How the "Public Option" of Health Insurance Went From Inevitable to Imperiled

Some straight talk from a straight-laced federal agency puts government-run insurance on the brink


Just a few weeks ago, progressive health-care reform looked like a done deal. And the so-called "public plan"—a government-run insurance option beloved by the Democratic Party's most liberal faction—was to be the legislation's centerpiece.

But thanks to some inconvenient analysis from the Congressional Budget Office (CBO) and increased public worries about government spending in general, reform efforts are now in disarray. Although an expensive overhaul of the health-care system is still on the front-burner, the once-preordained inclusion of a public plan is now in jeapardy. If it fails, the result will be a huge loss for the Democratic Party's liberal wing and a victory for those who want to keep the government out of the health insurance business. How did a sure thing turn shaky so fast?

Ever since the politically disastrous defeat of President Bill Clinton's HillaryCare in 1994, progressive health care advocates have been itching for a legislative rematch, digging through the wreckage in search of lessons for future battles. One of the key ideas to emerge was a "public option"—a government-run insurance plan that, advocates said, would compete with private plans, providing Americans a cheaper insurance option while exerting a downward pull on private insurance premiums. More crucially, unlike HillaryCare, it would accomplish this without directly forcing individuals off their current insurance plans.

The public option was credited by supporters with having almost miraculous properties. Former South Dakota Sen. Tom Daschle, a one-time frontrunner to head up the Department of Health and Human Services and one of the Democratic Party's most prominent health-reform advocates, penned a piece for Newsweek claiming that it would simultaneously lower costs, expand choice, and improve patient access. Given such expectations, it was hardly surprising to see pundit and longtime universal health care booster Ezra Klein write that for progressive reformers, the inclusion of a strong public insurance option was "the single most recognizable marker for victory."

For a while, things seemed to be moving in that direction, with President Barack Obama making health care one of his top legislative priorities, and Democrats everywhere proclaiming that the time for reform had finally come. As Michael Cannon, a health policy analyst at the Cato Institute, argues, "The administration wanted to create an aura of inevitability."

But starting this month, the advocates' confidence began to shrivel. The New Republic's Jonathan Cohn, whose 2007 book Sick made a passionate plea for universal coverage, wrote on June 17 that reformers should be worried, topping his blog post with a picture of a lit-up panic sign. The next week, the same magazine published an article by Clinton health-care pollster Stanley Greenberg worrying that the public mood was bearing an eerie resemblance to 1994. And Sen. Dianne Feinstein (D-Calif.) warned on June 21 that Obama might not have the votes this year to pass the biggest item on his legislative agenda. Much of the newfound criticism centered on objections to the public plan.

What let the air out of their tires? The answer, to a large degree, lies in the unexpected power emanating from three little letters: CBO.

That would be the Congressional Budget Office, a straight-laced bureau whose job is to ground congressional fantasy in budgetary reality. And when it comes to health care, fantasy was more or less what the reformers were hoping for. Unfortunately for them, says George Mason University economist Tyler Cowen, "CBO scoring is biased toward the certain and the real and the measurable." That attitude led the office to decline to score some of the untested cost-saving measures included in the bill.

On June 16, the CBO slapped the Senate Finance Committee's draft legislation with a staggering $1.6 trillion price tag over the next 10 years—an outlay which the office further predicted would only cover about two-thirds of currently uninsured people. Given recent polls suggesting increased public wariness over excessive spending, it was a number big enough to give pause even to a government on a record-breaking spending spree.

The CBO didn't actually score a public option (though that didn't stop some Republicans from inaccurately saying it did). But generalized sticker shock seems to have opened the way for already skeptical legislators, including some centrist Democrats, to express concerns about the government getting heavily into the insurance market.

There are plenty of reasons to be skeptical of a public plan. The most discussed objection is that it would cause many people to move off their current employer-sponsored policies. The government wouldn't force anyone to switch, but would be providing an incentive for workplaces to drop current coverage altogether. Businesses that did so would likely be required to pay into a pool to finance insurance alternatives, but for many, particularly those with older, less healthy workforces, dropping current coverage options would still prove an attractive option.

