, opposed the public option. While the claims that this would drive insurance companies out of business are pure nonsense (as demonstrated in a recent Congressional Budget Office report), the choice of a public option does run counter to the industry’s desire to have everyone in the country be forced to buy from them.
As the public option became weakened in Congress, and outright eliminated from the Senate Finance Committee bill, the mandate was also weakened to make it easier to opt out and minimize fines for those who fail to purchase coverage but do not meet the criteria to opt out. Naturally the insurance industry is not happy with such weakening of the individual mandate. A Blue Cross group was the latest to protest this. Besides putting out bogus numbers to claim that health care reform will increase costs, they called for a stronger individual mandate:
One of the report’s key findings is that a stronger individual mandate could greatly reduce healthcare costs.
“Strong mandates, beginning in year one, coupled with meaningful penalties, will help to ensure enrollment of young, healthy individuals to balance inflow of higher-cost people,” the study reads.
Sen. Olympia Snowe (Maine), so far the only Republican backing the Senate’s healthcare legislation, was the driving force behind weakening Finance Committee’s mandate and penalties during markup and has said she would rather do without the mandate altogether.
BCBSA is worried that lawmakers will dial it back even further, allowing more young and healthy people to go without insurance.
Hard to know what “party” is for individual freedom vs. colletivism. Interesting to see the plan to make the young pay in premiums to offset the costs of the old. I thought that was what we had a nation debt for, so people of today can spend money to be earned by future generations. If we are going to have our young people pay for our medical costs, what is the point of having a national debt then?
It isn’t making the young paying premiums to “offset” the costs of the old. The point is 1) to increase the risk pool by all paying in, and 2) have the young insured to cover their own medical costs, not the costs of others.
Ok, cool, while I may almost constantly disagree with you on underlying philosophy or theory, I do usually trust in your facts, and if the purpose is for the young to pay their own way, I’ll take you at your word that it is designed to do that.
Actually on this our philosophies might be closer. While I clarified the rational for having the mandate (which includes young people) I oppose having a mandate. If there is no public option, then many liberals who previously supported a mandate will also be less likely to support one. My suspicion is that on paper the mandate will be present, but it will be weakened even further.
What safeguards are there, if any, to keep a program like a “public option” even if it starts out on sound footing, to not end up with shortages like social security and medicare? Even from a world view that Democrats are the good guys (which I would dispute) as things come and go, what is to keep Republicans some day in the future from diverting funds from health care premium payments to some other emergency of the day?
‘What safeguards are there, if any, to keep a program like a “public option” even if it starts out on sound footing, to not end up with shortages like social security and medicare? Even from a world view that Democrats are the good guys (which I would dispute) as things come and go, what is to keep Republicans some day in the future from diverting funds from health care premium payments to some other emergency of the day?’
Well, for a start, a ‘public option’ is not a tax-funded entitlement like Social Security or Medicare. It’s an insurance plan sold by the government. Instead of comparing the public plan to Medicare it would be better to compare it to the United States Postal Service, whose tax investment is recouped by its income and which consistently shows a profit. The Postal Service has never been in danger of bankruptcy since the Ben Franklin days.
Propaganda comparing the public option to entitlements is mistaken or deliberately dishonest. Much of it is paid for directly by lobbyists for the insurance industry. Dick Armey’s organization, which has been providing bodies to protest at town halls, is also being paid directly by these organizations despite his disingenuous claims of purely grass roots organization. Dismissing liberal/conservative and Republican/Democrat questions entirely, the health insurance industry is spending a great deal of money to protect its current status as a legally protected cartel and its current business model.
It’s not just about the public option. The industry is spending a great deal of money to cover both sides of the street and protect itself from having to operate in genuinely capitalist market. Dismissing all other aspects of the bill (public option AND mandate), the health care reform under discussion would establish a genuine national health insurance market meeting national quality standards and adhering to national law.
Such a market currently does not exist, instead we have a cartel whose members enjoy quasi-monopoly status legally supported by state governments. This means individual insurance companies only compete with one or two other companies at most in their market.
So completely independent of liberal/conservative disputes about public options or personal mandates, this would force insurance companies to compete in a free market. The one thing that corporations hate more than anything is actual competition. That’s why they are so quick to merge, form cartels, or buy out the competition even when it means building potentially destructive corporate debt. Because the risk of bankruptcy is less threatening than the risk of competition.
