Schumer v. Grassley, Face the Nation
Filed under: Private Insurance, Proposed Legislation, Public Plan
On Face the Nation, Senator Chuck Grassley reaffirmed his opposition to a public option, stating that “the power of government is an unfair competitor.” He also, however, expressed an openness to health care cooperatives, if they are “in the area of what we have known in cooperatives in America– and there’s even a few insurance cooperatives already operating in America– if they’re within what we have known of cooperatives and the concept of cooperation for the last 150 years, I think we can reach a favorable compromise.”
This may be too much to ask, but Senator Grassley (or at least his staff) follows this blog on Twitter– or at least did before this post. But as regards the failed history of health insurance cooperatives in America, the essentially moribund state of those cooperatives which do still exist, and the difficulty of implementing an effective cooperative plan, he might be well served to read these posts by Professors Timothy S. Jost, “Jost on Cooperatives,” and Tim Greaney, “Market Entry by Health Care Cooperatives: Neither Quick nor Easy. ” Might I also suggest that as we look to reform healthcare in America, the spectre of legislating anew “what we have known” and functioned under is not particularly reassuring. The prospect of “overhauling” health care is appealing simply because “what we have known” doesn’t work.
And I guess the question is, with a filibuster-proof majority in the Senate, a proposal which includes a Public Option making its way out of the Senate’s HELP committee, and a similar proposal emanating from out of the House, ultimately how essential to the issue is what Chuck Grassley thinks ? Yes, he can wrangle and tie up a bill in the Finance Committee– but he and his Republican comrades in private insurance arms can’t tie up all the bills– nor do they have enough votes to quash, or even do more than delay a vote on a bill before the Senate for a mere 30 hours post-cloture. With the advent of the Democrat’s filibuster-proof majority, as long as those Democrats can muster the political will, might I suggest that Senator Grassley’s position has been relegated to being nothing more than a day plus 6 hours of inconvenience? But sure it would be nice to have the benefit of Senator Grassley’s expertise in health care. Just as it would also be nice to have the entirety of Congress along for the ride instead of kicking an screaming and casting blame and aspersions along the way– but the American Public has seen fit to no longer grant the Republicans more than a “suggesting” seat at the table: their vote no longer essential, their power diminished accordingly– their views relegated to their own merit or lack thereof, void of the political power derived from a substantial bargaining position. Under these circumstances a compromise which leaves us with “reform” void of substantive change in the form of a public option is both unnecessary and, might I say, the result of a failure of will and command.
However, faced with strident opposition to the Public Option from Senator Grassley, the realization of Democratic Party power was evident in Senator Schumer’s response. Schumer cited the “strong public option” contained within the current proposals from both the House and the Senate’s HELP Committee and stated that in “the Finance Committee, we’re trying to come to some form of compromise. But make no mistake about it, the President’s for this strongly and there will be a public option in the final bill.”
Spoken like a man with all the votes he needs.
Healthy Competition? How a Competitive Health Insurance Market Influences Cost
With the Obama administration’s brisk movement on health care reform in recent weeks, there is an increasing amount of dialogue about the administration’s desire for a government-based public insurance option. Advocates of the “public plan” argue that a government option would force private insurers to compete on price and quality. A common refrain from those opposing a public plan is that such a plan would leverage government capital and regulatory power to bargain down prices, which would decrease competition and consumer choice by overpowering private insurers. Since market competition is a resonating theme throughout the current discussion of health care reform, it would be constructive to discuss what we currently know about the role of competition in the health insurance market.
The American Medical Association found that, in 2008, 94% of the markets for health insurance were highly concentrated. By itself, this figure may not be troubling. However, in that same year, a survey by the Kaiser Family Foundation found that wages had grown by 29% whereas the average insurance premiums had grown by 120%.
Two questions arise. First, how does consolidation in health care markets affect consumer cost? Second, how does increased consolidation in health care markets affect the quality of care? This post will focus on the first question. A subsequent post will concern the role of competition on the quality of care delivered.
With regards to cost, a widely cited study by Wholey et al. found that a larger number of HMOs is related to lower HMO premiums. Specifically, Wholey found that highly competitive markets with 17 competitors and 45 percent HMO market penetration had 11% lower premiums than those with average competition. For additional findings see also this study. In their 2008 testimony regarding the potential Highmark BCBS and Independence BCBS merger, the University of Pittsburgh Medical Center analyzed data from the AMA and the Department of Justice, finding that states possessing a greater diversity of market participants have, on average, 12% cheaper premiums.
However, it would be incorrect to presume a simple relationship between cost and competition. For instance, one study found that there is a competitive influence of increased HMO penetration on non-HMO premiums, and that increased HMO penetration can slow the rate of growth in addition to simply decreasing costs.
Moreover, the ability of a competitive marketplace to lower costs can be explained by factors other than the increased leverage of insurers in concentrated markets. Read more
