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During today's press conference (see the video accompanying this article), the President was asked if a public health care plan was "non-negotiable." He answered that nothing was "drawn in the sand," and that he was only "committed to reform and coverage for all." This is very disturbing as it seems to indicate that our President is willing to compromise just about anything away from health care reform.
The case for a public plan is very simple. The reason for the massive amount of our nation's GDP devoted to health care, all the personal debt and bankruptcies, and the vast number of people uninsured and under insured is the profit motive of privatized insurance. As Noble Prize winning Economist, Paul Krugman puts it in Health Economics 101:
[I]magine what would happen if there were only one health insurance company, and everyone was required to buy the same insurance policy. In that case, the insurance company could charge a price reflecting the medical costs of the average American, plus a small extra charge for administrative expenses.
But in the real insurance market, a company that offered such a policy to anyone who wanted it would lose money hand over fist. Healthy people, who don’t expect to face high medical bills, would go elsewhere, or go without insurance. Meanwhile, those who bought the policy would be a self-selected group of people likely to have high medical costs. And if the company responded to this selection bias by charging a higher price for insurance, it would drive away even more healthy people.
That’s why insurance companies don’t offer a standard health insurance policy, available to anyone willing to buy it. Instead, they devote a lot of effort and money to screening applicants, selling insurance only to those considered unlikely to have high costs, while rejecting those with pre-existing conditions or other indicators of high future expenses.
In short, to maximize profits private insurance companies must charge as much as possible while at the same time covering as little as they can possibly get away with. A public plan, on the other hand, is not motivated by profit and thus does not have this problem. Furthermore, a public plan would be, as Krugman notes, cheaper while offering better coverage. By forcing private insurance to compete with a robust public plan we force private insurance companies to offer more coverage at a cheaper price. This can only be good for the American people.
And yet, the President seems willing to abandon the public plan. But how can there be any reform if you allow the private insurance companies to continue their practices? What will he do instead of a public plan? Ask the insurance companies "to be good"??!!
This is very troubling news.
Posted June 23rd, 2009 by mattwion
