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Posts Tagged ‘Public Option’

As the health care reform legislation wends its way through Congress, it appears that some sort of Public Option may be included in the bill.  The latest talk is that it will only be available to those who have no health insurance. If you already have health insurance through your employer you won’t be able to get it.  It also seems that individual states will be able to opt out of the program, thus denying residents of those state the opportunity to purchase the Public Option.  Meanwhile it appears that the vast majority of the American public are in favor of the Public Option – an option that most of them won’t be able to exercise.

Is there a message here? You bet there is. The American people are fed up with private health insurance.  It costs too much and provides too little.  The American people have seen the excellent quality of health care in Canada and much of Europe- all provided by national health care systems and most of the people seem to be saying that they would rather have something like that. The primary opposition to some sort of national health care comes from the hard core Republicans who are held in thrall to the insurance companies and the banks of America.  The thing to remember is that while the Republicans are a very loud voice they are at the same time a very small voice. Only 20% of Americans now consider themselves to be Republicans. That is a pretty small minority and it shouldn’t have the power to dictate national priorities. Actually the previous election that booted them out of office sort of says the same thing.

So, is there a solution for this upside down manner of thinking? Is there some sort of compromise that can worked out with the party of the politically flirtatious Olympia Snow that would make the majority of Americans happy and yet satisfy the cravings of Republicans to pay a lot of money for very little insurance? You betcha!

The solution is really remarkably simple. Create a national health care system and use Canada or another country that has a very successful national health care system as a model.  We don’t have to just make it an expanded version of Medicare. Make the national health care system such that it covers everyone by default.  You don’t have to be employed or live in a certain state or have no preexisting conditions. If you are alive, you are covered. However, knowing the extreme disappointment the Republicans are sure to feel about being covered by the government, we should provide them with the option of buying expensive insurance that doesn’t necessarily cover all possible ailments and might be revoked at any time for any reason. We will call that the Private Option.

If you ask me that is a compromise worthy of Solomon himself.  Everybody will be happy, everybody will get their way and we will all be healthier in the process.  I would bet even Sarah Palin and Rush Limbaugh would go for it.  I mean they would run right out and buy the Private Option. Right? Wouldn’t they?

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In many of America’s large cities there are tall skyscrapers, and if you look at who owns the tallest of the skyscrapers you will often find that they are owned either by a major bank or a major insurance company.  If you care to think about that for a few moments I’m pretty sure you’ll see that there is the message there.  You can get the same message by noting that the tallest skyscrapers are never owned by shoe manufacturers, food companies, or clothing companies. Some types of businesses just make a lot more profit than others – the top two seem to be banks and insurance companies. Which brings me to the “public option”.

The recent economic catastrophe was essentially caused by the banks in those big, tall skyscrapers making really bad bets, i.e. loaning money for real estate loans that would never be repaid. In the end the solution our representatives in DC came to was for the government, i.e. you and me, to absorb these losses, give the banks a bunch of money and set them back up in their chairs at the financial craps table.  Some have already paid back the loan you and I gave them and some haven’t. So, in a way we sort of own those banks that haven’t repaid the loan we made to them. Of course it is these banks who essentially own our houses because they gave us a loan to buy them and we haven’t paid that off yet. It’s all sort of circular isn’t it? Sort of hard to figure out who ultimately really owns what and who owes what to whom.  The key though seems to be that the banks have to stay in business, so you really do have to pay your mortgage to the bank and you really do have to pay your taxes in order for the government to pay for the loans we made to the banks. The point is this: you have to pay.

So what does this have to do with health insurance? Well, insurance is a lot like banking.  The health insurance company bets that you’ll be healthy and you bet that you won’t.  Both the banking and the insurance industry rely on making good bets. However, the health insurance industry has one great advantage over the banking industry. With insurance you only pay out a bunch of money when something bad happens to the your health – meanwhile you keep paying the insurance company a lot of money. In mortgage banking it’s sort of the opposite.  The bank pays out a big lump sum up front and then collects it back – multiplied by a factor of four or five – over 30 years. The bank is taking a big risk though because you might not pay them back. It would seem that the insurance companies are also taking a big risk too because you might get a catastrophic disease.  So isn’t it all sort of the same? I could be, but it isn’t. The insurance companies have learned about a thing called denial of benefits – it’s all in the fine print. Basically, a lot of them don’t pay off when a catastrophe happens.  They manage to find a pre-existing condition or some other excuse to disqualify you.  So, they make out like bandits and build big skyscrapers. But don’t feel too bad for the banks, because they have an out too: if you don’t pay your mortgage they just grab your house and sell it. Then they take their big profits and build big skyscrapers.