The other, somewhat less-discussed problem, is the potential for free riding. Any public plan would be subject to regulations known as guaranteed issue and community rating. These regulations would require plans to be open to all comers and prohibit plans from discriminating based on price. That would be an extremely attractive option for the chronically sick. But the presence of the very sick, and thus the very expensive, would drive up total costs—potentially pushing healthy people away from private plans. As Cowen explains, the result would be a sort of federal high-risk pool, "a vehicle through which you can pay more money to cover some high risk people."

So without ever actually scoring it, the CBO brought concerns about the public plan to light. The likely end result of this, thinks Cowen, is a dramatically scaled-back bill with either no public option or one that's largely toothless—restricted from bargaining down prices with medical providers, or perhaps subject to a "trigger" mechanism that would only allow a public plan to come into being if private plans failed to control costs or increase coverage.

Public-plan champions such as Robert Reich and Jacob Hacker, the latter of whose 2007 Economic Policy Institute paper "Healthcare for America" was influential in the push for a public option, have been ramping up pressure, pleading in a June 23 conference call with reporters for Obama to use the bully pulpit to support a vigorous public option. But although Obama voiced some support for the public option in a press conference later that day, he refused to say that its inclusion was non-negotiable—a message reiterated by White House senior advisers over the weekend. The implications for the public plan were crystal clear: Despite all the reformers' hopes and work, it's no longer inevitable.

Peter Suderman is a Reason associate editor.

NEXT: Debt and Taxes: The CBO's Dire Projections

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  1. Because this quote never gets old in relation to healthcare reform:

    "Expanding coverage is easy compared to controlling healthcare costs. Nobody has to give much up to expand coverage, but in controlling cost there will always be losers." --Nancy Turnbull, Commonwealth Health Insurance Connector board member and associate dean at the Harvard School of Public Health.

  2. There's actually a relatively simple solution. Just say if you want to sell health insurance in the USA, you charge the average risk for the US, per person, and accept all comers. The competition would then shift from excluding and arbitrarily denying coverage to efficiency in the healthcare financing/insurance business. It's currently paid for by a mix of tax dollars and insurance, including increased rates for uninsured, so you're in fantasy world if you think you're saving a whole bunch by excluding people. They just come back another way. Best of all, you keep the govt out of it any more than they already are.

  3. From the article: "a straight-laced bureau"

    I believe the expression is "strait-laced," as in "bound up tightly" (in this case, by rules, procedures, and protocols).

  4. If we are going to have a government distorted market, then ban everything other than catastrophic health insurance (i.e. make it insurance again) and make heath expenses 100% tax deductible.

    And only give 5 year, (non-renewable for slight reformulation) patents for drugs that treat the symptoms of a disease and 25 year patents for therapies that cure diseases.

  5. Let us begin with the premise that health is not a commodity.
    This is what separates the men from their toys. We have had enough experience with unregulated economic greed to know that the speculators and middlemen cannot be trusted to manage energy, defense, natural resources or insurance without collusion and waste built into guaranteed profits.
    Our congress is, and has been, a pawn in the hands of corporate magnates at the expense of polluting air, soil and water for short term private gain. The legislature has subsidized corporate failures after decades of unrestricted outsourcing of jobs while reducing our investment in health and education. The only resources necessary for an independent nation is management of all resources, including the health of its people for the people.

  6. d:

    "There's actually a relatively simple solution. Just say if you want to sell health insurance in the USA, you charge the average risk for the US, per person, and accept all comers."

    Sorry, but this won't work. In fact, it's doomed to failure due to adverse selection.

    Follow along:

    1. If everyone is charged the same premium, people who are healthy will opt out of coverage and self-insure at lower cost, while people who are unhealthy will take advantage of the low premiums and opt in.

    2. The insured pool will shift to more high-cost customers, and the insurer will need to increase premiums to the new average or else lose money.

    3. When premiums rise, even more healthy people will opt out, further increasing the average costs of the insured pool, forcing the insurer to raise premiums even higher.

    4. The market spirals out of control with no equilibrium.

  7. The only economically viable options are:

    1. Charge a fixed price and force everyone to participate, effectively making insurance premiums a tax, or

    2. Underwrite each individual's premiums to their actual risks.

  8. I got the silver bullet!... why don't we give free healthcare for all and control overconsumption by making all treatments horribly painful (sort of like - you get a golden chalice, but some guy gets to punch you in the face).

