Yes, Virginia, There Is A Difference

The headlines say that 73% support a public option as a part of healthcare reform. That sounds good for advocates of reform. There is a problem though. Almost no one cheering this actually understands what a public option would be.

There is also the question of a single-payer system. As one of the readers of this blog asked, just what is the difference between a public option and a single-payer system? This is an area of widespread confusion. This confusion is intentional. Let’s clear this up right now.

To fully explain this and divulge the motivations behind the confusion we need to begin with a look at some fundamental assumptions. These assumptions are totally false but almost universally held here in the US by those on both sides of the question of healthcare reform.

The term “free market” is constantly thrown around. This is done by people who actually think they understand what they are talking about. Of the several conditions necessary to a free market, two are particularly pertinent here. First, all buyers and sellers must be too small to have an individual effect in that market. Second, all payers must have all relevant information. Think about the healthcare industry for a moment. Is either factor in play? Far from it.

We even hear the word entrepreneur on occasion. How much of your own money are you willing to put into a start-up to compete with any of the drug corporations? How about Aetna, Cigna or Blue Cross?

Let’s get real and just ignore all of the socialism talk from this point on. It is only brought into the debate by those who have no real argument in favor of the healthcare leeches and those naive enough to buy such rubbish. Those throwing around free market, entrepreneur, socialism, capitalism, competition, level playing field and others of that ilk are either knaves or have been taken in by those knaves.

Single-payer
Let’s take single-payer first. Think of it as Medicare-For-All or something similar. Everyone gets a card. This could actually be your Social Security card. It would need some security features. It probably should be a smart card, with routine identification. It could include your medical records. It would not be any more a violation of your privacy than a passport, a credit card or other such common items we use daily.

You step up to the receptionist in the doctor’s office or hospital and let them record the information. This is information you must provide even now, in a less convenient way. Later, they will enter the billing information. That will be sent to the payer by computer for reimbursement. CMS presently pays for Medicare, Medicaid and the Children’s Health Insurance Plan.

Some other payer could be used. You could, in fact, divide up the workload and let several private insurance companies do the processing. But why? CMS spends 1.8 cents of every dollar on administration. The private companies spend 30-32%. CMS sets aside nothing for profit. CMS does not pay multi-million dollar salaries. CMS has no incentive to increase its costs. Dividing up the pot reduces the economies of scale.

In Britain the doctors are actually government employees. That is not necessary. It is also not the case for most countries with national health systems. Even in Britain not all doctors work for the government.

Parallel to the national system there is what might be characterized as concierge medicine. One can still buy a private policy or engage a group of doctors for a retainer. This is obviously more expensive. One does get more attention from the doctor but not necessarily better care.

The savings of a single-payer system are obvious. They are also large. The savings would allow all of the uninsured to be covered.

Private insurance corporations have an incentive to increase costs. That incentive is increased profits. CMS has an incentive to reduce costs. This can be accomplished by preventive care and similar measures. There is a reason that private plans give only lip service to such matters.

Public Option
Pubic option is getting a great deal of talk but specifics are hard to come by. There is a reason for that. Part of the reason for this public option talk is to divert attention from single-payer and to cause confusion. Details are unnecessary for these purposes.

Another reason for talk of a public option to to satisfy those fixated on the myths of free markets, competition, capitalism, the ‘murican way, et al. Those intellectually challenged politicians who owe their positions entirely to their hypocritical flag waving need some red meat for their intellectually challenged constituents.

The justifications for a public option turn on two points. It is said that many people need an affordable plan. It is also claimed that the public option would be a benchmark. Apparently we would use the market to force the private plans to be competitive with the public plan. Hang on to this. It will raise its ugly head a bit later.

Now, let’s take a look at just how a public option is supposed to work. First, let’s hazard a wild guess that an overwhelming chunk of those 47 million uninsured will wind up on with the public option. They will be joined by most of the under-insured. That alone means that the public plan will have more subscribers than any private plan.

It has been suggested that the private plans be forced to take some of the uninsured. This would entail subsidies being paid to the private plans. How many of you taxpayers want to subsidize the most profitable industry we have?

I have already mentioned the 30% edge that CMS has over the private plans in administrative costs. Being much larger, CMS will have much greater bargaining power. Not paying $15 million salaries might even redound to the advantage of CMS. CMS executives will not be required show a profit every quarter. They will not receive profit participation or golden parachutes.

If we factor all of those considerations into the pricing of both public and private plans, please tell me how the word competitive ever got into the debate.

The real trick will be to make the public plan competitive by raising the premiums to something the private plans can match. Getting the private plans down to the cost levels of the public plan would require more magic than Merlin could conjure.

To raise the premiums on the public plan is to subsidize the private plans. It subsidizes their inefficiencies. It subsidizes their profits. It subsidizes those golden parachutes. Does anyone think that makes sense? Does anyone think that solves the problem of our deplorable healthcare system?

All of this is done in the name of preserving competition, capitalism and a host of other extraneous issues. None of those heal a single person.

For anyone needing a reminder, the issue should be, first and foremost, providing affordable healthcare to the people that compose this country. Anyone wanting to argue those other issues is welcome to do so whenever and wherever those issues are the subject at hand. The issue now at hand is how best to provide healthcare for everyone.

Government Management
I am sick to death of the claims that the government can’t manage anything as well as private enterprise. The government micromanaged essentially all industry in WWII. Does anyone want to compare that with the performance of Halliburton? The post office will pick up a letter from your house and deliver it to your strange uncle in that cabin 50 miles from a town in Idaho for 44 cents.

But, wouldn’t it be terrible to have some government bureaucrat get between you and your doctor? In 15 years the number of health insurance bureaucrats increased 25 times as much as the number of doctors. You actually have layer after layer of bureaucrats rationing your private plan at this moment. And, those private bureaucrats are graded on how much money they can save the corporation. If that’s what someone prefers, they need to be careful about falling off the edge of the Earth.

While composing this, dear Tom Daschle came out with his advice for the President to abandon the public option. Tom was joined by two other former Senate Majority Leaders, Bob Dole and Howard Baker, both Republicans. They presented a plan paid for by the healthcare industry. Tom himself was paid for by those same interests. Almost all of his $5+ million income since leaving office came from the healthcare industry. I agree that Obama should drop the public option but I support a real option, one not written by the AHIP and PhARMA.

Tom said, “We’ve come too far and gained too much momentum for our efforts to fail over disagreement on one single issue.” I can’t see where we have moved at all, at least not in the direction of real reform. His greed cost him the job at HHS. I had hoped goodbye, Tom meant goodbye.

Tagged as: ahip, cms, daschle, halliburton, Health, healthcare, hhs, medicare, pharma, public option, reform, single payer