So what does this have to do with a Public Option? The Public Option for insurance essentially makes the government an insurance company – which is to say that we, the taxpayers, are insuring ourselves with all the money we put in our tax dollars pot in DC.  The government makes no profit – and why would it? If we are the government then profiting from ourselves would just be like taking money out of one pocket and putting it in another. A government-run insurance option is essentially non-profit insurance for everyone. It is cheap and efficient and people don’t get denied coverage just because they got sick.

So why don’t we have a banking public option? Good idea. It’s because the banking lobby is too strong and they have paid off too many people in our government. The best way to run a bank is to make it government-run and non-profit. At least that is the best way for the taxpayers; however, you probably wouldn’t have so many skyscrapers anymore. We are a long way away from the government running our banking system – for the time being our government would rather just use our money to provide the banks with multi-billion dollar loans. But perhaps after our next economic meltdown (and it will come, don’t worry, all of the factors that caused the past one and the one that caused the Great Depression before it are still in place) maybe, just maybe, the government at that future time will have the courage and insight to suggest a public option for banks.

Meanwhile, it looks like the citizens of America may soon have to choose whether they want to buy expensive insurance from companies that build big skyscrapers with their profits when they don’t pay off on their policies, or will they choose to buy low-cost health insurance backed up by the full faith and credit of the U.S. government?  I have a feeling there is going to be a rush to buy the public option. Meanwhile, the insurance companies might start considering whether they could convert their posh offices into city apartments and rent them out, since they probably won’t be needing all that office space much longer.

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The barons of American industry discovered long ago that they could get people in other, less well off, countries to do factory work for less money than what Americans wanted for pay. It all started with the outsourcing of American jobs within the country itself. Good paying jobs in the textile and other industries migrated from the industrialized north to the south.  These factory owners made a fortune by paying the Americans in the south much less than they had been paying those in the north.  It didn’t take too long before the owners of the businesses noticed that they could get even cheaper labor a little further south – and a lot of jobs went to Mexico. Now, it’s hard to find any items of clothing that carry the label Made in USA.  It turns out that even the Mexicans are now feeling the bite of low cost competition and today, when you buy any item of clothing, you could just as easily see a tag that says Made in India, or China, or Egypt or almost anywhere – although I have yet to see a tag that says Made by Eskimos in the Frozen North.

But, as they say, it is an ill wind that blows no one any good.  Or, to perhaps paraphrase – sort of – what’s sauce for the goose is sauce for the gander.  It turns out that outsourcing can help not only the fat cats who own our big businesses, it can also help the little guy who has to buy their stuff.  One prime example is that we are able to outsource our selection of automobiles.  We can buy foreign made cars instead of American made cars – and we do.  The American consumer has pretty much decided that they get a better value by buying Japanese or European made cars instead of American made cars.  Of course the American car manufacturers could give us better value than they do, but they don’t.  They choose not to. So we have the ability to choose something else. Most of us happily outsource our automobile choices to other countries.

Well then.  If we can outsource the purchase of cars, and lots of other stuff to China, India, Japan, Germany and so forth, why can’t we buy our health insurance from foreign countries too?  After all, a health insurance policy is nothing more than a sort of reverse lottery.  You get money, but you would probably rather not have won this sort of lottery, because it means you are sick.  The more money you win, the sicker you are.  But my point is that this is just a really big gambling game, and the boys who run the health lottery in the U.S. make big bucks in this game.  Essentially you pay a lot more into the pot, via your bets (i.e. your policy premiums), than you ever collect (on the average).  The insurance companies score!  They take in a lot more money that they pay out. (Ask yourself this:  how many health insurance companies have failed or needed a government bailout during the Great Recession?) The question we need to ask is this: how much do our U.S. insurance companies really compete with each other? Could their idea of competition be sort of the same as how the American car companies compete against each other?

What would happen if we let Chinese companies provide our health insurance? If there is one thing I have noted about the Chinese I have met throughout the world, it is this: they love to gamble.  My guess is that they would love to be in the insurance/health-gambling business.  They would undercut the absolute Hell out of the U.S. insurance industry, but they would also pay off on their claims because they are also excellent businessmen.  They know they need to keep satisfied customers.  My guess is that India could be a good source of health insurance too.  Another great source might be Ireland, a place where bookmaking is entirely legal and companies like Paddy Power will take a bet on anything.  It could even rejuvenate the fading Celtic Tiger.  If there is one thing Paddy Power knows how to do, it’s calculate the odds.  And they always pay off too.  There’s no denial of claims from Paddy Power.  You score, you win.  They pay.  No questions asked.  That’s the way insurance should be.

So, while we are thrashing about and wringing our hands about a Public Option, and how it will generate competition for the fat cat health insurance industry, maybe we should generate some real competition.  Let’s allow the outsourcing of health insurance to foreign companies and open up the health insurance business to the world. How about some real competition?  Then maybe we’ll see who the real Capitalists of the world are. Is it the Americans, the Irish, the Indians, the Chinese or someone else?