This is why insurance companies want the individual mandate so much and also why they oppose the public option… with which they would not only have to compete but which they would also not be able to buy out.
What do you mean–shortages like Medicare? Medicare is doing far better than private insurance plans at providing medical care. Sure, if no changes are ever made it cannot sustain itself, but that is true of any business as well. Insurance companies maintain their profits by significant increases in premiums most years, and by finding more and more ways to deny payment. Medicare doesn’t resort to either. Besides, much of Medicare’s current problem was caused by changes made by George Bush, which the health care reform measures will correct.
Of course it is always possible that in the future government will screw up the public plan. In that case people enrolled would simply change to private plans. Market forces would be the strongest factor dissuading politicians from trying to take premiums for the public plan and applying them elsewhere.
‘Market forces would be the strongest factor dissuading politicians from trying to take premiums for the public plan and applying them elsewhere.’
Actually, this isn’t completely true. There would be a stronger motivation. Angry voters with too much swing for the government to completely have its way.
What has stopped ‘conservatives’ from Goldwater, to Reagan, to Newt Gingrich, to W. Bush from gaining real traction in efforts to repeal and/or privatize social security? People simply would not stand for it. In the 1980s, Goldwater flipped sides and threatened to vote with Democrats in the Senate if Reagan tried to defund social security. The GOP Congress of the Clinton/Bush years was able to put off renewing the funding, but they were not able to outright privatize it as they wanted even with Bush in the Oval Office.
The public plan would be like social security in that raiding its funding would be politically impossible once it got going.
As presently structured, the public plan will only be available to a minority of people. Therefore it wouldn’t be in the same position as social security. Cuts to the program wouldn’t be the same as cuts to Social Security as long as people could switch to another plan.
‘As presently structured, the public plan will only be available to a minority of people. Therefore it wouldn’t be in the same position as social security. Cuts to the program wouldn’t be the same as cuts to Social Security as long as people could switch to another plan.’
I didn’t mean to suggest absolute equivalence. But I don’t believe that ‘being able to switch to another plan’ would necessarily mollify those people who, for whatever reason, chose the public option over those other plans in the first place.
Not necessarily, but there will be far less of them than those affected by Social Security cuts so I expect that market reasons as opposed to political pressure will be the larger factor preventing a scenario such as Mike suggests. Regardless, the potential that this could happen is not a sensible reason to oppose starting a public option.
Well, being something of a lefty, I believe that some on the right are correct when they say the existence of a public plan will lead to expansion of said plan. If it is successful, more people will want access and will want to switch and there will be political pressure to open it to more individuals. This is basic economics. If people like it, more people will want it.
It is possible that if people prefer it they will open it up to everyone and it will start to squeeze out private insurance. Only Republicans would see that as a bad thing.
@Ron. sounds like you already addressed your own question of “What shortage?” But here is a link- http://www.webmd.com/medicare/news/20080325/experts-predict-medicare-fund-shortage – Of course it doesn’t say current shortage but predicts a shortage- I also wasn’t referring to shortage of treatment or services, I meant shortages in a sense of its unsustainable Ponzi scheme structure. Sure reforms might modify the losses that will be suffered by those who end up holding the bag but federal government is quite consistent in how it operates, it demands people pay income tax then it spends at a faster rate than what is sustainable from what it takes in, then on top of income tax it starts forcing people to pay social security tax/insurance and it pays out at an unsustainable rate, then it starts forcing people to pay medicare tax/insurance and it pays out at an unsustainable rate. Now it wants to start health care tax/insurance. Tell me you can’t see the pattern.
“….In that case people enrolled would simply change to private plans..” I don’t believe I can at this time disprove that assertion. What I do know is I can’t opt out of Social Security or Medicare. What I also know is if I like the public schools in the area I live in I pay for them through property taxes and/or rent with the tax built into the price. If I find the public schools in my area are lousy despite ungodly amounts of money they receive, I “simply” pay for the public schools anyway and then pay on top of that for private schooling of my children. Granted comparing Education to Health Insurance is like comparing bananas to bicycles but what I’m speaking to is not legislative language but the character of government, local or national. Always promising more than it can deliver, always developing ponzi schemes, always getting a hook in you that you can’t ever go back and take it out.
