Free Markets, Free People

Dumb idea of the day – Reintroduce the public option to lower deficit

Yes, that’s what 128 Democrats in the House are sure will be the way to lower the deficit in coming years:

As both political parties worry about the growing federal deficit, an unlikely proposal is returning from last year’s divisive healthcare debate: the "public option."

Creating a major government health insurance program was roundly rejected last year, but 128 House Democrats are pushing to reconsider the idea, contending that it would hold down federal spending.

Anyone – what are Medicare and Medicaid? Well, yes, you’re right, they’re "government health insurance programs". And how solvent are they? Well, you’re right again – they’re not. Both have unpaid future liabilities in the tens of trillions of dollars.

So explain to me how, after these two "government health insurance programs" have been mismanaged to the point of impossible future liabilities, giving the government the rest of the population will, as CBO claims "save the government $68 billion between 2014 and 2020.

Yeah, see, I’m not on board with this idea at all – seems to me to be more smoke and mirrors. I’d love to the reasoning behind the CBO’s findings. Oh, wait, how about this:

The government’s administrative costs would be lower than private insurers’, proponents say, and it could pay hospitals and doctors less.

No, their admin costs are not "lower" and that’s been pointed out ad naseum for quite some time. They just passed the "doc fix" and there is no stomach (or spine) to cut doctor’s pay in the Congress and they risk all sorts of problems if they cut pay to hospitals.

So yes, I’m right – smoke and mirrors.

Let’s see how they play this hand of vapor as Democrats try again – before the window closes for good – to move us another step closer to single payer with nothing more than hot air promises as a basis for their arguments.

~McQ

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43 Responses to Dumb idea of the day – Reintroduce the public option to lower deficit

  • Well we all knew they wouldn’t give up on the public option.   It’s their dream.
    Will they have the votes & the cojones to push something like this through after the mid term election?

  • I think it was here that I said that they wouldn’t give up on the public option if there were flying saucers hovering outside the Capitol firing death rays into the dome.

  • The “Jedi Mind Trick” does live on.  Remember in works on the “weal minded.”

  • Then the question of Depression or Double Dip Recession would be answered once and for all – DEPRESSION Here We Come!!!!

    • DEPRESSION Here We Come!!!!”
      Think how great it will be, when we’re all in Mexico, doing jobs Mexicans won’t do!

  • Hmmm… They’re early.  I figured they’d wait for a few years for ObamaCare to ruin our health care system, then pitch single-payer as THE solution to the health care crisis.  I guess they are panicking over the “drubbing” they expect to take in November.

    As for Jedi mind tricks and the weak-minded… A majority of the American people are onto the dems in this case.  This isn’t a Jedi mind trick: it’s the start of a naked power play to ram yet another piece of huge, invasive legislation down our throats.  Funny how the dems always yap about how much the American people are clamoring for their policies to be enacted yet have to pass them by chicanery in the dead of night, ain’t it?

    • I disagree.  I’ve met folks from super-majority Democrat districts.  (You have to be careful not to mention you are a Republican or even independent as they will scream like in Invasion of the Body Snatchers).
      They have drunk the Kool-Aid.  Non-Democrats are vermin.  Breaking with the “party line” is verboten.  The Jedi Mind Trick works just fine on them because they are both the (“weal” and) “weak minded.”

    • They’re early.  I figured they’d wait for a few years for ObamaCare to ruin our health care system, then pitch single-payer as THE solution to the health care crisis.  I guess they are panicking over the “drubbing” they expect to take in November.

      No, no…  This is just one of the series of feints you can expect.  They keep the idea roiling in the body politic this way.  They watch for an opening, and…

  • Now, now. Maybe we should pass the single-payer bill first in order to find out what’s in it. That also gives the WH more time to get the savings numbers just right.
     

  • The administrative costs of Medicare are in fact way lower than the estimates for any multi-company private solution (as any 4 year old with a abacus could calculate)

    • Uh, no it doesn’t as anyone who can read at a 4th grade level would know – if they’d just do it.

      http://www.qando.net/?p=3362

    • The lowest administrative costs are those of private systems in a true free market. Get rid of the tax break for employer provided health insurance, and you get rid of the complete overhead of health insurance and HMOs and other managed care. And you also introduce true price competition into the system.

