This Is Better

by publius

Marc Ambinder:

An administration official said tonight that Health and Human Services Secretary Kathleen Sebelius "misspoke"[.]  . . .  A second official, Linda Douglass . . . said that President Obama believed that a public option was the best way to reduce costs and promote competition among insurance companies, that he had not backed away from that belief, and that he still wanted to see a public option in the final bill.

In terms of broader perspective, Jacob Hacker has one of the best defenses of the public option that I've seen.  One important point he raises is that it's actually a way to prevent overreliance on excessive regulations and bureaucracy.

The argument is fairly simple.  Any type of reform is going to require a lot of regulatory oversight.  That means detailed regulations, lots of regulators, etc.  If, however, the country had a public option, the insurers would suddenly have a market incentive to comply with these requirements without so much regulatory coercion and administrative costs.

In this respect, the public option actually reduces the need for government -- and reduces the threat of agency capture and other public choice-ish problems (especially at the state level).

Comments

[Doctor Science, Demiurge of No-Knead Bread]

I have used this widget to find my Rep's Health Care Town Hall, which I'll be going to next week. That's at FireDogLake and it only covers Democrats. Does anyone know of anything similar for Republicans -- put in your zip, it gives you a map of every event within N miles?

[LaJeff]

She didn't misspeak. The media misrepresented her comments.

[Jacob Davies]

So let me get this straight. The big healthcare companies, whose political power derives from bribery of public officials (via campaign donations & promises of sinecures) - as well as rampant astroturfing that is riling up some seriously crazy people with some seriously crazy ideas - might let Americans have universal coverage and community rating, just so long as those Americans don't try to use the collective, democratic mechanism of the federal government to organize their own insurance?

Gee, thanks. What a deal. Is there any other potential function of the US Federal Government they would like to veto, while they're at it?

And it's these people who we're supposed to trust to make life-or-death decisions about the provision of healthcare? The kind of people who think it's A-OK to bribe politicians and the media to tell lies, and to conduct a nationwide program of covert propaganda aimed at the least-informed, most-unstable groups of society?

This is behavior we might expect of an organized criminal syndicate. It is not the behavior of organizations that can be trusted to act in good faith and with the best interests of their patients at heart. Good faith - in any realm - means a willingness to participate honestly and openly in public discussions.

I am so embarrassed to see Democratic politicians who have clearly sold out. They could be a member of the Congress that passed universal healthcare, which they know (from simple observation of other countries with it) will be spectacularly successful and popular. This would be an accomplishment bigger than that of the Congresses that passed Social Security, Medicare, Medicaid. This is what the people want, and these guys have it in their power to give it to them.

But they're selling us out for a couple of hundred grand in campaign donations and maybe a directorship once they retire (which may be sooner than they expect if they block this Congress from actually accomplishing anything). It is shocking. This is not some nerdy wonk issue that nobody understands and whose impact or necessity is debatable anyway. This is life and death. I am appalled by how cheaply they can be bought.

[Joe]

I'm unsure how "better" this is. The linked discussion is somewhat all over the place, while we have anonymous sources spinning things, and not even doing so in a consistent basis. Sure some of them are spinning that the public option is still safe.

I do like how "prominent Democrats," not just "liberals" are the ones who would be upset if the public option is off the table.

[Molly Malone]

What Jacob said.

[Pithlord]

I think Obama's defined the principled issue pretty well: "No one in America should go broke because they got sick." Because of Medicaid, it is already the case that if you are poor, the government will cover treatment, but it is also the case that if you are uninsured and too young for Medicare, you have to become poor before this will happen.

Americans with healthcare insurance bitch about it, but Canadians and Europeans bitch too and the fact is that no one can abolish scarcity. There's a problem with balooning cost, but that's also a problem in the rest of the OECD, albeit to a lesser degree.

What should not be a matter of principle is a "public option". Bismarckian systems seem to work about as well as public systems. No doubt they each have thier respective problems, but it really is a boring wonky issue, and not something that should excite the kind of passion Jacob is exhibiting.

