Key Republican Troubled That Public Option Is "Cheaper," Has "Clear Advantages"
If you ask most people whether politicians should be in the business of providing Americans better services at lower costs they'd probably say yes. But Rep. John Kline (R-MN)--ranking member of the House Education and Labor Committee--seems to believe just the opposite.
"There are some things in this legislation that I find particularly troublesome," Kline told Minnesota Public Radio. Specifically, he was thinking of the public option. "[O]ur fear is that if you actually get in there looking at the legislation that it's set up in a way that employers would increasingly opt to letting their employees move over to the public, to the public option. And because it is cheaper, it's designed to save money, which the government-run program has some very clear advantages, and the claims that it's gotta pay for itself that through the first three years of this there would be government subsidies."
Ummmmm...yeah. Sounds terrible. You can listen to the whole thing here, but the key moment begins at about 3:35.
Early indications suggest that the public option will much more than pay for itself. But no matter. I assume that public opinion polling must show overwhelmingly that Americans want to pay more for health care so that insurance companies don't have to contend with a superior, cheaper competitor. Otherwise it's hard to understand Kline's statements anything other than a call to subsidize insurance companies--and no elected official would ever stand for that.
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To be fair, some of his concerns are legitimate.
1. If the "take or pay" cost for employers is much less than what they're already paying for employee coverage (it is in most cases) there will be a big incentive for employers to drop coverage. I'm not sure it's that simple and there are other reasons employers would continue coverage, but it's still a legitimate concern.
2. If the system is cheaper because of taxpayer subsidies, then it's not really "cheaper". The system should pay for itself. Maybe it can and maybe it can't, but it's a legitimate question - particularly since most of the funding decisions are still, well, undecided.
July 13, 2009 5:28 PM | Reply | Permalink
If the public system covers only people who can't afford private insurance or have pre-existing conditions that make them expensive, then there's no way it can function without subsidies unless it charges enough in premiums, which means it would be no more affordable than private insurance and we're right back where we are now.
Unless it includes the healthy and wealthy too, in other words a genuine single-payer system where we're all in one big pool, then it will have to be subsidized.
July 13, 2009 5:41 PM | Reply | Permalink
There definitely has to be some risk-adjusted considerations.
Denying coverage for pre-existing conditions will be illegal for even private insurers under the reform plans. But there still could be a greater percentage going toward a public plan, which could skew the results of the public plan.
July 13, 2009 5:56 PM | Reply | Permalink
Exactly! People working jobs that don't offer health insurance and those with pre-existing conditions as well as people over 50 years old will be first in line for government health care. But their salaries will not be on the level necessary for the system to grow on its own. It'll need health people who use medical services rarely, just like the for-profit industry.
July 14, 2009 9:25 AM | Reply | Permalink
I think you need to read up on the issues there. The "legitimate concerns" that you pose don't even make sense.
1.If employers find savings, there will be more incentive to have coverage for their employees.
2.The system will be cheaper because of cost savings (administrative) and competitive pricing not subsidy.
There is no legitimacy to the congressman's contentions, only shameless biding on behalf of the insurance industry.
July 13, 2009 5:53 PM | Reply | Permalink
Really? It's nice to hear from someone so well informed. Perhaps you can enlighten me.
1. How much of a saving will employers have to find in order for the health care cost not to be significantly more than the take-or-pay cost?
2. If the system will be cheaper because of cost savings, why does the CBO estimate the cost at $1 trillion over 10 years? Why is there so much debate over how to pay for this?
July 13, 2009 6:07 PM | Reply | Permalink
Re: #2 - The CBO scores government expenditures. It doesn't score private expenditures.
July 13, 2009 6:12 PM | Reply | Permalink
"Why is there so much debate over how to pay for this?"
Best friend, I'm no expert on insurance, but that's a tell. Why is their controversy? Who benefits from the controversy? Some of the people in this "debate" are paid to debate. A lot. Debate itself doesn't mean anything of substance.
July 14, 2009 12:40 AM | Reply | Permalink
That debate, mbf, is not the correct debate. This fear of spending 1 trillion over 10 years is quite ridiculous. The U.S. government already spends over 1 trillion per annum on health care expenditures. Spending 1/5th of that per year in order to bring down overall costs (public as well as private) while providing affordable coverage for all Americans is a quality investment. The alternative is to spend the same 1 trillion in rising costs after 10 years and have nothing to show for it except a bankrupt country. Perhaps you prefer the alternative but it's quite revolting.
July 14, 2009 3:02 AM | Reply | Permalink
Healthcare costs us about $2.4 Trillion/year. Our healthcare costs are increasing at a higher rate than all but two OECD nations at about 4.6% per year. Using the $1T/10 year number that was projected as a cost of this program, that extra $100B/year equals about a 4.2% increase in healthcare costs. A fairly minor investment if we can realize any overall savings at all.