      Of course, the down side is it eliminates government control of healthcare. This is only a downside to corrupt politicians and statists, but it is why it won’t happen.

  • Anyone who thinks the insurance companies are saving money over a government-run plan is in la-la land!  Insurance companies eat up 30 cents out of every premium dollar on bureaucracy, advertising and profit.  Meanwhile Germany and France fun their government health system for 2 cents on the dollar.   Do you believe that we are incapable of equaling the Germans and the Franch?  Or are you just partisans who ignore facts and throw tantrums, like Palin, Limbaugh, Hannity, Sowell, Coulter, etc. etc. ?

    • Well you tell me? Does this sound like a tantrum?

      http://www.qando.net/?p=3362

      • Nice take on it.

        The other thing is that if my private insurance is too expensive, that’s between me, my insurance company, and most likely my employeer (because my employeer is most likely providing it). That’s not to say such expense is good, but that its impact is limited.

        When it is a “public option” like Medicare, the cost doesn’t matter to me so much, it just adds to the national debt. Until we end up like Greece. Which will happen, if we don’t do something soon to fix SS, Medicare, and Medicaid.

        Private costs are a private problem, public costs are a public problem.

    • Better to compare private insurance to Medicare, not the German or French systems that are likely quite different. What Obama will foist upon us will be Medicare. It is interesting how the left likes to talk about how well some other country does it, and they keep switching from country to country as needed. Spain was the great model early 2009.

      I was also under the impression that Germany and France actually used something more like Obamacare than outright socialism like NHS or Canadian Medicare.

    • “Meanwhile Germany and France fun their government health system for 2 cents on the dollar.”

       Do your homework. Germany funds their system with a 15+% tax on gross payroll(which only covers about 60% of the costs), plus copays plus gov’t. subsidies. And they are running a deficit in the system.
      And anybody who thinks a government run system doesn’t have at least as much bureaucracy as a private company is in la-la land.  

  • Actually, creating a public option wasn’t “roundly” rejected last year.  Public polls show that 60-70% of the public wants a nonprofit option that individuals could choose, if they so desire.  And it wouldn’t lead to a single-payer, it would lead to a TWO-TIER system like almost every other advanced country. (So you could add private coverage if you want it and can afford it.)  The public option wasn’t passed with Obamacare because the Senate couldn’t get the last few votes required for passage.  So they omitted the public option, in order to pass the bulk of the legislation.
     
    Your question as to the insolvency of any of these programs begs the question as to WHO would be insolvent if the programs didn’t exist — it’s not the programs’ fault, it’s the need.  You are not going to make the need go away.
     
    Government administrative costs are certainly lower.  It’s very clear that private insurers have EXCESS administrative costs in addition to legitimate ones –  ask any doctor who has to deal with the insurers on the phone.  They also have marketing costs.  They also make an industry average of 4-5% private profit in return for absolutely NO value-added, because in healthcare, insurers are basically an accounting function.  Add all these together and you get about 10 cents that could be saved out of EVERY healthcare dollar, for the performance of an automatic accounting function.  That’s a conservative estimate. Not only would your own premium be lower, you’d pay less in taxes to cover the subsidies for the  poor.

    • Your question as to the insolvency of any of these programs begs the question as to WHO would be insolvent if the programs didn’t exist — it’s not the programs’ fault, it’s the need. You are not going to make the need go away.

      It’s the “need’s” fault? Uh, not really – it is the program’s fault. What would you call $60 billion in waste, fraud and abuse a year? That has gone on since the program’s inception and not a thing has ever really been done about it? What would you call trillions in unfunded future benefits? Both, plus much more cause me to call it a badly mismanaged program.