    Alternatively, we can subsidize smoking, heavy drinking, overeating, and a sedentary lifestyle (all of which contribute to lower lifetime healthcare costs).

  9. The girl in the pic is kind of cute, even with all the blood.

  10. We have had enough experience with unregulated economic greed to know that the speculators and middlemen cannot be trusted to manage energy, defense, natural resources or insurance without collusion and waste built into guaranteed profits.

    We do? Where?

    Our congress is, and has been, a pawn in the hands of corporate magnates at the expense of polluting air, soil and water for short term private gain.

    How could that happen? Oh, right, when politicians control buying and selling, the first thing to be bought and sold are politicians.

    The legislature has subsidized corporate failures after decades of unrestricted outsourcing of jobs while reducing our investment in health and education.

    So then the problem is government, not an unregulated market.

    The only resources necessary for an independent nation is management of all resources, including the health of its people for the people.

    Managed by these legislators: "The legislature has subsidized corporate failures after decades of unrestricted outsourcing of jobs while reducing our investment in health and education."

    Or, is it that all this will work if we just get the right people in charge?

  11. Oh, for fuck's sake. There is no reasonable expectation that any particular business model, let alone a middle-man model, will last forever.

    Bloody insurance companies do nothing but add to health care costs, slow down the response time of the medical system, and cock-block needed care and medications. You think otherwise, you're math challenged. Lawyers likewise.

    Get rid of the insurance and lawsuit roles in medical care, institute a NON-profit tax collection each year on actual medical costs for the past year, and you'll have provided healthcare for the nation.

    It'd save us incredible amounts of money; improve the health of the nation; provide a strong forward impetus to the economy; and get rid of two entire classes of parasitism.

    Just as it is only sensible to educate the populace, and only sensible to provide transport infrastructure, it is only sensible to keep the citizens healthy. Some things are just too critical, expensive and/or complex to expect the individual to be able to manage. Health care is one of these issues.

  12. "Let us begin with the premise that health is not a commodity."

    Two broken legs right out of the gate. And there's only one remedy for that.

  13. I actually read a very interesting article on healthcare costs here (forive me if this is a bit older).

    Really looks at incentives for care, and how it's possible to have lower costs and higher results.

    Really this makes sense though. Our current system rewards bad behavior (to many tests etc) and punishes good behavior (order those extra tests or you will be sued).

    Just like with mortgages, bad incentives wreck the system.

  14. If a public plan would be such a nightmare, why suppose private insurance would fail to compete ?


  15. If a public plan would be such a nightmare, why suppose private insurance would fail to compete ?

    Why so scared:

    The public option won't beat the private market. It will fail, and as such, the government will continue to bolster it with ever-increasing subsidies and costs, and ever increasing regulation on the private sector-- regulations which predictably won't apply to the public option-- until the private options are squeezed out. Leaving the public option as the only "option". See my previous prediction here.

    Imagine yourself going into the bowling alley business, when your primary competitor can simply print more money if his business model continues to fail against yours. How long do you think you'd last?

  16. If a public plan would be such a nightmare, why suppose private insurance would fail to compete


    (a), insurance isn't healthcare or anything to do with healthcare; it is a gambling mechanism designed to siphon off money that is derived from poor consumer bets on the insured issue, and like all sustainable gambling mechanisms, it is designed to favor the house (the insurance company);

    (b) if the money spent on healthcare exactly equals the cost of said healthcare, then there is no extra money being spent that can go to the house -- no gambling is going on -- so the insurance path is inherently *far* more expensive than the pay-for-costs path.

    (c) The government "insurance" model is a scam specifically designed to keep the insurance companies in business. The insurance model is inherently broken in that it utterly fails to provide healthcare for the poor, it incurs large costs above and beyond the healthcare, it blocks meds and care and tests in arbitrary ways, and it exacerbates the other major artificial price increase in the current system, the lawsuit problem, by screwing up what the doctor would do if simply left to provide what they think is the best course of care for any particular patient.

    The correct answer is:

    1: Provide the healthcare required
    2: Total the costs
    3: Recover the costs at tax time
    4: Any padding, intentional harm, insufficient care, etc, use criminal law to address. No lawsuits.

