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Ambivalence Revisited

Yesterday, I talked about the recent upsurge in interest in the “Public Option” (Bad News and More Bad News) and my mixed feelings about the whole thing. Well, I’m inspired by Lambert to revisit this topic:

Who kidnapped Paul Krugman? Partial truths, false statements, bad writing… It’s almost like he’s turning into an access blogger!

I read Paul Krugman’s piece yesterday with some interest ::

Here’s the story: About 800,000 people in California who buy insurance on the individual market — as opposed to getting it through their employers — are covered by Anthem Blue Cross, a WellPoint subsidiary. These are the people who were recently told to expect dramatic rate increases, in some cases as high as 39 percent.

Why the huge increase? It’s not profiteering, says WellPoint, which claims instead (without using the term) that it’s facing a classic insurance death spiral.

. . .

Now, what WellPoint claims is that it has been forced to raise premiums because of “challenging economic times”: cash-strapped Californians have been dropping their policies or shifting into less-comprehensive plans. Those retaining coverage tend to be people with high current medical expenses. And the result, says the company, is a drastically worsening risk pool: in effect, a death spiral.

. . .

Finally, there have been calls for minimalist health reform that would ban discrimination on the basis of pre-existing conditions and stop there. It’s a popular idea, but as every health economist knows, it’s also nonsense. For a ban on medical discrimination would lead to higher premiums for the healthy, and would, therefore, cause more and bigger death spirals.

So California’s woes show that conservative prescriptions for health reform just won’t work.

And Krugman goes on to discuss what he believe WOULD work. And his discussion made me so uncomfortable, I blocked the whole thing from my mind ::

And if you put all of that together, you end up with something very much like the health reform bills that have already passed both the House and the Senate.

Because if Krugman thinks those bills are actually going to “work” — that they’re more than just fragile baby-steps that start us on the path to doing something serious some day — well, I didn’t know what to say about that.

When he says, “Finally, there have been calls for minimalist health reform that would ban discrimination on the basis of pre-existing conditions and stop there.” I guess he’s right.  But, what about the other calls — for Single Payer (Medicare for Everyone) — Krugman doesn’t mention this possibility at all.

And how about the possibility of letting the Death Spiral for the Health Insurance parasites continue to it’s logical conclusion ::

But the main point is this: California’s death spiral is a reminder that our health care system is unraveling, and that inaction isn’t an option. Congress and the president need to make reform happen — now.

CRAP — I’m such an idiot. It’s been obvious for almost a year (the second we started talking about Health Insurance Reform instead of Health Care Reform) that we were heading toward a bailout of the insurance industry. But, I thought it was just because there was no way WE were going to get bailed-out :: why isn’t Krugman writing about the death spiral that PEOPLE are in over a lack of health care?

I didn’t realize that the insurance industry was in a death spiral and that they can’t survive without the bailout. What would letting the death spiral play out mean to us?

My ambivalence has just about melted away . . .

65 Responses

  1. Lambert’s post is really good — everyone should read it.

    • My favorite part:

      The real question is Anthony Weiner’s: What value do the insurance companies add to the transaction? None of the defenders of our murderous system of health “care” for profit have ever been able to answer that question. Not even you, Professor Krugman. So why are we bailing them out by guaranteeing them a market? Why isn’t that part of the conversation? More importantly, Professor Krugman, why didn’t you make it part of the conversation?

      • Yeah, supposedly they can bargain for lower costs from the provider as well as have better information on who is a good provider but that’s not exactly the role they really play. I knew when this managed drug benefit program from UHC got bought out by Smith Kline B. that it was just the start of vertical loading. It’s the same trick Rockefeller used to create a monopoly for Standard Oil.

        • They must do some hellacious bargaining in exchange for keeping one-third of they premiums they collect.

        • Except they don’t “bargain” with the providers and pharma….they hold all the cards! We’ve got the patients; you want some, you take what we offer. It’s a horrid industry.

          I worked at a BC (still privately held) group several years ago. Want to see the greatest single employer of the morbidly obese? Shocking!! They provide lousy coverage to their employees, and medical groups have gone to the media to try and get people to lobby their employers to switch to a better insurance group. But, they give out big bonuses to every non-exempt employee….and call themselves a not-for-profit. Those profits should be going toward covering member treatment and/or lowering premiums!! I didn’t last long…it’s too hard to breathe when I work someplace I know is unethical.