      • You have two different issues here, waste-fraud-abuse and unfunded liabilities.
        The last one first:  Isn’t the whole “unfunded liabilites” thing just a fearful canard, and really meaningless because it’s non-functional? Isn’t EVERYTHING in the long-term future, both public and private, an “unfunded” liability that either gets funded, or else doesn’t get funded?   The trillions aren’t all due now, or next week.  It has no negative bearing on long-term GDP growth, no negative bearing on short-term investment, nor anything else.   And the money, when it is due, does not leave the economic cycle.  Quite the opposite: investors know that society’s long-term commitment to healthcare means that innovation will have a pay-off.
        If you are worried about the long-term U.S. budget deficit, well then — there is none.  The CBO just scored it again two weeks ago, and the long-term budget is roughly almost in balance.  More work needs to be done, surely.  But  even the short-term deficit, a monster, starts diminishing next year, until it disappears in about 15 (?) more years.
        The first one:  Don’t forget that waste, fraud and abuse exists in the private insurance industry, and that Medicare on the other hand, has been vastly under-investigated until, in fact, Obama.  (E.g., a quarter-billion dollar Medicare fraud was uncovered last week.)
        Up until the Wall Street debacle, the FBI listed the two biggest frauds in U.S. history as private healthcare organizations.   You could make the argument that the private healthcare insurers do in fact return value in at least one way,  by their policing functions — except in the cases where they are colluding in the fraud.  Criminologists have always said that the biggest private frauds are in insurance, and that this is a world-wide phenomenon.

        • I don’t know where we find guys like Lee.  A liability is a promise that needs to be honored.  An unfunded liability is one in which there are no funds set aside to fund that promise.  So, NO, “EVERYTHING in the long-term future, both public and private” is not an unfunded liability.  Ask any insurance company of any kind (life or P&L) about unfunded liabilities and orange jump suits (as in the ones worn in prison).  Also, ask any company running a defined benefit pension plan and then compare that with the unfunded liability of public pension funds.
           
          And yes, if companies do fund their future liabilities, they are prevented from using those funds for investment in the business.  What would ever make you think they do not.  Pension funds are not available to the company for teir own business investment.  More orange jump suits.
           
          I cannot imagine what CBO report you read that claims the US deficit will decline to zero within 15 years.  In fact, current estimates are that the debt will grow to $20 trillion requiring at least $1 trillion, and maybe more) in interest payments annually. since the current budget is roughly $3 trillion, we are looking at interest payments equivalent to 1/3 of today’s budget.  That is a major constraint on the Fed regarding raising interest rates.
           
          You are also quite amusing.  Bruce mentions over $60 billion in Medicare fraud and you pop up with $.25 billion in fraud uncovered.  Can you say “rounding error”?
           
          Please provide a reference for “FBI listed the two biggest frauds in U.S. history as private healthcare organizations” and “Criminologists have always said that the biggest private frauds are in insurance”.  I would love to see those.

          • Rick Caird:  “Ask any insurance company of any kind (life or P&L) about unfunded liabilities…”
             
            Oh for heaven’s sake.  The federal government covers future liabilities by future revenue, not present savings.  Do any private insurers  keep assets on hand to cover all liabilities in the time period after, say, the maturity on long-term treasuries?
             
            In fact you could argue that the government is MORE reliable, since it has the power ot taxation, while any a private health insurer who fails will be bailed out by the U.S. taxpayer.  You know it will happen.  In fact we just bailed out the entire insurance industry implicitly with the Wall Street bail-out.
             
            Rick Caird  :  “ I cannot imagine what CBO report you read that claims the US deficit will decline to zero within 15 years.”
             
            The yearly deficit, not the accumulated debt.  The CBO long-term budget chart shows total revenues matching primary spending roughly at around 2012 — under the baseline scenario.  Then the budget stays roughly balanced beyond that point.
             
            Yes of course, “primary” spending does NOT include interest on the debt already incurred.  But getting it to balance is the first improvement since Clinton, and unmatched by any Republican.  So we keep going.
             
            Now, the CBO also declined to analyze cost-savings in Obamacare beyond two decades, writing that they don’t have enough analytical evidence.  There may be much more savings, nobody knows.  And that is without a public option, which clearly gets a good score.
             
            The CBO also delivered a barely-veiled comment that they don’t believe Congress will stick to paygo and the baseline scenario.  So what should you do?   Vote for Republicans to do something else like Medicare Part D which really was an unfunded mandate?
             
            If we get Congress to stick to paygo — which includes letting the Bush Tax Cuts expire as scheduled, or at least do not extend them beyond a cyclical stimulus for the current crisis — then we are on the way to managing the interest on the debt.  We can find spending cuts in the future through technological innovations and/or institutional improvements that can reduce the long-term budget without harming people.  DeLong gave a good summary, here:
             
            http://delong.typepad.com/sdj/2010/07/fiscal-policy-the-long-term-budget-outlook.html
             
            Rick Caird: “Please provide a reference…”  etc etc.
             
