Other Good Ideas Nobody is Voting For/Against
Steven Pearlstein in his op-ed makes a fairly dumb classic Washington Post (false) moral equivalence between death panels hysteria on the right and the public option on the left. That said, he makes some interesting points vis a vis ideas that are not in any of the bills currently under review:
To address the pricing power of the big hospital chains, the government could require that they offer the same set of prices to all private insurers. Congress could also toughen antitrust laws to make it more difficult for hospitals in the same region to merge and require the breakup of chains that charge rates that are significantly higher than in other markets. To bring down drug prices, Medicare could cap what it is willing to pay for any drug at 150 percent of the average price paid by other industrialized countries, where governments negotiate prices that are significantly lower. That would become a new benchmark for what private-pharmacy benefit managers would pay.
I don’t really know where I stand re: public option. I thought the Wyden bill was always a better bill. Or Phil Longman’s work on the VA Hospital. So I’m just kind of watching this play out with some detached (both political and geographic) interest.
To address the pricing power of the big hospital chains, the government could require that they offer the same set of prices to all private insurers.
This is likely to be disastrous as policy.
First, it will fail as a method of cost control. If you force providers to offer the same pricing to small insurers that bring them little in the way of economic benefit (predictable volumes) and lots of additional complexity costs, the lowest prices will tend to drift higher to cover the additional cost.
But that’s the minor point. The major point is that you eliminate one of the two major incentives for the formation of larger risk pools (the other being scale benefits on admin costs). Under this proposal, any fly-by-night, extreme cherry-picker can free-ride on the negotiating strength of larger issuers.Report
good point. maybe I misread him but I thought in context he was describing more high-risk/high-cost kinds of treatments. Maybe I made that up in my mind to make it sound like a potentially better idea.Report
thinking about it so more, it’s part of the anti-trust theme of his piece. It’s anti-monopolistic. I don’t know if that changes the criticism. It would seem to achieve that goal (busting of trusts) but I wonder if something else would be needed to deal with the potential downsides of the idea.Report
It’s anti-monopolistic.
Right. I sympathize with where Pearlstein is coming from, and I credit him with being a good faith participant in the whole health care debate. But it think he’s barking up the wrong tree with his concerns about monopoly. The root of increasing per patient costs is not monopoly power per se, but the structural incentives in the way that care is provided and paid for. Just pushing the cost pressure down onto hospitals is unlikely to change that. In our current system of fee-for-service medicine and fragmented payers, there are very weak systematic incentives to manage patient care in ways that promote good outcomes at low costs. The insurer has such an incentive in theory, but in practice it’s easier to just try to avoid responsibility for payment or avoid issuing the policy in the first place. To be fair, there are examples of insurers in the large group market successfully improving the management of chronic conditions , but even then the incentives are weak because contracts for large group coverage turn over so often (and for that matter they are usually third-party administration contracts where the actual casualty risk is borne by the employer).Report
I’ve never understood the argument that other countries threaten pharma companies with stealing their intellectual property if they don’t agree to sell drugs at cost-plus. Would it not be possible for pharma companies to then say “fine, nobody respects anybody’s patents anymore, hurray” and then start making all sorts of stuff from the other countries’ IP?Report
i suppose although that doesn’t sound like good business practice and it would end up in WTO (and WTF for that matter) legislation.Report
Boy the post has far more then its share of The Stupid. Equating a false, slanderous lie with a hotly debated policy proposal. Brilliant. I may not survive this health care debate.Report
like i said that part was uber-stupid. someone could try to make a legitimate argument that public option is not the best policy or not sell-able politically in the Congress. But that it’s the same as the death panel stuff is quite ignorant.Report