  17. The public option won't beat the private market.

    You're still talking about insurance. The optimum solution isn't insurance. Insurance is a scam, no matter *who* sets the odds or rakes in the profits.

    As long as you try to protect the insurance industry, you will continue to fail to come up with a viable solution. Because they are parasites; and protecting parasites is self-destructive. You should be looking for ways to eliminate the parasites entirely. They're a sign of a sick economic system, bleeding off energy into irrelevant backwaters for no actual benefit to the host.


    It's official. America and the World are now in a GLOBAL PANDEMIC. A World EPIDEMIC with potential catastrophic consequences for ALL of the American people. The first PANDEMIC in 41 years. And WE THE PEOPLE OF THE UNITED STATES will have to face this PANDEMIC with the 37th worst quality of healthcare in the developed World.


    We spend over twice as much of our GDP on healthcare as any other country in the World. And Individual American spend about ten times as much out of pocket on healthcare as any other people in the World. All because of GREED! And the PRIVATE FOR PROFIT healthcare system in America.

    And while all this is going on, some members of congress seem mostly concern about how to protect the corporate PROFITS! of our GREED DRIVEN, PRIVATE FOR PROFIT NATIONAL DISGRACE. A PRIVATE FOR PROFIT DISGRACE that is in fact, totally valueless to the public health. And a detriment to national security, public safety, and the public health.

    Progressive democrats the Tri-Caucus and others should stand firm in their demand for a robust public option for all Americans, with all of the minimum requirements progressive democrats demanded. If congress can not pass a robust public option with at least 51 votes and all robust minimum requirements, congress should immediately move to scrap healthcare reform and request that President Obama declare a state of NATIONAL HEALTHCARE EMERGENCY! Seizing and replacing all PRIVATE FOR PROFIT health insurance plans with the immediate implementation of National Healthcare for all Americans under the provisions of HR676 (A Single-payer National Healthcare Plan For All).

    Coverage can begin immediately through our current medicare system. With immediate expansion through recruitment of displaced workers from the canceled private sector insurance industry. Funding can also begin immediately by substitution of payroll deductions for private insurance plans with payroll deductions for the national healthcare plan. This is what the vast majority of the American people want. And this is what all objective experts unanimously agree would be the best, and most cost effective for the American people and our economy.

    In Mexico on average people who received medical care for A-H1N1 (Swine Flu) with in 3 days survived. People who did not receive medical care until 7 days or more died. This has been the same results in the US. But 50 million Americans don't even have any healthcare coverage. And at least 200 million of you with insurance could not get in to see your private insurance plans doctors in 2 or 3 days, even if your life depended on it. WHICH IT DOES!

    If President Obama has to declare a NATIONAL STATE OF EMERGENCY to rescue the American people from our healthcare crisis, he will need all the sustained support you can give him. STICK WITH HIM! He's doing a brilliant job.



    Join the fight.

    Contact congress and your representatives NOW! AND SPREAD THE WORD!

    God Bless You

    Jacksmith - WORKING CLASS

  19. d-

    Just say if you want to sell health insurance in the USA, you charge the average risk for the US, per person, and accept all comers.

    Even (Gasp!) smokers?

    Otherwise, Russ R. beat me to it...

  20. Thank God the libs have underestimated the average intelligence of America. We're still smart enough to know that if something sounds too good to be true, it probably is.

    Fighting this totalitarian idea tooth and nail, let's not give the government the key to euthanasia.

  21. I know you won't be able to grasp this, Ben, but I'm still compelled to point out that the government is the most parasitic of middlemen in our system. All you want to do is trade a parasite for well-armed parasite.

  22. Let's compare the patterns of a capitalist business system with the patterns of a public system.
    Someone above said something about a bowling alley. What if you owned one? Would you want to compete with the gov't?
    Well, no, but lets say we left it all private then, and these bowling alleys continue to compete. They expand, get better, and have more quality. They open new bowling alleys. Other bowling alley businesses move into the area. More and more advertising is used to draw more and more people to come bowl, to drive up more profits per month, per year, etc.