            Google  “fraud in healthcare and  insurance” and swim through it yourself.  It ought to become obvious that fraud is ubiquitious although Medicare sounds worse because it is far better reported.  Don’t miss the George Washington University study from last year.  And here’s the DOJ release on the Columbia/HCA fraud of Medicare:
            http://www.justice.gov/opa/pr/2003/June/03_civ_386.htm

        • Up until the Wall Street debacle, the FBI listed the two biggest frauds in U.S. history as private healthcare organizations.

          Could you provide a link to such a thing? I went to an F.B.I website, because I thought, “Hey, that’s a heck of claim!”

          And this is what I found:

          All health care programs are subject to fraud, although Medicare and Medicaid programs are the most visible. Estimates of fraudulent billings to health care programs, both public and private, are estimated to be between 3 percent and 10 percent of total health care expenditures.” (Emphasis mine). It didn’t seem to make the claim it was the biggest either.

          But here’s the kicker, Mr. Arnold. You seem to be implying that the healthcare industry itself is the biggest source of fraud (per the F.B.I.) rather than people trying to rip-off various healthcare entities. If you aren’t  implying that, I don’t see the point, except maybe throwing enough bull @$&$ and trying to make it stick…to something.

          • Jim Sullivan:  “I don’t see the point…”
             
            I didn’t see the point either.  Medicare and Medicaid spending are serious problems, and if we don’t deal with them, then nothing else is going to help us.  But the fraud, waste, abuse, mismanagement, etc. are NOT the reason they long-term budget bloaters.   Anyway, to fix those problems you need investigation and enforcement, and this is no different with the private sector, where it may be that the statistics are lower because there, fraud is underreported.  Be all that as it may — it’s not a reason to forego the savings in a public option.

          • ” Anyway, to fix those problems you need investigation and enforcement, and this is no different with the private sector, where it may be that the statistics are lower because there, fraud is underreported.  Be all that as it may — it’s not a reason to forego the savings in a public option.

             That emphasized part, you say like its common knowledge. It isn’t. Citation please.

            And how, exactly, would a public option offer savings, if ultimately run by the same people that run medicare, medicaid, social security, FEMA, the ATF, the IRS, the Dept. of Education, the NEA…?

          • There is a good discussion of healthcare fraud in the George Washington University study, mentioned above and linked below:
            “First despite strong evidence that fraud is system-wide and affects the cost of health care in both public and private insurance, national reporting systems on health care fraud fail to capture private sector fraud. As a result, current evidence on the scope of fraud fails to present the full magnitude of the problem, because it tends to focus on public insurance fraud. ”  p.2
            “losses to fraud — over $220 billion in 2007 alone – would be enough to generously support coverage for all uninsured Americans.” p.3
            http://www.rwjf.org:80/files/research/50654.pdf
            In addition, private healthcare fraud that involves providers AND insurers, in collusion, would tend to be undiscoverable.
            The reasons why a public option would be cheaper to consumers is that there can be a larger risk pool at the same time as the premium avoids some of the private insurers’ profits and some of the private insurers’ costs. The CBO estimates that premiums will be 5 to 7% lower.
            It also will reduce the budget deficits.  There appear to be two reasons why the CBO says it will reduce the budget deficits: (1) because the lower premiums then lower the gov’t subsidies to the poor people using the exchanges, and (2)some people will leave their employer’s plan, taking the additional compensation which went into their employer’s plan as additional wages, using some of that to buy into the public option plan and keeping the rest of it as additional income — BUT wages are taxed, while the part of wages that is the employer’s health contribution was untaxed.  (Essentially, the U.S. has a screwy system where old tax breaks for employer healthcare have created smaller risk pools and lots of administrative inefficiencies for both insurers and providers.  It’s one of the handful of possible cost savings that Obamacare tries to address.)
            http://cboblog.cbo.gov/?p=1183

          • “The reasons why a public option would be cheaper to consumers is that there can be a larger risk pool at the same time as the premium avoids some of the private insurers’ profits and some of the private insurers’ costs. The CBO estimates that premiums will be 5 to 7% lower.”

