May 11 2009
Will private sector co-opt health care reform?
The first big gambit in health care reform was put forward by an array of health providers and the Service Employees International Union this week, which mainly consists of a promise to hold down health costs voluntarily, by 1.2 percentage points annually — a promise that is estimated to be worth $2 trillion over 10 years.
Promises aren’t any guarantee of results, just as grits, to quote the old song, ain’t groceries. As a show of good faith, it’s a reasonable opening gambit, one that the signatories to the plan intended to impress the Obama administration. The president clearly wants people to see that his team is hard at work making this campaign promise come true, and the alliance of interested parties want people to see that they’re engaged constructively in the effort.
This is more important that it may seem up front, since the alliance, comprised of the Advanced Medical Technology Association, the American Hospital Association, the American Medical Association, America’s Health Insurance Plans and the Pharmaceutical Research and Manufacturers of America, has at least a few members who helped to sink the Clinton health care initiative. The Times story says these folks are interested in holding off government-imposed price controls, which would impact their profits.
But it’s my estimation that these folks are also hopeful of scuttling any attempt to institute a public sector health insurance plan. It’s not just that they don’t want the competition, but that anything like a “Medicare For Everybody” plan would quickly identify cost savings, bringing administration costs closer to the 2 percent that Medicare and the VA have versus the 20-30 percent that is the norm in our current “free market” system.
Then there’s the fact that MFE would not be troubled by such things as community rating and pre-existing conditions, since it would be open to everyone, including the 46 million currently without any insurance at all. But a lot of folks with mediocre coverage might find the public plan attractive too, especially if the cost of their private plan exceeds their rent or mortgage because of the old pre-existing conditions dodge. So forget competition from the private sector; MFE would prevail in a rout. And I’m thinking the trade groups named above don’t want that.
Meanwhile, this week’s announcement is just the opening gambit in this game. Like I said, promises look pretty on paper but there is literally no mechanism in place to make these promises into reality. (See Robert Reich on this.) That won’t come until some sort of legislative proposal emerges from Congress. When that happens, we’ll see just how successfully the private sector has managed to co-opt reform — and just how loudly the rest of us will have to holler to get effective reform.
