Now, take the exchange systems being proposed. They function just like that employer enrollment system and with all providers, except they apply to all people, not just the folks at one company. Now you've essentially got a big book where each provider lists its plans and the price for them. And it operates just like an employer based program- price per plan, not per person; a regular enrollment cycle; existing conditions must be covered; and no one can be dropped, denied service, or have an individually inflated premium.
Now market principles can actually apply.
Do note an interesting thing here- there's not government involvement in the actual provision of insurance yet, just in providing a fair market for service.
So what's the deal with the public option then?
Given the current state of affairs, it would take a long time for prices to come down to a reasonable range, because people are used to high prices or, at the low end would be subsidized, and there is still considerable pull from investors to maximize profits at the expense of service. But what if you introduced a non-profit option? One that didn't have investors to worry about, only providing care and remaining solvent? If it had to be self sustaining and operate on the same exchange as the other companies, it would create a significant point of competition; companies that shorted service of kept prices high would quickly lose business to it. Ones that matched or exceeded its value, on the other hand, would remain competitive. Now you've got market forces really doing their job.
What about such an option being unfairly advantaged in competition? Well you have to choose only one of two mutually exclusive positions to stand on - a non-profit, government based company is by its nature inefficient and the private market can easily out perform it. Or such a company would outperform any private solution and offer the best overall value for service.
Both can't be true, but either way, the consumers are the ultimate winner, which is the fundamental goal of the reform to begin with.
That overall system is at the core of all the major reform proposals, with some degree of variation. Wyden-Bennett, for example, does not include a public option, but it strongly establishes the exchange as immediately available to all people and transfers tax credits for coverage to individuals and away from employers. It also seeks to phase out medical entitlement programs in favor of care subsidies on the exchange and some wrap-around services.
Other proposals leave the employer based tax benefit in place and/or only make the exchange available to individuals and small employers, so more strongly need the public option to better dive competition, since they exclude a fair segment of the market.
There are other implementation details in the bills and logistics, but if more effort was made to explain that basic core, this issue would be a lot less contentious. It's about making the market work properly, not about taking over care in any way.
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ninetydegrees
no subject
on 2009-09-02 04:51 am (UTC)Now market principles can actually apply.
Do note an interesting thing here- there's not government involvement in the actual provision of insurance yet, just in providing a fair market for service.
So what's the deal with the public option then?
Given the current state of affairs, it would take a long time for prices to come down to a reasonable range, because people are used to high prices or, at the low end would be subsidized, and there is still considerable pull from investors to maximize profits at the expense of service. But what if you introduced a non-profit option? One that didn't have investors to worry about, only providing care and remaining solvent? If it had to be self sustaining and operate on the same exchange as the other companies, it would create a significant point of competition; companies that shorted service of kept prices high would quickly lose business to it. Ones that matched or exceeded its value, on the other hand, would remain competitive. Now you've got market forces really doing their job.
What about such an option being unfairly advantaged in competition? Well you have to choose only one of two mutually exclusive positions to stand on - a non-profit, government based company is by its nature inefficient and the private market can easily out perform it. Or such a company would outperform any private solution and offer the best overall value for service.
Both can't be true, but either way, the consumers are the ultimate winner, which is the fundamental goal of the reform to begin with.
That overall system is at the core of all the major reform proposals, with some degree of variation. Wyden-Bennett, for example, does not include a public option, but it strongly establishes the exchange as immediately available to all people and transfers tax credits for coverage to individuals and away from employers. It also seeks to phase out medical entitlement programs in favor of care subsidies on the exchange and some wrap-around services.
Other proposals leave the employer based tax benefit in place and/or only make the exchange available to individuals and small employers, so more strongly need the public option to better dive competition, since they exclude a fair segment of the market.
There are other implementation details in the bills and logistics, but if more effort was made to explain that basic core, this issue would be a lot less contentious. It's about making the market work properly, not about taking over care in any way.