July 14, 2009 4:11 AM | Reply | Permalink
The cost arguments are all fiction. No one knows how much this is going to cost and it can't possible pay for itself in the short run without leaving tens of millions still without healthcare.
We should finance this as we do Rep. Klein's cherished priority - war. Pretend it is free, pay for it off the books, and maybe in a decade or so if we get good at it, it will pay for itself. Of course, that hasn't worked with war, but we're still pretending it's free.
July 13, 2009 6:23 PM | Reply | Permalink
That pretty much sums up the reality, except that if everyone who CAN pay, pays a reasonable premium towards a shared risk group, it WILL be paid for (except for those who simply can't -- now covered under Medicaid.
You're right - we really don't know all the costs, but they are majorly hyperinflated, and based on the idea that there will be "FREE HEALTH CARE FOR ALL, PAID FOR BY TAXES!" That is not, nor has it ever been --- the plan.
July 13, 2009 8:02 PM | Reply | Permalink
I guess it depends on how you view human nature. I understand your argument. If it's free some will overuse. I have a boss like that but she does that with our employer paid plan already. But paying taxes isn't free as any Republican will tell you. I do believe all who can afford it should be taxed. But I believe the taxation should be progressive. Insurance premiums are not progressive. I don't have any trust that the insurance policies under this plan will be fair. I fear the loop-holes. I fear the bait switch to under-educated, busy, lying to themselves, consumers -- choosing the cheap policy which doesn't provide enough coverage for real needs.
I don't have any illusions that a government plan would be perfect or even very good, but the government doesn't usually flagrantly lie about what you are entitled to get. You get what the law says you get and if you don't like that you can at least bitch to your Congressman, but the insurance industry will be hiring every unemployed attorney to staff up to figure out how to game anything passed by Congress.
Real world example. Who thinks they don't need insurance? People in their twenties. They are healthy. Yes they are! Right up until they are not. An extended family member in her twenties has been in the ICU for more than two weeks with meningitis. I can't even imagine what that is going to cost and though I don't know it for a fact my guess is that her insurance knowing her state and her job is just absolutely dismal. Would she be better off under the plan Congress passes? We won't know till the attorneys have read the fine print.
July 13, 2009 8:37 PM | Reply | Permalink
Big picture: Republicans have been trying to undermine government programs created for the public benefit since the New Deal. Their mantra since Reagan has been Government IS the Problem. Nothing scares them more than the populace realizing that government can, in fact, do good.
We know, absolutely, that government-run health care is more cost-effective and provides better care to more people. How? Because every other developed nation in the world has some form of government health care, with lower costs, lower mortality, and better coverage. Or look at the huge administrative savings in medicare and the VA compared to private programs. A government program hiring the same doctors, nurses and administrators at their current salaries, and buying the same equipment, buildings and infrastructure would save money because, if nothing else, they don't have to pay shareholders profits. Factor in the ability to negotiate lower prices for drugs and the ability to efficiently evaluate the cost-effectiveness of treatment options, and you have even more guaranteed savings.
As employees realize that a government plan is easier and cheaper, they will switch. As employers realize that a government plan is easier and cheaper, they'll get out of the insurance business, too. Frankly, it is amazing to me that the largest employers aren't leading the charge for a government plan. Eventually, we'll have a single payer system, either de facto or by further legislation, and the people will see it, and just like people in every other developed country, they will come to see it as both their right and the government's obligation.
Once people start realizing that, then "tax and spend" is no longer a scary proposition, but instead the very purpose of government. And that's the fear. The more it works, the more people would learn that Government is not the Problem, only BAD GOVERNMENT IS THE PROBLEM. And people already overwhelmingly associate the Republican brand with BAD GOVERNMENT
July 13, 2009 9:46 PM | Reply | Permalink
I still don't understand the problem.
Inherently, the public option, or single-payer-if-you-want-it, will cost no more than the current system. It will simply monetize all the current externalities (lost productivity, early deaths, chronic illness, inefficient labor allocation due to insurance-program-handcuffs, bankruptcies, broken families due to dead parents/children, emergency room expenses and charity wards) that result from people with no or partial coverage, and place them all in one single-payer bucket. These costs, as well as the currently dollar-denominated costs and outlays either account for the profit margins or the lack of profit margins in the current privatized system.
It will end up LOOKING like it costs more, but inherently, it can't.
Face lifts, boob jobs and Viagra not withstanding.
July 14, 2009 12:16 AM | Reply | Permalink
That opposing a public option means favoring taxpayer subsidies to insurance companies is a very powerful way of framing the issue, and I wish that Democratic health reform advocates from the President on down would adopt it.
July 14, 2009 9:29 AM | Reply | Permalink