Medicare has been going since the mid 1960’s. It is hardly a Ponzi scheme, even if financed through taxes. As I noted above it does a better job financially than the private insurance industry.
You can opt out of Medicare B, but very few do so. In any event, the public option isn’t anything like Medicare or Social Security, or like schools. The public option is to be paid by premiums of those who choose it. If you don’t want it, don’t choose it. If people do choose it, they will always have the option of changing to something else. That is a key point of health care reform–to give people choices they do not have.
It’s worth noting that the projected Medicare shortages are just that… projected. The most conservative (I use this word in the literal sense rather than the political sense) estimates are based on current revenue and expenditures with no changes to either. The projections politically popular with ‘conservatives’ are based on the assumption that expenditures will continue to grow at the same rate while revenue will not.
It is also worth noting that the projected budget surplus in January of 2001 included Medicare and Social Security expenditures at their current rates and those surpluses could /easily/ have been used to refund those programs. Moreso, it would have been immensely political popular to do so. Instead, the Bush Administration and their congressional allies (in both parties) chose to do other things.
If a couple’s kids get sick and they can’t afford to go to the hospital because the family just bought a house, we don’t expect the kids to pay the price because their parents did not expect the illness. While I am sure Ron and I disagree on the full distance the government should travel on this issue, the health of the American people doesn’t stop being a priority because the Bush Administration got happy with the country’s money. Something still needs to be done. I know I failed the elevator test in my long comment above, but I really recommend reading all of it.
‘It is possible that if people prefer it they will open it up to everyone and it will start to squeeze out private insurance. Only Republicans would see that as a bad thing.’
For some reason it makes me smile that we agree on that.
Ron and E.R. – thanks both for your comments, and Electic you are one of the few bloggers that consistantly write long posts that I think worthy of reading the whole thing.
“As I noted above it does a better job financially than the private insurance industry.”
Do you know why?? Have you ever heard of cost shifting.
If so, then what ive qouted from you above is disingenuous at best.
If not, it is well worth looking up and will go a long way to explain why healthcare costs have gone up so much.
I have a problem with a government option because i think that more competition is needed. I am against all of the current house bills however.
All the regulations and mandates are only going to make insurance more expensive.
“Until Republicans decided to use this as a last chance to argue against health care reform, most Congressional Republicans backed the individual mandate. The real driving force for mandates came from the insurance industry, which saw this as a way to increase the number of customers. Republicans, being firmly in the pocket of the insurance industry, went along.”
So the majority of both parties support individual mandates but only the republicans are in the pockets of the insurance companies? Your bias is showing. We have 2 corporate controlled parties in this country, any free-thinker sees this as obvious.
More proof that the dems are also bought and payed for- the PHARMA lobby has spent hundreds of billions to get this legislation passed.
RealLiberal,
Cost shifting does not change the fact that government programs provide health care more economically than private insurance. Medicare is forced to pay extra money because of the uninsured. Medicare is harmed by cost shifting.
For another reason why your argument makes no sense, look at the Medicare Advantage plans. Cost shifting is not a factor at all when comparing the government and private plans, but it costs 13 percent to 19 percent more to care for the same patient population in private plans than in the government plan. Attributing this to cost shifting makes no sense.
“I have a problem with a government option because i think that more competition is needed. ” One of the points of the public option is to provide more competition, so your argument here makes no sense either.
“All the regulations and mandates are only going to make insurance more expensive.”
There is absolutely no reason to believe this. The insurance industry tried to make this argument this week and their arguments were shown to be based upon faulty data and false. Health care reform will make it less, not more expensive.
Ironically, many right wingers such as yourself both complain about the cost while opposing measures (such as the public option) which will lower insurance costs. You can’t have it both ways–complaining about the cost and opposing ways to lower the cost of insurance. If cost is really the main concern, then go for a single payer plan which would be the least expensive way to provide coverage.
Your last comment is utterly illogical. I am not saying, as you incorrectly claim, that it is support for mandates which means that a party is in the pocket of the insurance industry. Whether you want to ignore the facts or not, the fact is that the insurance industry has considerable influence over the Republican Party. In the case of mandates, members of both parties wound up supporting the same policy but for quite different reasons.
“It’s not just about the public option. The industry is spending a great deal of money to cover both sides of the street and protect itself from having to operate in genuinely capitalist market.”
Could not agree more with this. Insurance companies greatest fear is a single payer system. Its second greatest fear is having to compete in a truly free market.