Guess who my money’s on.

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It was only a week or two ago that the Obama administration was letting it be known that their plan for a Public Option was, in itself, an option.  Maybe a co-op sort of health plan thing would be just as good, they were saying.  They were flexible. Let’s just all work together and get something done was the approach.  The Republican Party gave its customary reply: NOT ONLY NO, BUT HELL NO!  They’re not interested in public options, private options, co-ops, or anything else for that matter that changes anything about American health care in any way. I think they’ve made their point.  They don’t want to play.  It now appears that President Obama also has gotten the message and now the message from the White House has also become clearer: the Public Option was never really off the table!!  It has been part of the plan all along and will continue to be so.  It seems the gloves have come off.

OK.  That’s good to know, because now we can really start to understand what all the Republican bluster has been all about, and we can also start to understand why the Democrats are so fervently in favor of a Public Option.  And, as part of our examination of the Public Option we can also understand why one man’s meat (or panacea, in this case) can be another man’s poison (or poison pill, to continue the analogy).  The Public Option has the potential to cut both ways.  Here’s why:

First, for the 50,000,000 Americans who don’t have any health insurance at all ( a fact that ought to qualify the U.S. for third world country status, except that most third world countries probably have a better record – so maybe we should be looking at fourth world status) the Public Option will literally be a life saver.  People who cannot afford the current high prices for insurance or who can’t get insurance because of some pre-existing condition (insurance companies really only want to insure people who won’t need to use their insurance – hey, it’s a business.) will finally be able to get treated for life threatening illnesses instead of dying from them.  The Republican Party is against this Public Option because it’s not a money maker for private business. In fact it could turn out to be a truly massive money loser.

That’s where we come to the part of the Public Option that is a poison pill.  It may well be the ultimate poison for the medical insurance industry. In one of his town meetings, President Obama was asked how the private health insurance companies could compete against a government private option, since the government is a non-profit organization (at least so far) and therefore its insurance rates would be far lower than those offered by the private insurers.  (The massive difference in costs to the consumer being due to the massive profits the insurance companies currently make from premiums and denial of coverage.)

President Obama was quick to point out that private industry can indeed successfully compete against the government, and he gave the example of how well Fedex and UPS are doing financially while the U.S. Postal Service is pretty much on the ropes.  You might note that the President neglected to say that he was comparing apples and oranges and that’s why his example worked so well.  Fedex and UPS deliver mostly high priority packages and some high priority letters.  The cost to the sender of these items is high, but people are willing to pay when it “absolutely, positively has to get there overnight”.  The Post Office, on the other hand, delivers letter and package mail to everyone in the country who has a mailbox, and they come by your house every day whether they have mail for you or not because that is their route. While doing this they only charge 10% or less of what Fedex and UPS charge per item.  Fedex and UPS are successful, not because they compete with the Post Office, but because they don’t compete with the Post Office.  They are successful because they offer a service that the Post Office doesn’t.  (And believe me, Express Mail does not compete with Fedex or UPS.)

But what about the Public Option? Will the Federal Government be offering a plan that directly competes with private insurers?  You betcha.  And that, my friends is the poison pill I was talking about.  This wonderful idea of providing low cost insurance to all comers is a great idea for all Americans, but it is death to the private insurance industry.  Who in their right mind would pay a small fortune for private insurance when you can get the same coverage from the government for a fraction of the cost?  This, of course, is the great fear of the Republican Party and their rich friends.  Cue the rumors about Socialism, Death Panels, Fascism, Communism, European Style government, Canadian style medicine, long waits for treatment, low quality treatment, free medical care for illegal immigrants, the end of the pharmaceutical industry, Martian landings, tsunamis, earthquakes, and the loss of freedom for all Americans.  You have to hand it to the Republicans.  They have great imaginations and they really know how to stir up their base with a few key phrases or words.

The simple fact is this: a Public Option is a great idea for most people.  It lowers the cost of insurance and provides insurance for everyone.  Ultimately, there is more business for the medical industry – if not for the medical insurance industry.  We become a healthier nation – except for the private health insurance companies who eventually go extinct, because eventually everyone will choose the Public Option.  One man’s panacea is another man’s poison pill; it’s as simple as that and that is what all the commotion is about.  The Democrats are on the side of the vast majority of the American people and the Republicans are on the side of the big, profit-making businesses.  That isn’t news, that’s the way it’s always been.

The real question is this: will the Republican members of Congress stick to the cause of their masters in the insurance industry and vote against health care reform, thus risking catastrophic losses in the next election, or will they cave in and vote for it and thus against the very people who contribute so much money to them?

What would Sarah Palin do?

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