    If hospitals are private, they will depend on profit in order to become better hospitals. Ones that succeed, and get more patients, make their hospital better. Ones that fail gradually deteriorate until government restrictions on health code are exceeded, and they shut down (thank god for gov't *something*, eh?)
    But companies and businesses don't just taper off at a high quality level. They have to keep expanding (look at McDonalds, Starbucks, WalMart), they have to increase profit per month, and per year - and that means more patients and/or higher costs.

    Leaving the health of our bodies and minds in the hands of someone who is more concerned with profit than they are with our health is... unreasonable.

  23. Let's first ask the question of why it costs $120 for a 20 minute office visit (as it did for me a few months ago). Greedy insurers, lawyers bureaucrats? All of the above? None? I really don't believe it's just one batch of people or policies but rather a toxic mix of opportunism and abuse.

  24. Leaving the health of our bodies and minds in the hands of someone who is more concerned with profit than they are with our health is... unreasonable.

    So, Lauren, what is it about health that makes it different from any other consumer good? Why doesn't the food industry, for instance, contain the same kind of booby trap for consumers?

    There's nothing about health care that makes it operate under different laws of economics than other industries do. Until enough people acknowledge that, the health care debate will be chronically stupid.

  25. the once preordained inclusion of a public plan now looks increasingly diceythe once preordained inclusion of a public plan now looks increasingly dicey

    This is the first thing in news that resembles a ray of sunshine that I've seen in many, many months.

    Now it may not in fact be actual sunshine. But at least it's not an active hurricane.

    Imagine if you can: ObamaBoy pisses off enough people that he can't jam either his ObamaCare or Cap and Trade agendas down our throat. Somehow, between a few Republicans and a few old school (like LBJ era) Democrats, we get a situation that looks a little like the Clinton years.

    Is it possible? Possible that by the time ObamaBoy is done with his second term, congress (via the American people finally saying enough is enough) forced them all to do something about the out of control spending?

  26. I'm still up in arms about UHC. I do not see the Dems letting this one go. But there is so little rational thought about the subject, it blows my mind.

    What happens when there is a commodity which is desired, but artificially priced so high that no one can afford it, or regulated into illegality?

    A black market forms, right? We've all witnessed the explosion of power enjoyed by the drug cartels in Mexico, right? Where did they get all that money? The black market which operates in America, and exists solely because of government regulation!

    Or the rise of the American mafia on the backs of bootleggers back in the Roaring Twenties. Heck, look at how much money the Kennedy's made running moonshine!

    Or the street corner "watch salesman", who opens his coat and will sell you a real gold Rolex for half price? That's a black market. Every where in our society, where the "legal market" doesn't fulfill the desires of the common man, he says screw the "legal markets" and operates with illegal ones.

    Where is the health care black market?

    In the movies, when the Mafia guys get shot up, they always go to their mafia doctor. He's in a private setting, unregulated, they operate in a cash only system...

    How many of you know one of these doctors? Not to common, huh? Think about how many of you could find a bag of marijuana tonight if you wanted to. If there is a need that is not being satisfied by our current markets, why hasn't an illicit market sprung up to meet those needs? Hmmmmm...

    Maybe because the system isn't really broken and enough people already get what they need without having to resort to illegal means?

  27. OMG... I love it, it's economic ignorance day already!! 7:45 AM and starting off right.... YEAH!

    I don't really even want to contribute... I think I just want to watch the continuous stream of *fail* that is being unleashed on this comment board.

    I've already gotten:

    Ben - Who thinks all insurance is parasitic and can't possibly conceive of a use for risk-pooling (Does he feel the same way about paying for firemen? Homeowners insurance?)

    Lauren - Who sees the virtue in competition, until at some magical point businesses keep trying to expand well beyond their potential market and then become a problem somehow... but only in Healthcare (Has she not considered that if supply is overproduced - i.e. there are too many hospitals and too many doctors - that the asking price will go wayyyy way down, and then many of those extra hospitals will go out of business until a more rational equilibrium has been ment?)

    Why so scared? - Who fails to grasp the differences of a competitor in a free market where no one has any specific advantage other than quality of services and a "competitor" who gets to also be the referee, write the rule book and play with guns.

    ...and a dozen people who desperately want to believe that greed, and not government coercion is the thing that makes healthcare so much more expensive than we all think it "should" be. Plus a respectable number who just think that health care operates in some parallel universe where the laws of economics are inapplicable.

