Private Health Insurance = Newspapers

I have a question for all of you “socialized medicine baaaaad” bleaters out there: What would you do if US business decided, en masse, that providing health care for employees no longer made economic and logistical sense?

Fifty-nine percent of Americans receive health insurance through an employer, according to the ABC News Health Care Town Hall broadcast the other night. If you are among that 59 percent, would you stick to your rhetorical and supposed ideological principles? Would you pony up $10,000 when acute stomach pain you think might be an appendicitis sends your daughter to the emergency room at 3 a.m.? Would you just tell her to suck it up because that’s what conservatives do? Or might you suddenly find yourself rather open to the dreaded socialized medicine? Considering that I’m aware of no great mass of conservative seniors or veterans boycotting Medicare and the VA, guess which option I think is most likely?

For all its massive complexity and expense, the US health insurance model rests entirely upon a single, simply understood Jenga piece: the willingness of private employers to pay for private health insurance and eat its inefficiencies. Pull that piece away, and the whole system falls down in a mass of wreckage – affecting everything from public health to doctors salaries. In this way, private health insurance resembles nothing so much as the institutional newspaper industry, which also long depended on an irrational business subsidy. For years, newspapers managed to convince businesses – and classified advertisers – that they needed to use the newspaper to reach customers in their particular market. At the same time, newspapers convinced themselves that advertisers were paying for their vital community journalism. Reality, in its merciless way, with a little nudge from web technology, has greeted these twin delusions with, “Uh, no” and “Uh, hell no.”

What’s striking to me, in retrospect, is how obviously fragile the entire institutional journalism model always was, even as most of us, myself included, considered it as permanent as undertaking. I suspect, one day soon, we’ll look back on the employer-based model of “free market” health care and say the same thing, especially if the Republicans and corporatist “centrist” Democrats succeed in blowing up meaningful reform as they’re trying very hard to do.

The key health care delusion is that employers provide insurance to keep their employees healthy. No. They provide it because they’re afraid of losing employees to competitors if they don’t. The instant a critical mass of companies perceive they can retain and recruit talent without paying directly for that talent’s basic health care needs, the private US insurance industry, which depends on companies considering health insurance a part of base compensation, is doomed. It is never a good thing for your business model to depend on a single corporate standard, which could be revised in an instant.

How likely is business to wake up and say, “Not our problem anymore?” Let’s take a look at a couple of charts.

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The first chart illustrates nicely a simple fact that I’m not sure everyone grasps. Those of us who get our health insurance through an employer do not come close to paying the cost of our own insurance. Not. Close. This, folks, is socialized medicine. It’s just corporately socialized – badly – through an enormous and unpredictable business tax. And look at the trends. They are all upward – drastically. It’s the worst of all worlds – employees are paying more, but so are employers, whose share of the costs is actually increasing. At a time when most employers are struggling just to stay in business, this is completely unsustainable. And everyone knows it. Raise your hand if your company is laying the hard sell on you to enroll in a high deductible plan. That’s the first step to dropping insurance altogether.

The second chart buttresses the first, showing how private insurance costs – paid primarily by employers – are projected to balloon over the coming decades, greatly outpacing the costs of the socialized medicine programs, which are growing too fast in their own right. For a citizen, here’s the bottom line of this chart: Government insurance contains health care costs far more effectively than private insurance. And again, I see nobody fleeing Medicare for the glories of the free marketplace because care is somehow worse.

This chart also provides the rationale for the so-called “public plan option” that has become the key source of controversy in the ongoing effort at reform. Government has demonstrated that it controls costs better than private insurance, which must turn a profit and pay big bonuses to executives. Thus, if government creates a plan to compete with private insurers for that corporate business, it’s likely to succeed, and, in turn, drive down at least the growth of costs. That’s the argument for a public plan.

