American Politics 20 - Halloween Edition

[Swordfish]

You're confused. The revenue effect of the public option will have to cover the cost of the public option. Under the terms of both health care bills, the public option is required to compete on an even playing field with private insurance companies in the health insurance exchanges, on the same terms as private insurance companies. As the AHCAA summary puts it (pdf), "the public option must survive on its premiums. ... The public health insurance option is provided startup administrative funding, but it is required to amortize these costs into future premiums to ensure it operates on a level playing field with private insurers."

What happens if it doesn't?

We'll just... what? throw it away?

Or what happens if the premiums are too high to really solve any of the actual healthcare issues that healthcare reform is supposed to address?

We just... what? Pack it in and admit it won't work?

Once its passed, it will make no difference whether it's self sustaining or not, it will never go away, and it will only get bigger.

[Anya, Vengeance Demon]

What happens if it doesn't?

You mean, will Congress--which can't muster the votes to pass a subsidized public option now--somehow muster the votes to fund the public option once it has visibly failed to live within its means? I doubt it, but I don't know what the politics of health care will look like in ten years or so, and neither does anybody else. Whatever President Chastity Bono decides to do in 2019, subsidies for the public option are not a part of the actual, existing, present-tense Democratic health care plan.

ETA:

Responding to your edits, I don't see why exactly the public option would keep getting bigger if it was prohibitively expensive. It's only offered as part of the health-care exchange, competing with other insurance options; a bloated public option would be unappealing to consumers if they could get a better deal with somebody else. That's how markets work, no?

[Swordfish]

You mean, will Congress--which can't muster the votes to pass a subsidized public option now--somehow muster the votes to fund the public option once it has visibly failed to live within its means? I doubt it, but I don't know what the politics of health care will look like in ten years or so, and neither does anybody else. Whatever President Chastity Bono decides to do in 2019, subsidies for the public option are not a part of the actual, existing, present-tense Democratic health care plan.

Well, sure. but it hasn't been passed yet.

If the premiums are not lower than those publicly available currently, then what is the point of the public option?

ETA:

Responding to your edits, I don't see why exactly the public option would keep getting bigger if it was prohibitively expensive. It's only offered as part of the health-care exchange, competing with other insurance options; a bloated public option would be unappealing to consumers if they could get a better deal with somebody else. That's how markets work, no?

Let me clarify before i answer this.

By 'bigger' I am referring to 'more expensive for the taxpayer'. I worded that poorly.

So really 'prohibitively expensive' is a relative term.

if premiums are not low enough, then you have a situation where congress gets to play the 'we have to act!' card. What follows is a shell game that ultimately means subsidies in some form. I'm at a loss to see how it wouldn't end up that way.

Once they have started subsidizing premiums, people relax, because most americans fail spectacularly at equating taxes with costs of programs. Most taxpayers will still look at the public option as a discount, even if If taxes go up to cover the excess premium.

Likely most of it will be hand waved away with the ongoing 'bill the evil rich for it' mantra that the left seems to have adopted with great success.

As I said, if premiums are not lower than what is currently available, then what is the point? And if you want to make this support itself, as well as pay back administrative costs, then how do you keep premiums down?

ETA:

a bloated public option would be unappealing to consumers if they could get a better deal with somebody else. That's how markets work, no?

that's pretty much my point with the exception of one important point; the public option would be operating outside of the free market.

it's an important distinction because, as I mentioned, once implemented it will never be allowed to fail.

This is how entitlement programs become money pits.

[Anya, Vengeance Demon]

Once they have started subsidizing premiums, people relax, because most americans fail spectacularly at equating taxes with costs of programs. Most taxpayers will still look at the public option as a discount, even if If taxes go up to cover the excess premium.

Well, now, let me make myself clear. Uninsured people under a certain income threshold will receive subsidies to purchase health insurance on the exchange, from which they'll be able to choose between private carriers and the public option. (That accounts for roughly half the cost of the bill, as I recall.) So Congress is subsidizing health insurance costs in general (because individual health care plans are expensive); they just aren't giving specific subsidies to the public option. The public option has to compete on a level playing field for the customer's dime.