            Heh. Of course part of this larger risk pool is preexisting conditions, no lifetime limits, and people who will use more health care because they are now insured.
            More health care consumed  means more health care costs. Period. The rest is bs.

          • Timactual:  ” part of this larger risk pool is preexisting conditions, no lifetime limits, and people who will use more health care because they are now insured.”
            Already included in the calculations.

    • “the public wants a nonprofit option that individuals could choose, if they so desire.”

      You mean like Blue Cross, or the Kaiser system, or one of the many other non-government non-profit health care corporations?

      ” It’s very clear that private insurers have EXCESS administrative costs in addition to legitimate ones”

      Unlike government where every penny is spent wisely and legitimately. Right. Care to buy some well-watered Florida real estate ?

      ” ask any doctor who has to deal with the insurers”

      You might also ask any doctor (and pharmacy and hospital and even insurer)just how much of his/her administrative costs are mandated by the government.
       Obviously you have not used a health care provider or pharmacy recently.  

      • Timactual:  “You mean like Blue Cross, or the Kaiser system, or one of the many other non-government non-profit health care corporations?”
         
         
        Well, Blue Cross keeps announcing the intention to go for profit.  Kaiser builds its own hospitals, which would logically lead to something like the two-tier Australian system.  But the real issue is the size of their risk pools.  It should be pointed-out that Obamacare, by making the risk-pools larger, actually sets-up the market for non-profits like these to lower the premiums for everybody — without a public option — as follows:
         
         
        Most people appear not to have noticed that a major cost-reduction in Obamacare is the introduction of a much more efficient market, and the (unfortunately) slower move to get everyone into it.
         
         
        These markets are going to be listing exchanges, web pages essentially, whereon every insurance company that aims to cover people must list their prices in a standard coverage format, subject to approval by each state’s insurance commisioner. This initiates a few different things:
         
         
        (1) It immediately introduces more competition.  (2) It reduces consumer transaction costs to nearly zero. (3) It allows the building of bigger risk pools. (4) Because it is all listed on one page, there doesn’t have to be any marketing cost, and this eliminates a whole budget item for the healthcare insurers, while competition will make them tend to pass the savings right back to the insured. (5) This zero marketing cost also allows a non-profit to enter more easily, to build its risk pool, and to offer prices that are 5% to 10% lower than the for-profit insurers.
         
         
        You can’t reduce consumer transaction costs and reduce producer marketing costs without cost savings. It’s definitionally impossible.
         
         
        Timactual:  “ask any doctor who has to deal with the insurers”
         
         
        Actually I’ve talked to about 8 doctors in the last three months about it.  (6 of them supported single-payer!  But I still think it should be a two-tier system, to provide incentive for innovations.)  Healthcare-provider administrative costs are virtually unmentioned in the healthcare debate, but these costs are significant:  arguing on the phone, dealing with different billing conditions, office time, etc.  I was surprised to hear a top surgeon at UCLA say he’s pissed because the healthcare costs of his corporation’s employees are going up with Anthem’s new hike announcement (39%) — he has to plow it right back into his own prices!

        • “Well, Blue Cross keeps announcing the intention to go for profit.”

          So what? I keep anouncing the  intention to lose weight. And even if true, so what?

          “the introduction of a much more efficient market”

          Pure political bs. An unsupportable claim with absolutely no evidence.

          “subject to approval by each state’s insurance commisioner”

          Sort of like the current situation.

          “Healthcare-provider administrative costs are virtually unmentioned in the healthcare debate,”

          Only if you are deaf and blind.

          The rest of your comment is more assertion and political bs.

          Crikey. At least Erp’s drivel is sometimes amusing. 

          • Timactual:  “Pure political bs. An unsupportable claim with absolutely no evidence.”
            You think that the exchange markets will NOT reduce consumer transaction costs and producer marketing costs?  What’s your reasoning?
            Why do you think this is originally a Republican proposal?

