Compromise is a Dirty Word

I don't know whether to be appalled or not. Those of us who like the geer helplessly at the sidelines of American politics have by now grown accustomed to the fact a half-way decent piece of legislation in Washington is a piece of legislation that will die a slow, ignoble death in committee. Occationally a bill is passed that, despite the predictable bloat, unquestionably serves the common good. And when such a bill comes along and, wouldn't you know, is actually passed, I can't help but feel a little let down. The warm embrace of disappointing compromise is familiar and expected and safe. If something good is actually going to come out of Washington, I would at the very least like to see a Mr. Smith moment. But instead, these moments pass as, or at the very least, exactly like business as usual and the fact that these corruptable assholes can just as easily turn around and vote with half a conscence reminds us that they were there to do it the whole time--sitting on their hands and collecting contributions.

But I don't know about the latest House health proposal. I think it would be much easier for me to declare without reservation and too much thought that this most radical of the three health reform compromises is, just like everything else, a big pile of shit. It is possible however that, as far as compromises go, the Energy and Commerce Committee offers us a real one. That is, it offers us a bill that most people who aren't paying their third mortgages with insurance company cash can live with. The public option is included. That seems good to me. Subsidies to those under and around the poverty line are included if somewhat reduced. That seems good too. Perhaps most importantly, insurance industry best practices are to be enforced. So overall, maybe this is not so bad.

But some would beg to differ. There is a seemingly technocratic tweek in the bill, a little something thrown in for the Blue Dogs, that would separate the infant public insurance program from the bargaining leverage of Medicare. That is to say, the new plan will have to negotiate their fees with doctors and hospitals without its muscly, half-way insolvent big brother standing behind it. And to some that makes all the difference.

If not, he is going to have a lot of pushing back to do. It begins by realizing that while this is an inconsequential detail to just about every American, the change actually dynamites the entire plan. Operated within Medicare, the new public option would have limited marginal administrative costs. It would have a large pool from the beginning, with leverage over virtually every provider. I don’t understand – not I don’t support, I do not comprehend – why there was ever a proposal to pay x% above Medicare rates in the public option. If Medicare rates are too low, or geographically unfair, or anything else, then change the Medicare rates. If a doctor is willing to perform a procedure for $d for a Medicare patient, in exchange for the opportunity to serve the large population of Medicare patients, he should surely be happy to continue performing procedures for $d for access to the combined Medicare and public option populations. (source: Taunter)

Or she, buddy. The glass ceiling on complaining about legal liability and getting underpaid by Soviet Medicare has long since been shattered. The ladies are now free to opt-out of treating Medicare patients too, you know.

By contrast, stripped of Medicare support and pricing negotiation,* the public option is a startup insurance company, no more and no less. Actually, a lot less – it has to hire the worst administrators (everyone in the sector already either went for the money at a private operator or the security at CMS), it has the nimbleness and marketing savvy of a government agency and the purchasing power of the smallest guy in the industry, and it will almost certainly have a disaster of an insurance pool. It will be the one sucker offering community rating in a risk rating game. It’s like joining a poker table and playing cards-up.

I hope he isn't right. Because the way things stand now, I can't imagine that the final product will look much more progressivee than this. The downside risk, on the otherhand, is virtually infinite.

And so I can only hope that Taunter is overstating things. Maybe the bargaining power of the public option will be minimal. And maybe the plan will end up getting stuck with an adversely selected cadre of unemployed tumerous hunchbacks. But maybe there's something in a different business model. Maybe the fact that, as a public institution that is committed to breaking even and not, as are pubically traded insurance companies, bound to producing increasing year over year profits, the public option will be seen as a fundamentally more reliable--unlikely to rescind policies and committed to keeping medical cost ratios high. Whether it is an individual looking for health care or a company hoping to attract employees, there is always the possibility that the public option, despite its inability to offer substantially lower premiums, will be seen as a fundamentally more reliable.

But I really don't know.

*Note that Medicare fee structures offer disasterous incentives for health care providers. Public option aside, fixing that will go a long way to fixing the fiscal side of things.