    Ooooh what a day it's going to be!

  28. Why does anyone still listen to Tom Daschle? He is a known liar and has been disgraced many times and yet he has the unmitigated gall to talk about " would simultaneously lower costs, expand choice, and improve patient access." Oh well, the stupid, uneducated part of our society that believes in free lunches will undoubtedly believe that the government can provide a "perpetual motion machine" that costs nothing and can power the world with no environmental impact. Go figure!

  29. How about we reward Americans who choose not to SMOKE, Drink alcohol or eat in excess? How about those healthy folks who come to my office only 1-2 times per year? One to get the Flu shot (I think it is absurd for a young healthy individual to be immunized with the Flu shot,) and the other to get a routine check up (which should be done every 3-5 years for healthy men and women under the age of 40.)

    How about Americans take a second look at WHY they are going to the Doctors office. Too often I see people in my clinic coming in for trivial BS that they could handle at home or on their own if they took five minutes to evaluate their own health.

    Colds, bumps, bruises, hiccups, a day or two of diarrhea is not a reason to go to the Drs. Often people become sicker from going into a clinic after being exposed to people who REALLY need to be there.

    I think the Health care reform needs to start with the individual.

    Put down the coke and snickers, and walk up the stairs instead of taking the elevator.

    I refuse to be punished because of another's poor vice.

    Why charge me such a high premium if I only see a ND? By historical figures tend to be 50-60% cheaper than going to an MD.

    And one doesn't even have to see an ND; they can see a PA, NPA or a NP.

    We need to stop the blood letting of American tax paying dollars by applying a little common sense to Health care.

    Self Care.


  30. p.s A large portion of Health care cost is elevated because of abuse. See the New Yorker Article on the Hospital in McAllen Texas, vs. the El Paso Texas hospital. a Great article. ( sorry I don't have it saved here at the office)

    The author goes DIRECTLY to the source of the problem.

    When Doctors become business men and own hospitals. They tend to order more test, to receive more of the insurance payment.

    Its a shady business.
    Kind of like Judges owning jails.

    A slight conflict in interest.


  31. Many of the readers here will be familiar with the McAllen Texas story - medicare pays more in McAllen than anywhere else, with no increase in measureable benefit. Most have heard that the US pays the most for healthcare, but again has no measureable benefit above those who pay less.
    In the 1970's, a Rand study was done comparing essentially people who had health insurance against people who didn't.
    Hate to break it to people, but healthcare is useless - - yeah, some successes are visible, most failures (hospital infections) are invisible. Yeah, its nice not to pay out of pocket for a broken arm, but get cancer and you die - they diagnose it earlier, which gives the illusion that there is progress being made, but a lot of money for vanishingly small benefit. I don't care how they finance health insurance, because you are healthy until your not.

  32. Here is the link to the New Yorker article again.

    It's important to align incentives correctly. For doctors, AND patients just like anyone else.

    People should pay for poor lifestyle choices, and doctors should be paid for results, NOT by doing the most tests they can.

    Also, for those that think profit shouldn't be a factor at all, do you think people spend all that time in medical school etc for nothing? Or the companies that spend billions developing pharmatcuticals?

    There needs to be a balance. people need to be rewareded for their hardwork, but you don't want to skew the system to reward irresponsible behavior.

  33. Sugarfree spun his molecules leftward to emit the following tripe:

    I know you won't be able to grasp this, Ben, but I'm still compelled to point out that the government is the most parasitic of middlemen in our system.

    I know YOU won't be able to grasp this, but our task is to get the government under control. Not to knuckle under to its failures. You can't control private enterprise, but the government is supposed to work for us, it isn't there to make a profit or to waste our money. Now, if you want to point your nipples north and let the government continue downhill, that's fine. You can line up for your yellow stripe with the rest of the sheep.

    The government should be building transport and communications infrastructure, managing basic utilities, maintaining a strong defense, educating the populace, and providing healthcare. Because these are not things sane people want private enterprise metering out based on individual income, or lack thereof. These are areas where private enterprise is the disease, not the cure.

    I'm all about the free market and reduction of government until we're talking about people starving, directed into ignorance, or dying of a curable disease. At that point, you can take your free market and your government reduction and shove both of them right up your selfish ass. These are real people we're talking about, not points in your stock portfolio.