  • ah, ye of faith with very little-to-no faith! it’s SO much fun to watch people stew from their ideological soapboxes and unseemly ignorance. all the same talking points; all the same references; all from identically like-minded sources, not one of outside origins. it’s as though if you ALL say it — as would be expected — it must be true.
     
    it’s even SO MUCH more fun to think about what it’s going to be like in 2016 when we’re still a democratic republic; the financial crises has eclipsed a full recovery; the world has forgiven us for our not-so-distant tyrant-like ways; everyone has gone back to work; and you get healthcare and she gets healthcare and he gets healthcare and you get health care and you, young man, get healthcare and everyone gets an affordable, meaningful healthcare plan; “our grandchildren” are not only still grand and NOT directly paying weekly federal debt bills with piggy-bank funds, some of them are stinking rich; and, socialism is still EONS away from becoming the political, economic and/or socioeconomical foundation of the United States…all thanks to then still president Barack Hussein Obama and people who understand that, while requiring patience and time, progress, not opposition to progress, is what makes the world and it’s people evolve. the only bad part will be that Christianity (and religion, in general) will still hold a crippling, not-in-the-Constitution death-grip on…well, the rest of us. but i’m cool with that…as long as i get a job, healthcare and my IRA back…and i get to help someone else to do the same. after all, it is america.
     
    yep, Obama bin Laden, His Phoniness, Barrack The Wealth Spreader, Obysmal, President Christ Superstar, by God, The Teleprompter in Chief and the sometimes liberal, always evil Progressive (sometimes called “everyone else whose not into ‘the way things were’“) are going to save us from the damage done by years of ignorance and complacency, catapulting us back onto the road OF prosperity. we’re already on the road TO it.
     
    you’ll see. it’s going to be just like before! you remember…good times!!
     
    not ONE of these ridiculous right-infested claims, cataclysmic meltdowns or doomsday events is going to happen…certainly not under this watch, and likely under NO watch of the future. we’re not Greece, can militarily kick ANYONE’s ass, understand how to adapt and change to meet challenges and fix that which is broken (of course, “how to” is one thing…), and have the power to continually force change with a simple, periodic vote. unfortunately, despite upbeat, rosy predictions, the latter won’t help you this November.
     
    and what then will you say? will you say you were wrong? 
     
    i’ll tell you what: i will if you will…deal?
     
    back to job hunting…

    • Put this little screed on your resume.  I am sure an employer will read it and be dazzled by both your magnificence  and predictive ability.  You are sure to find that job in no time.

      • thanks rick! i’ll take that under advisement…

        by the way, exactly what part of my comments would an employer find to be so offensive so as to exclude me from possible employment? it’s the 21st century…i doubt any. in my field, it’s encouraged…

        also, would this July 23, 2010 at 12:18 be considered “screed?”

    • The real problem is that there are two questions brought up here that are related, but aren’t linked as closely as they should be.

      1- Would Obama’s health care policies improve health care and / or the budget? Considering we started with the highest quality health care system in the world (and it was available to a wider range of the population than any sytem in the top thirty), but are trying to copy the bad ideas from inferior systems, it certainly won’t help the actual care recieved. A quick look at Medicare, Masscare or any of the nations that have run into problems with the budget of their socialized medical systems shows that the only way to save money is to lower the services offered even further.

      2- Will the Democrats win in November or will Obama get reelected? Considering the vast majority of Obama voters were ignorant or hypocritical (not many people will openly claim they think it’s just fine to spend two decades in a rascist organization, even if it’s just for political expediency), and the core is so dedicated to their lies that they have a chance. Their projection is so pervasive they may not even realize it. Accusing others of ignorance while completely ignoring every single bit of evidence about our own systems and the ones they’re trying to copy.  Accusing anyone critical of Obama of relying on idealogically liked-minded sources, then linking to the Huffington post. Ironically enough, one about projection and tyranny, while ignoring the fact that Bush had much more support for his actions than Obama, or that real tyranny involves taking possessions and freedom of action away from your own populace to consolidate power (see Chrysler and Health Care Reform) .

  • But in one of its most surprising moves so far, it has done the opposite, proposing what would be the most radical reorganization of the National Health Service, as the system is called, since its inception in 1948. Practical details of the plan are still sketchy. But its aim is clear: to shift control of England’s $160 billion annual health budget from a centralized bureaucracy to doctors at the local level. Under the plan, $100 billion to $125 billion a year would be meted out to general practitioners, who would use the money to buy services from hospitals and other health care providers.

    ObamaCare is so .. yesterday