“Cost shifting does not change the fact that government programs provide health care more economically than private insurance. Medicare is forced to pay extra money because of the uninsured. Medicare is harmed by cost shifting.”
This is true but private insurance is harmed by cost shifting 2 fold. First they pay extra because of the uninsured, just like medicare. Secdonly, (which is what i was alluding to) private insurance is the victim of cost shifting due to medicare. Medicare only pays 70-80% of doctors and hosiptals asking prices. To recoup these losses private insurance is charged more.
“I have a problem with a government option because i think that more competition is needed. ” One of the points of the public option is to provide more competition, so your argument here makes no sense either.
Your right what i posted doesnt make any sense Because i meant to say -I have NO problem with a gov. option.
“the fact is that the insurance industry has considerable influence over the Republican Party.”
I agree. But i disagree that the $100,000+ that the average liberal has received from the insurance industry has not influenced them to support some of these mandates and regulations.
Its also blatantly obvious that the dems. (for the most part) are bought and payed for by the PHARMA lobby and the doctors lobby.
““All the regulations and mandates are only going to make insurance more expensive.””
“There is absolutely no reason to believe this.”
Most of these mandates and regulations will make business more expensive for private insurance. You can beleive that they wont raise prices but your beliefs wont be based in reality.
Thus RealLiberal:
‘Could not agree more with this. Insurance companies greatest fear is a single payer system. Its second greatest fear is having to compete in a truly free market.’
I mostly agree with this, certainly, but I don’t know that I agree with all of what you say. I say mostly because it might be possible that insurance companies fear real competition more than they fear single payer. Single-payer is not even on the table at this point in the reform discussion and, barring a radical shift to the left by key Senate Democrats or the Obama Administration, it will not be. So while the concept may be very disturbing to insurance companies and they certainly are against it, they aren’t (and have no reason to be) scared of it in the foreseeable future.
The comment from which you quoted included the actual facts of the reform, which are as follows: the various forms of health insurance reform currently on the table would establish a national market for health insurance in which all companies would have to compete with each other and meet legitimate quality standards. This is not called ‘government takeover’ but rather ‘capitalism.’ It would be far more competitive than the current system, not less, while having quality controls not present in the pure ‘free market’ system that you appear to advocate.
In short and sweet terms: the health care reform that we’re going to actually see looks a lot more like John McCain’s health care policy than Barack Obama’s. It’s an improvement over the existing situation and I believe that any improvement over the existing mess is good. Let’s not pretend it’s in any way ‘liberal’ though. The most likely version to pass, the Finance Committee bill, needs a lot of improvement on the Senate floor and in reconciliation with the House bill in order to even be acceptably ‘moderate.’
What we’re seeing is pragmatic, conservative reform of the insurance system. Not the radical reform of the health care system truly necessary.
RealLiberal,
In the past there was cost shifting due to lower Medicare rates, but with managed care insurance companies have lowered their rates close to Medicare rates. They also deny far more than Medicare. Medicare Advantage plans pay off The same pay schedule as Medicare but cost significantly more. The cost shifting argument just doesn’t hold up.
In projecting furture insurance costs you are not including signficant factors such as the increased risk pool and increased competition. Each of these factors should should have a signfiicant effect on lowering rates from where they otherwise would be. In addition, any factors which lower the curve of rising health care costs will help keep insurance rates down.
I’m still shocked that somewhere along the line someone finally managed to throw into the discussion the anti-trust exemption for the insurance “business”…
‘I’m still shocked that somewhere along the line someone finally managed to throw into the discussion the anti-trust exemption for the insurance “business”…’
As an advocate of the danger corporate power poses to private freedoms, I tend to mention anti-trust issues and labor issues a LOT.
To Ron:
“One of the biggest cost shifters is government itself, which currently pays for close to half of all U.S. health care. (Wall Street Journal, January 6, 2009: “federal, state and local governments paid for 46.2% of health-care spending in 2007, up from 45.3% in 2004 and 37.6% in 1970.”) In the private sector, if one corporation controlled nearly 50 percent of the market, it would be called a monopoly.