  34. Brian demonstrates his sub-100 IQ:

    So, Lauren, what is it about health that makes it different from any other consumer good?

    Healthcare is what keeps your beloved spouse, parents and children from dying a horrible, painful death as a consequence of something curable.

    A consumer good is what allows you to watch Lost and Faux Newz, or dial up that country song to listen to. You know, the one about your boots, your dog, and the bar.

    That clear things up for you, little buddy?

    Were you born without compassion, or is this simply the result of a head injury?

  35. Sean W Malone successfully resists anything remotely resembling comprehension, and sallies forth with the following 100% clue-free remark:

    Ben - Who thinks all insurance is parasitic and can't possibly conceive of a use for risk-pooling (Does he feel the same way about paying for firemen?

    We pay the *government* for firemen in a form of profit free risk pooling exactly as I advocate we do healthcare. We do this, because it is unacceptable to let Joe's house burn because he can't afford bring-the-firetruck insurance. Instead, we figure out the total cost, divvy it up in taxes, and everyone gets firetruck service, even the no-tax-paying guy under the bridge, should his cardboard box catch fire.

    Healthcare is similar. If a house burns down, the next house may catch. If the guy under the bridge catches and incubates [insert biological horror here], anyone may catch it, including you, with your insurance. If disease X occurs, and we only study it when some rich person gets it, the cure won't be ready when the rest of us need it. So we need to look at everyone, keep everyone's health up, just like we need to keep everyone's house from burning. And of course, healthy people tend to be more productive than unhealthy people. That's a given. They have more energy, fewer worries, less pain, more up time, and clearer heads (by the way, are you ill?)

    Now, what you suggest is that the firemen only come if you pay them. That is the position of a dumbshit. Trying to make the same case for healthcare is also the position of a dumbshit. It is shortsighted, harmful to the community in general, and retards progress in an area where we all eventually benefit from progress, and where any of us may, like a fire, catch a problem in an unanticipated manner.

    When you defend the insurance industry, you're not defending "risk pooling". Taxes and then redistribution across the population is risk pooling too - like firemen, as you correctly point out. The difference is that for the insurance industry, we're paying a bunch of profit to parasites, profit that does *not* go towards healthcare. This money is wasted. With a properly controlled tax and redistribution program, all the money that comes in goes back out on target: taxes for healthcare go for healthcare. To the degree this isn't so, we can change it if we work at it, because the government works for us.

    But what about government salaries, I hear you cry? GOogle is your friend.

    Arthur F. Ryan, chairman, CEO and president of Prudential Insurance Co. of America received the highest compensation among insurance executives in 1999, making $7.189 million dollars. Compare that to... oh, the president's salary. OR anyone else's in government. Not happening.

    7 MILLION DOLLARS. That's a lot of health care, sonny. That is why insurance companies are a very poor choice for pooling risk. They brutally skim the pool, and the pool is therefore far more expensive than it needs to be, without any benefit to those in the pool. Whereas if the money in the pool is spread over people who contribute little or less, there *is* a benefit to the others in the pool, including the payers, because a healthier nation means a healthier, richer YOU.

  36. Ben:

    If health care were run like fire fighting service as you propose, it would be like whenever someone burns a bag of popcorn in the microwave the engines are summoned.

    Unless there was some sort of penalty (fines) or screening process (911 dispatchers) in place to weed out those who don't actually need health care services and think they do, there will be much abuse of the system.

  37. Yeah, this thread wasn't as fun as I thought it was going to be... it was mostly just ben being a self-aggrandizing moron and not understanding how dumb he is...

    LAME. F-

  38. Insurance is not parasitic, when structured properly it works like this. I have a 10% chance of getting cancer and another person has a 15% chance, and the treatment will cost tons of money. I'm unwilling to risk incurring medical expenses that bankrupt my family, but since the insurance company can sell multiple polices and it is an extremely unlikely event that everyone gets cancer it will bear that risk for me in exchange for a premium because in the long run it will make money. In this way everyone wins, if I get sick I don't have to pay astronomical costs, and the company is able to earn a profit.

    Health care may keep a spouse alive, but so does food, clothing and housing and free markets seem to work fine in those areas.