Now, in so doing they're hoping that the introduction of competition into the individual health care market where it doesn't exist right now--as it stands, many states have a single insurance provider--will serve to lower costs. This is the primary aim of the public option; if Blue Cross is the only provider in, say, Alabama, the public option would provide competition, which would force Blue Cross to offer plans at competitive rates. The public option should also be able to take advantage of economies of scale to reduce administrative costs--at least in the House bill, it's a national plan--and won't charge extra in order to make a profit.

Now, I think you're proposing one of two hypotheticals:

1) They pass a plan with the public option and premiums are still really high for both public and private insurance. In this situation, I think it's plausible that Congress would pass additional subsidies to help people afford insurance. (And I wouldn't object, because I think the current plans don't spend enough on subsidies.) But in this scenario, the public option itself still isn't costing the government anything; it's being covered for by premiums like the plan anticipates.

2) They pass a plan with the public option and premiums are much higher for the public option than they are for private insurance, because it turns out that the government can't run an insurance company effectively. In this case, I don't see why the government would go out of its way to save it. It would have very few customers, a poor reputation among elites, and private insurance carriers who would like to see it put out of its misery. I think the more plausible result here is that the government just quietly lets the public option die.

[Swordfish]

Well, now, let me make myself clear. Uninsured people under a certain income threshold will receive subsidies to purchase health insurance on the exchange, from which they'll be able to choose between private carriers and the public option. (That accounts for roughly half the cost of the bill, as I recall.) So Congress is subsidizing health insurance costs in general (because individual health care plans are expensive); they just aren't giving specific subsidies to the public option. The public option has to compete on a level playing field for the customer's dime.

Now, in so doing they're hoping that the introduction of competition into the individual health care market where it doesn't exist right now--as it stands, many states have a single insurance provider--will serve to lower costs. This is the primary aim of the public option; if Blue Cross is the only provider in, say, Alabama, the public option would provide competition, which would force Blue Cross to offer plans at competitive rates. The public option should also be able to take advantage of economies of scale to reduce administrative costs--at least in the House bill, it's a national plan--and won't charge extra in order to make a profit.

Now, I think you're proposing one of two hypotheticals:

1) They pass a plan with the public option and premiums are still really high for both public and private insurance. In this situation, I think it's plausible that Congress would pass additional subsidies to help people afford insurance. (And I wouldn't object, because I think the current plans don't spend enough on subsidies.) But in this scenario, the public option itself still isn't costing the government anything; it's being covered for by premiums like the plan anticipates.

If the government is passing additional subsidies to bring down the premiums on the public option, then it is costing the government money though, isn't it?

2) They pass a plan with the public option and premiums are much higher for the public option than they are for private insurance, because it turns out that the government can't run an insurance company effectively. In this case, I don't see why the government would go out of its way to save it. It would have very few customers, a poor reputation among elites, and private insurance carriers who would like to see it put out of its misery. I think the more plausible result here is that the government just quietly lets the public option die.

I think the more likely result here is that the government funnels more cash into it to make it more competitive.

I can't imagine a scenario where they put so much political capital into it and then just allow it to die.

I can't really think of an example where it's played out that way.

[Anya, Vengeance Demon]

If the government is passing additional subsidies to bring down the premiums on the public option, then it is costing the government money though, isn't it?

Semantics aside, in the Democratic health-care plan, as in the first hypothetical that I laid out, the government would not be allocating money to the public option itself, but to individual consumers. Mcbigski was suggesting that the current plan allocated money specifically to the public option, and that's incorrect.

I think the more likely result here is that the government funnels more cash into it to make it more competitive.

I can't imagine a scenario where they put so much political capital into it and then just allow it to die.

I can't really think of an example where it's played out that way.

Who's they? Recall that the public option will take effect in 2013. And since it will at the very least be able to limp along for a little while, the issue of whether or not to bail it out will probably come up after Obama's out of office and most of the current Congressional leadership has retired or been replaced. (I just looked up the Congressional leadership from 1999; of the ten people listed for both Democrats and Republicans, only Harry Reid--then Minority Whip--is still in office today.) So we're likely talking about a new group of people examining the failed policies of their predecessors. I'm not sure why they would be anxious to preserve somebody else's reputation, especially since there wouldn't be a political upside to it.

