30 March 2009

Counter-intuitive

The complaint raised by conservative senators against the public plan option in a health care reform plan is that it would be an "unfair playing field" which would disadvantage private insurers.

My response has generally been dismissive to this line of argument.  The senators making it have generally been shills for the insurance industry and inclined to oppose reform in any case, so it's not overly cynical to view their objections as not entirely in good faith.  Even so, my thought has been, what of it?   Let the market decide.   If, as the conservatives fear, the public plan winds up being cheaper and better and the public freely votes with their feet and their dollars to choose it, then GREAT!   But if, as some doomsayers predict, the private insurers will select out the healthiest patients and the public plan winds up saddled with the sickest patients and highest costs, then isn't that good for the insurance industry?

Joe Paduda makes an interesting argument that the public plan would actually not be anti-competitive:
Sure, price is a factor - but it is not the most significant factor - not by a long shot. By keeping patients out of the hospital, a private plan would eliminate utilization and prevent price from ever becoming a factor. So, even if a service area was dominated by a public plan, a private plan that did a really good job of keeping members healthy and out of the hospital would deliver lower costs.
And also:
The reality today is that almost every market is already dominated by a very few health plans, so much so that in most markets, there really is very little market competition amongst health plans. [...]  If anything, a robust public plan would add competition to many markets, competition that would, if anything, increase consumer and provider choice.

How exactly is that bad?

Interesting perspective.   I doubt it will convince the AHIP advocates, but hopefully there's someone on the Hill explaining this sort of thing to Olympia Snowe and Arlen Specter.

2 comments:

  1. It's not unfair as long as they don't make acceptance of the government plan mandatory. As with Medicare and Medicaid, the government plan will surely pay less than the private insurers. And as with Medicare and Medicaid, many doctors will simply opt out, leaving many without their "entitled" cheap medical care.

    That's not necessarily "bad," but it's likely to be ineffective.

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  2. Interesting take, and I appreciate an honest give and take.
    One question though about "keeping people healthy and out of the system". In its simplest form, s**t happens, and even the best and most vigerous attempts at maintaininh health don't always work. Accidents, bad genes, simple bad luck, etc put all of us at risk for being a "part of the system". To expect that living right, whatever that may mean, will keep members of any group out of the system seems destined to failure. Most of the patients that I see are in average or better than average health (specialist here), but I still see them. They are still a part of the system and are costing money to the system that they are in.

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