    Health care costs are out of control primarily because government quashes interstate competition, heavily regulates instate plans to subsidize various disease and provider lobbies resulting in adverse selection, underpays doctors participating in medicare and medicaid passing off costs to private consumers, and encourages employer based health coverage through the tax code. Employer based coverage further separates the individual purchasing healthcare from the costs of providing it, and creates a circumstance where individuals have few choices other than the employer provided plan because no other options can be bought with pre tax dollars. Finally, the government fails to take action to rein in frivolous lawsuits that raise mal practice premiums and encourage defensive medicine.

  39. Also, there is the belief out there that we currently have free market health care; that is definitely not the case given that government directly controls half of health spending through medicare and has heavily regulated and subsidized certain parts of the industry as I previously mentioned. Lets give individual freedom a chance.

  40. As for this idea that healthcare is to complex for the individual to manage, well if an individual can't understand how to take basic care of himself and manage his own affairs, how do we expect him to be able to vote on such complex matters such as war and peace, international trade, and energy policy? There's a slight inconsistency in the view that the individual is qualified to select the leader of the free world but just can't quite handle the decisions involved in purchasing health care and health insurance.

  41. Tim, I agree overall with your points,

    however while an individual should be competent to pick out different insurance policies, or make basic chocies about his health,

    it's different when it comes to evaluating many methods of care. If a doctor presents you with a number of different health care options, for treating something like cancer etc you are probably going to go with what he says becuase you don't have the knowledge to evaluate the treatments. If you did, you wouldn't need a doctor.

    The key here then is to make sure the doctors have the right incentives to recommend the best treatments, NOT to recommend extra tests because they are afraid of lawsuits, and NOT to recommend treatments because it will improve their bottom line.

  42. I agree with you too on incentives, its just that government by kow towing to the trial lawyers and unfairly advantaging the fee for service system through medicare has largely caused the misalignment of incentives in the first place. In a free market system, if doctors did those things you suggest they would lose customers. However, we don't have one of those.

    Also don't forget most employees don't have multiple options to choose from when purchasing healthcare from their employer, a system that is encouraged by the government.

    Get the government out of healthcare except for the truly poor and truly disabled, and create a loser pays legal system and the problem is solved.

  43. As an illustration of how stupid government meddling is, they talk about cost shifting instead of cost cutting.

    I'd like to add that, as one poster hinted above, over-utilization is another driver of cost.

  44. If we treated car insurance the same way we treat health insurance your auto insurance company would pay for all your maintenance costs. Oil changes, new windshield wipers, radiator flush, new tires, no problem. Now imagine how expensive your car insurance just became. It doesn't work that way thank god or an oil change would cost upwards of $200. Want to drive down cost of maintenance health care and protect yourself against big ticket items take a cue from the auto insurance industry.

  45. This issue is B.S. If 'the government' were to take an economical approach to providing healthcare, they would do as follows: Open up one(1) federal hospital in each of the 50 states. Offer medical services at no charge on a first come, first-served basis, and keep all related costs on public file and display.

    How do they do it? Simple. You pay one doctor 100k/yr. You pay 10 doctors 1M/yr. You pay 100 doctors 10M/yr. You pay 1000 doctors 100M/yr. You centralize the activity. You put staff on payroll to support the doctors. Hospitals are publicly funded, hence publicly accountable, and every copper penny is accounted for. Private practices can be paid for by private people with private money. But, if 'the government' is going to be involved, you're headed for the state hospital, period.
    Run-amok federal funding of healthscare has resulted in an open-ended taxpayer liability with no parallel, save education and defense.

    The United States is currently 12 trillion 'in the red', working on 13. How much debt are we able or willing to carry in order to provide all things to all people? Only your healthcare lobbyist knows for sure...

  46. My only point is that if you take the Bible straight, as I'm sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won't get the full deal by just doing regular skill english reading for those books. In other words, there's more to the books of the Bible than most will ever grasp. I'm not concerned that Mr. Crumb will go to hell or anything crazy like that! It's just that he, like many types of religionists, seems to take it literally, take it straight...the Bible's books were not written by straight laced divinity students in 3 piece suits who white wash religious beliefs as if God made them with clothes on...the Bible's books were written by people with very different mindsets.

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