However, it’s not clear to me that business still wouldn’t eventually decide – public plan or not – that they no longer need to provide employee health care. Eventually, it would come to seem odd for the companies to buy health care from the government rather than just allow government to provide it in the same way most other industrialized countries do. That’s the argument against a public option, that it’s actually a Trojan Horse for single-payer health care. Because it will undercut private insurance costs, it will eventually drive private insurance out of business, leaving no option but single payer. I happen to largely agree with this argument. I just think crowding out private insurance is entirely a good thing.

Doctors – or at least the American Medical Association lobbying group – hate this idea because it means some physicians might get paid less. They remind me very much of reporters and editors asserting how important it is to maintain the authority, rigid heirarchy, and surprisingly highly paid executive structure of the traditional newsroom in the face of budget cuts and dirty bloggers. We’re very important, damn it. How will you get along without us? Yes, yes, all true, except people vote with their money. And health care can be surprisingly elective, right up until the point when it absolutely isn’t.

Doctors clearly have greater immediate importance than journalists. But people die, or get sicker, every day in this country for lack of insurance money to pay doctors, or, more often, because of inertia brought on by what it costs to access quality primary care without insurance. What happens when a big chunk of that 60 percent of Americans with employer-based health care suddenly finds it has to pay the full cost of a visit to Watson Clinic? Either they won’t go – they’ll wait until they need the ER, which they also will not pay – or Watson Clinic will drop its prices, otherwise known as paying doctors less.

Whilw doctors may not perceive their own risk if nothing changes, I think the private insurance industry does see what’s coming. That’s why they’ve “come to the table” with what sounds like major cost control commitments. Who knows how serious or enforceable they are, but they are using them as a cudgel against the public plan. Private insurers have a very small political, and especially economic, needle to thread. If Congress does nothing, I think the private health insurance industry realizes it could face a very rapid apocalypse akin to what the newspaper industry is now enduring. If Congress adopts a meaningful public plan, I think the industry sees a slower, more gradual glidepath to the same apoclayptic end state. One could argue quite forcefully that this represents the best option for the country – a managed destruction of the employer-based model that allows the insurance industry to gradually shrink to a niche, supplemental status, much like in the excellent French model, which most observers consider the world’s best health system. But ultimately, that doesn’t serve the industry’s economic interests.

Rather, it seems that its preferred option is to commit to some cost reduction and universal, or near universal, coverage backed by government subsidy and an individual mandate. No public plan, or, more likely, a public plan intentionally larded with landmines designed to keep it from functioning well. This, to me, is worse than doing nothing.

In any event, Congress isn’t really debating heath care reform. It’s debating the future of the private health insurance industry. That’s what we’re deciding right now because all evidence suggests that the industry cannot both support itself and provide health care for all Americans. I also think, politically, this debate is about deciding who gets to blame who for bringing socialized medicine to America in the years to come.

I must admit that a very large part of me is rooting for Senate Republicans and the Mary Landrieu/Bill Nelson band of Corporacrats to succeed in blowing up the public plan, which will force the House to vote against any health care reform. I have come to believe that truly significant systemic change, the type of change driven by a fundamental reassessment of how we think about a subject, comes only as a byproduct of massive, widespread economic pain. Human beings just don’t do abstraction very well. For example, $4 gas single-handedly destroyed the Hummer culture in this country in about six months and did more to shape energy policy than any congressional initiative in my lifetime.

The face-spiter in me would take some joy in the day that the coalition of major industry associations announces that within three years its members will no longer offer health insurance to employees. They’d get to be the bad guys, and I’d get to enjoy the spectacle of watching the AMA – the progenitors of the “socialized medicine” epithet — help write the single-payer health bill it would take Congress about 15 minutes to approve. I have always said that single-payer health care would come from the business Right. I still believe that. Doing nothing will ensure it, I think.

So while I acknowledge that a public plan-based gradual reform path is probably safer for the country, I must confess that I’ve grown weary over the years of protecting penny ante economic conservative bleaters from the consequences of what they think they believe. The silence of the lambs as it all came tumbling down would be sweet – at least for a minute or two.