[Lord O' Bones]

Who's they? Recall that the public option will take effect in 2013. And since it will at the very least be able to limp along for a little while, the issue of whether or not to bail it out will probably come up after Obama's out of office and most of the current Congressional leadership has retired or been replaced. (I just looked up the Congressional leadership from 1999; of the ten people listed for both Democrats and Republicans, only Harry Reid--then Minority Whip--is still in office today.) So we're likely talking about a new group of people examining the failed policies of their predecessors. I'm not sure why they would be anxious to preserve somebody else's reputation, especially since there wouldn't be a political upside to it.

Is that the normal turnover rate though? We have had a lot of fail over the last decade.

[Anya, Vengeance Demon]

Is that the normal turnover rate though? We have had a lot of fail over the last decade.

Actually, we've had relatively little turnover, compared to previous eras. Congressional races have become less competitive in the past few decades, and the turnover rate for Congressional seats has gone down. In 1994, for example, the Republicans picked up 54 seats in the House of Representatives and it was considered a huge sweep. But swings of a similar size or larger used to be a lot more common, as you can see by looking at the elections of 1948, 1958, 1964, and 1966. The same is generally true in the Senate as well.

[Swordfish]

Semantics aside, in the Democratic health-care plan, as in the first hypothetical that I laid out, the government would not be allocating money to the public option itself, but to individual consumers. Mcbigski was suggesting that the current plan allocated money specifically to the public option, and that's incorrect.

Well, ok. But the bottom line is still money being spent by the government.

And remember, democratic leadership wants single payer. So a public option that fails could easily be turned into single payer.

Who's they? Recall that the public option will take effect in 2013. And since it will at the very least be able to limp along for a little while, the issue of whether or not to bail it out will probably come up after Obama's out of office and most of the current Congressional leadership has retired or been replaced. (I just looked up the Congressional leadership from 1999; of the ten people listed for both Democrats and Republicans, only Harry Reid--then Minority Whip--is still in office today.) So we're likely talking about a new group of people examining the failed policies of their predecessors. I'm not sure why they would be anxious to preserve somebody else's reputation, especially since there wouldn't be a political upside to it.

Of course there would be political upside to it.

Do you really think the democrats would quietly swallow what amounts to such a colossal failure? It would be a major black eye for the party.

People would not want it to die, they will want it to be saved, because it can be sold as a free ride.

Like I said, i can't think of a single example of something that has gone down in the way you describe this playing out.

[Shryke]

Well, ok. But the bottom line is still money being spent by the government.

That's a rather broad category of things to be against.

The money is all in the subsidies, the point of which is to make sure everyone can get health care.

We are still on course to potentially Swissify things though.

Not even close. The Swiss method only functions because of intense regulation.

And it's still, fyi, one of the more expensive ways to provide health care. (comparatively speaking obviously. It's still way cheaper then the current US method)

[Anya, Vengeance Demon]

And remember, democratic leadership wants single payer. So a public option that fails could easily be turned into single payer.

If the Democratic leadership wants single payer, and could easily get single payer, why isn't the current plan single payer? Either they don't, or they can't, because it isn't. And if they don't (or can't) now, why should that change in the future?

[Swordfish]

What makes you so sure about this? Rumors galore suggest that the White House does not want it (at least in this bill) and the big players in the industry have had their hands all over this process, sometimes for better and for worse. I do not doubt for a second that there are some legislators that want single payer but your blanket statement...not impossible but I'm not so sure.

Obama:

“I happen to be a proponent of a single payer universal health care program. I see no reason why the United States of America, the wealthiest country in the history of the world, spending 14 percent of its Gross National Product on health care cannot provide basic health insurance to everybody. And that’s what Jim is talking about when he says everybody in, nobody out. A single payer health care plan, a universal health care plan. And that’s what I’d like to see. But as all of you know, we may not get there immediately. Because first we have to take back the White House, we have to take back the Senate, and we have to take back the House.”

