What role will insurance companies play in the “public option”? by Kip Sullivan, JD

[slipslidingaway]

Much more at link and still reading...

http://pnhp.org/blog/2009/11/01/what-role-insurance-companie/

"Executive summary

Both the Senate and House versions of the proposed “public option” require that corporations with expertise in health insurance “administer” the “option.” This fact received no attention until October 24 when the Washington Post reported that the “option” would “likely” be run by insurance companies. Several bloggers attempted to assure readers that this news was nothing to be concerned about. They asserted that Medicare has always contracted with insurance companies to process claims, and then leaped to the conclusion that the role of insurance companies within the “option” will be no more significant than it is within Medicare.

But this conclusion is clearly wrong if the Senate version of the “option” becomes law, and almost certainly wrong if the House version becomes law. This conclusion rests on the widespread belief that the “option” will “look like Medicare,” which is not accurate. The most important differences between Medicare and the “option” are size and the environment within which the programs will function. While Medicare enrolls 15 percent of the population, the “option” is projected to enroll somewhere between zero and 2 percent. While Medicare is a single-payer system, the “option” will function within a multiple-payer environment.

These two differences, plus provisions in the Democrats’ legislation authorizing the federal government to hire private corporations to administer the “option,” create a high risk that insurance companies and other types of corporations will play a role in the “option” that greatly exceeds the limited role they play in the traditional Medicare program. Private-sector firms will probably play a role within the “option” that closely resembles the role that defense contractors play in the production of weapons for the Pentagon. Just as Northrop Grumman, for example, carries out all tasks necessary to create a fighter plane, so private corporations (not public employees) will carry out all tasks necessary to create the “option” health insurance programs. Carrying out virtually all of the tasks necessary to establish and maintain “option” health insurance plans is obviously very different from, and more significant than, merely processing claims.

To comprehend the more dominant role insurance companies will almost certainly play within the “option” we must first disabuse ourselves of the myth that the “option” will “look like Medicare.” Although leaders of the “option” movement have vigorously promoted that claim, the claim has been demonstrably false since at least June when Democrats introduced legislation that would create tiny “option” programs that would, according to Congressional Budget Office estimates, insure no more than 10 million Americans.

Once we have determined that the “option” will be tiny, we must then ask whether a tiny “option” can be implemented as easily as Medicare was in 1966. Using just our commonsense and a rudimentary knowledge of the health insurance industry, it becomes obvious the answer is, No, a tiny “option” cannot be implemented as quickly and easily as Medicare was. Unlike Medicare, which was implemented at the national level using a few relatively inexpensive methods (such as press conferences and a public education campaign), the “option” will have to be implemented on a market-by-market basis. The “option” program will have to create one “option” program or plan for the California Bay Area market, another for the upstate New York market, and so on...

To sum up: The tasks required to implement a small “option” are quite different from the tasks required to implement Medicare; the Democrats’ legislation indicates these tasks will be carried out by insurance companies and corporations with similar expertise. When we piece these facts together, we must conclude that private-sector corporations will very likely play a much greater role in the “public option” than they do in Medicare.............."

[inna]

1. Excellent article, thanks for the heads up.

I'm still reading it too, it's a good read!

[slipslidingaway]

2. Just getting back to this article, I see he links to a comment in a DU thread...

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=6847370&mesg_id=6850002

You're welcome...back to reading, this unrelated article is next on my list.

http://contraryinvestor.com/mo.htm

"...In this discussion we want to have a brief look at components of credit cycle character that as of today simply have no precedent over the last six decades of recorded Fed data. After looking at these data points, we want you to ask yourself, should we really be expecting a “typical” economic recovery? Secondly, we want to briefly have a look at historical patterns of consumption in prior recessionary cycles and what experience of the moment may be telling us relative to behavioral patterns of the past. Let’s get right to it..."

[ipaint]

3. Thanks for posting this.

The appendix of the article is quite enlightening given the response on FDL.

The article is full of info. Too bad the public option will never live up to the hype. It is going to be ugly when the majority of americans who trust obama and the democrats to do the right thing find out they were sold out and are now owned by the very business that has done such a criminally poor job of providing people access to care for decades now.



"Nevertheless, this issue of whether corporations will play a significant role in the “option” is an important one because truthful reporting about it helps educate Americans, including those Americans who hold seats in Congress, about what the “option” is and isn’t. Right now the Democrats’ “option” looks like a tiny little program that will hire insurance companies to create little privately run insurance companies from scratch on a market by market basis. It is extremely unlikely that if pollsters asked Americans what they thought of this version of the “option” that a majority would say they like it. It’s hard to believe a majority of the membership of Congress would vote for it."

[slipslidingaway]

4. Happy to see people at FDL challenging the absence of replies to legitimate questions...

:applause:

You're welcome and I agree, good info.

[slipslidingaway]

5. He raises some important issues IMO n/t

[bvar22]

6. The "Public Option" has already been "Privatized".

I see the CBO has now lowered their enrollment projections for the Public Option to about 6 Million after 10 years.

Someone help me with the Math:

New Price Tag for Health Care Reform = $900 BILLION Dollars for 10 years

Enrollment in the "Public Option" = 6 million after 10 years.

Who is gonna GET ALL that MONEY?



This isn't going to sit well with America.

This abomination is so bad that The Democrats are going to do the impossible:
The Republicans WILL gain credibility as the Party that OPPOSED this.

[slipslidingaway]

7. Only problem is ...most of America is asleep, years later each Party will...

point to some piece of this whole debacle and blame it on the other side ... and the members of each Party will fall in line.

:(