This week, the U.S. House of Representatives further increased government’s share of the health care market by passing, 289-139, a major expansion of the State Children’s Health Insurance Program (SCHIP). The program will now provide government-funded health care for children in families earning up to 300 percent of the federal poverty-level wage ($63,081 for a family of four). Research shows that as SCHIP grows, it displaces existing private insurance policies for kids between one quarter and one half of the time. (Wall Street Journal, January 21, 2009)
Unfortunately, SCHIP and most other government health care programs do not pay fair market rates for physician care, diagnostic services, and hospital services. Using their monopoly-like power, government-paid health care programs pay less than the actual cost of services and force the shifting of the rest of the cost to private insurance payers. Government reimbursements paid to health care providers can be as low as 30 percent of the amount needed to cover their costs and allow a reasonable profit.
On top of that, the bureaucracy, paperwork, delays in payment, and seemingly arbitrary denials of claims further increase the cost of doing business and further erode the income from providing government-paid health care.
To survive in business, providers (hospitals, physicians, etc.) have to ask other patients – those with private insurance policies – to pay higher rates to make up for the very low reimbursement from government programs. This cost shifting is one of the major reasons why the cost of health care insurance keeps skyrocketing.”
Which part of this do you disagree with?
Heres the link to the full article, if interested.
http://saturdaybriefing.outrigger.com/uncategorized/cost-shifting-distorts-health-care/
To Eclectic:
I agree with alot of what you said. But while i agree that single payer is not close to getting on the table, i do think that a government option with all these regulations added in will led to just that. I would argue that a truly free market solution is even farther off then single payer. There are a lot fewer people in congress advocating it.
The government option will leech off of private insurance like medicare currently does and then when there is no more private insurance to leech off of the prices will start going back up.
Single payer is the second best idea IMHO. The best being a truly free market healthcare industry.
I agree with you that this healthcare reform is not what is needed. I do disagree that this legislations most resembles mccains plan(im not a fan of mccain). I think this plan resembles more of what h. clintons and edwards campaigned on mixed with a little of mccains ideas.
“This is not called ‘government takeover’ but rather ‘capitalism.’”
I agree that the current legislation isnt a government take over BUT like all other government programs it will only expand. Even if private insurance lowers there costs enough to push the “PO” out of the market the congress will just throw money at it to keep it afloat.
Also while i agree that there will be capitalism after this legislation passes(if it passes) it will not be anywhere close to a free market.
RealLiberal,
The comments on cost shifting come from sources with an agenda and do not reflect the current realities. You also cannot lump all government programs together. Medicare and Medicaid are entirely different situations. Medicare is easier to deal with and is less likely to deny claims without good reason than most private payers. Medicare’s payment schedule is now just slightly below the average from private payers. When I consider the lower office overhead for billing Medicare and the lower risk of rejections, it is more economical to deal with Medicare than most other payers. The cost shifting argument is a bogus argument used to mislead people outside of health care who are unaware of such current realities. Medicare has payments built into the system specifically to pay for the uninsured and is harmed by cost shifting more than most private plans, so this cannot be used to explain the greater efficiency of Medicare over private plans. This also does not address the issue of private plans which pay off the Medicare fee schedule but where it still costs 13 percent to 19 percent more to treat the same types of patients.
‘Also while i agree that there will be capitalism after this legislation passes(if it passes) it will not be anywhere close to a free market.’
If your definition of a ‘free market’ is an absolutely unregulated market, then no. There won’t be anything like a free market.
However, what empirical evidence is there that an absolutely unregulated market is ‘free’? I’ve written about free markets before and will do so again. The empirical evidence I’ve seen in history and observed in world events suggests that an absolutely unregulated market would be very far from ‘free.’ The entirely unregulated market of the highwater mark of British capitalism was a nightmare of adult unemployment, dangerous and poorly paid child labor, crushing poverty and degrading crime.
The entirely unregulated American market of the same period and shortly thereafter, during the famous ‘Gilded Age’, was not free at all. It was a market dominanted by cartels and monopolies. The infamous ‘trusts’ maintained private armies to keep their workers in line as if they were feudal magnates and their employees were serfs.
The unregulated Russian market of the 1990s led to the takeover of major public utilities by gangsters and the brief dominance of a ‘Russian Nazi’ party backed by same over the Russian parliament. It completely undid the momentum for democracy in the country and made most Russians very glad to see Putin come into power to knock the gangsters down a peg.
I find the equation of an unregulated market with a ‘free market’ to be a false equivalence. There’s no data out there, of which I am aware, to contradict me.