[Eric Martin]

Bismarckian systems seem to work about as well as public systems.

Yeah, but in America, where the political clout of insurance companies is quite potent, this system is unlikely to fare well since it requires tight regulation and guidance.

And last I checked, there wasn't even a good Bismarkian proposal on the table. A public option - not necessarily a "public system" - would go a long way to settling the issue, or at least setting down a marker.

[Tony P.]

... the fact is that no one can abolish scarcity.

Scarcity is relative. The US spends 1/6 of its GDP on "health care" and buys 2.3 physicians per 1000 people with that money. Canada spends about half as much, and buys 2.1 physicians per 1000 people. Physicians are already less scarce in the US. Since health care is prescribed and provided by physicians, health care is already less scarce in the US than in Canada. Nonetheless, more Americans (per 1000) go without health care than Canadians do.

The difference is that Americans are culturally or ideologically attached to a system of distributing physician-hours which takes a relative abundance of health care and parcels it out inefficiently. (I do not say "unjustly" because I'm not up for making value judgements today.) For every Gary Farber, who goes untreated for real ailments, there's some rich old grandma who is geting more care than her counterpart in Canada would. Doctors have to eat; they earn money by providing medical services; they therefore provide as many services as they can, to people who have money.

If the outcome statistics were better in the US than in Canada, it would be easier to refute this suggestion: US physicians, able to sell their services only to the 800 Americans in 1000 who have health insurance, come up with tests and procedures enough to justify the super-abundance of 2.3 physicians per 800 insured people, without actually making those people healthier.

Physician-hours are a finite resource in the same sense as bushels of corn -- though on a longer time scale. (To grow more corn you need about a year; to grow more physicians you need about 30 years.) The nominal dollar price of a physician-hour or a bushel of corn is more or less irrelevant to the question of "scarcity". Dollars don't treat people; physicians treat people. It's physician-hours that are the finite "resource".

Relative to Canada, the US has a relative abundance of physician-hours. What's relatively scarcer in the US is rational thought.

--TP

[latts]

Any type of reform is going to require a lot of regulatory oversight. That means detailed regulations, lots of regulators, etc. If, however, the country had a public option, the insurers would suddenly have a market incentive to comply with these requirements without so much regulatory coercion and administrative costs.

But there are a lot of ways to kill and/or gut regulations, or possibly even to kill healthcare reform outright by making the regulatory apparatus a disaster. Getting political credit for reform that can be driven back towards the current status quo through regulatory failure is almost as good as doing nothing-- maybe even better if they can spin cooperation to their benefit-- while a public option would actually force real reform that plenty of people don't want.

IOW, a reform bill that relies on regulation could actually be a good thing for the profit-demanding forces, because it's easy enough to undo the constraints once voters have quit paying attention.

Okay, back to lurkdom...

[Hartmut]

Tony, there are other bottle necks too, e.g. lab capacities (I did my alternative civilian service in one), X-ray machines (and related devices)etc. That's one point where uneven population density actually plays a role. Those are also services that cost real money.

[Tony P.]

Hartmut,

I agree that labs, machines, and the people to run them are essential to modern medicine. In that sense, physicians are not the only bottleneck.

But it's physicians who order tests and scans. Even more important, it's physicians who read the results and prescribe treatments based on them.

If Hilzoy had come back from vacation reporting that Rwanda has 4.6 physicians per 1000 people, but not a single MRI scanner and only three X-ray machines, I would not claim that Rwandans have twice as much health care available as Americans do. But in comparing the US (2.3/1000) to Canada (2.1) or France and Germany (3.4), I think it is fair to use the physicians-to-population ratio as a reasonable proxy for healthcare-available-per-capita.

--TP

[arcadesproject]

This administration changes its mind more often than Brett Favre. Does Obama have a slight tear in his rotator cuff?

[hampshire]

Ya i also agree with him public option is a best way for health care reform.