If the Democratic leadership wants single payer, and could easily get single payer, why isn't the current plan single payer? Either they don't, or they can't, because it isn't. And if they don't (or can't) now, why should that change in the future?

Why did clinton settle for 'don't ask don't tell'?

*I'm 100% in favor of anyone who wants to serve, serving.

Clinton was genius in implementing incremental change.

[Ser Scot A Ellison]

Triskele,

I think I can answer for him. Swordfish: Just look at Medicare. Not saying he's right. As has been pointed out, the public option is funded by premiums, not taxes. It is not an entitlement program which are funded by taxes. It has to be purchased by each and every entity that wants it. But it doesn't pay out dividends to shareholders.

Out of curiosity who is paying for those who don't qualify for medicare/medicaid who can't afford the premiums under the "public option"?

[Andriy Czarchenko]

Out of curiosity who is paying for those who don't qualify for medicare/medicaid who can't afford the premiums under the "public option"?

Why did you add "under the "public option"" to the end? They can just as well choose private insurer with the subsidy.

Taxpayers would pay for it. Just like they do at the moment.

[Ser Scot A Ellison]

Czar,

Why did you add "under the "public option"" to the end? They can just as well choose private insurer with the subsidy. Taxpayers would pay for it. Just like they do at the moment.

Because I was unaware the subsidy could be used for private plans. Either way how much is this subsidy going to cost?

[awesome possum]

Probably less than what we're paying now.

Do you really think there's a chance that with reform the US will end up paying more than 14% of its GDP on health care?

[Ser Scot A Ellison]

Ser Poss.,

Probably less than what we're paying now. Do you really think there's a chance that with reform the US will end up paying more than 14% of its GDP on health care?

Well, if you go view the "This American Life" (the terribly right wing program that it is) from last week you'll learn that part of the problem with employer funded health care is that it seperated people from the cost of their health care choices. The analogy they used was employer funded grocery shopping. If you only had to pay a "co-pay" of $20 then could get whatever groceries you want you'd be unlikely to choose beans and rice. As such putting up the funds for even more people to be seperated from the direct impact of their health care choices seems a reciepe for futher increases in costs.

[awesome possum]

I disagree. In 2003 (the one conclusive study I could easily find) the average cost for a basic Emergency Room visit was $560. Add the inflation of 6 years and it's likely double or triple that.

So someone without health insurance goes to the ER because they have the sniffles or sprained their ankle. I heard a co-worker talking about her mother going to the ER a few weeks ago because her back itched. That's it. Just an itchy back. And she made sure she went to the hospital in town where visits can be written off. So we taxpayers get the bill compared to, what, a 100 bucks that maybe would have been payed if that same person were to go the doctor's office for the same problem?

Imagine that happening hundred thousand times a year throughout the country. Now imagine those $1000-$2000 ER bills being turned into $100 doctor's bills. Immense savings.

That alone is reason to try.

[Ser Scot A Ellison]

Ser Poss.,

I disagree. In 2003 (the one conclusive study I could easily find) the average cost for a basic Emergency Room visit was $560. Add the inflation of 6 years and it's likely double or triple that. So someone without health insurance goes to the ER because they have the sniffles or sprained their ankle. I heard a co-worker talking about her mother going to the ER a few weeks ago because her back itched. That's it. Just an itchy back. And she made sure she went to the hospital in town where visits can be written off. So we taxpayers get the bill compared to, what, a 100 bucks that maybe would have been payed if that same person were to go the doctor's office for the same problem? Imagine that happening hundred thousand times a year throughout the country. Now imagine those $1000-$2000 ER bills being turned into $100 doctor's bills. Immense savings. That alone is reason to try.

If you're wrong and costs continue to spiral upwards or worse the spiral gets faster what happens then?

[Ser Scot A Ellison]

Additionally, don't we have to ask how many people currently us ERs for non-emergency procedures versus how many will be given access to subsidised health care. If the latter number is higher than the former it could be a problem.