      • Yes! I followed one of those links (to Common Dreams) —

        Joe Scarborough Is Shocked, Yet Awed by Single-Payer Logic

        Weiner, who recently warned that President Obama could lose as many as 100 votes on a health bill if a public option is not included, really wants single payer–Medicare for all Americans is his goal. What a crazy, way-out, reckless notion, Joe went into their encounter believing. But Weiner asked some simple, direct questions that no politician, much less Obama or HHS Secretary Kathleen Sebelius, has managed to pose:

        What is an insurance company? They don’t do a single check-up. They don’t do a single exam, they don’t perform an operation. Medicare has a 4 percent overhead rate. The real question is why do we have a private plan?

        “It sounds like you’re saying you think there is no need for us to have private insurance in health care,” Joe asked at one point.

        Weiner replied: “I’ve asked you three times. What is their value? What are they bringing to the deal?”

        Scraping the bottom of a seemingly bottomless pit of spin, Joe is repeatedly left speechless, “stunned” and “astounded,” he said, by the questions themselves.

        • It’s hard to believe that any of this is really happening. It’s bizarre.

        • Wow, Katie, you’ve really done a yeoman’s work on this very important subject – thanks! The BO administration thinks they can throw around the meaningless term “public option” and catch the kool-aid kids with that. Well, guess what? YES THEY CAN! But the rest of us know better, and our numbers continue to grow exponentially, thanks to people doing this kind of reporting.

  2. Well, I was just writing something that might serve as an excuse for poor Krugman (I do feel sorry for him some times) It’s just hard to keep up with what one needs to justify every day

  3. Krug must be on Sustained Release Kool-aid tabs at this point.

    • Ha! It’s got to be something like that — this post of his doesn’t make any sense otherwise.

      • Could he be consulting for some health insurance corporation? I hate to even think it.

        • Or own stock, perhaps? I’m always amazed when people are surprised at the man behind the curtain. What did people expect a wealthy Krugman to do but protect that wealth?

          • He definitely seems to have a bigger investment in lying than in helping the American people. Sad.

    • I think Krugman’s bought into the idea that if this doesn’t pass, nothing will ever pass so better this and let them reform it in dribs and drabs later. That’s beyond optimistic. Usually those standing bills just turn out to be more and more giveaways for the lobbyists in the industry. We need to kill the health insurance industry before it kills a huge number of us.

      • And that’s the source of my (former?) ambivalence too. But, you’d think that Krugman could read his own post and see the logical fallacies.

        I’ve done that just writing posts here. Started out thinking my post was going to lead to a certain conclusion and realizing along the way that my points lead to a totally DIFFERENT conclusion.

        When that happens a thoughtful person changes their conclusion.

        • It seems more logical that a bad health insurance reform plan would get repealed, not “fixed.”

          • Exactly.

            My thinking is that if this congress can’t write a decent plan for the people who hired them, we simply need to send in representatives who aren’t indebted to the corporations and are willing to do the job we pay them to do.

        • I think Krugman’s experiencing cognitive dissonance, after being such a big supporter of BO. Krugman can’t stand thinking he was wrong about Barry all along, so he pretends to himself that he was right, and thus must fall in line with the BO BS about HCR.

      • What do you think of this Death Spiral idea? The companies are making more money than ever — how is that a Death Spiral?

        • I hope they die in agony.

        • It’s purple prose but it basically will cause the company to stop taking sick people or go out of business. The insurance business is based on spreading the risk around to a huge group of people and if the lose a portion of that population it changes their equations. The problem is that when their pools get small, the risk changes dramatically, especially if it’s the well people leaving. Cherry picking is always a problem. If the industry would just embrace one generic plan that it lets every body into cheaply and then ask for some subsidies, it could solve this problem without much trouble. It wouldn’t be perfect, but it would be better. They can’t even standardize the paperwork,let alone the coverage so in a way, they ask for it.

        • I’m asking the same thing Katie!

          Krugman’s logic is enough to make my head explode…..

          • Krugman is spinning a lot of stuff when what he really means to say is the Ds need to pass something–anything, even if it’s worse than passing nothing–so WH groupies like Krugman have something to point to and say, see Obama did that.

  4. Another sign of my stupidity — I had NO IDEA that profits rising by ~30% and more from one year to the next were the sign of a Death Spiral — that without a Bailout we could see the death of the health insurance industry.

  5. Blue Cross Regence, in Oregon, raised premiums by about 40% last year. That was my increase anyway, and I believe it was across the board for everyone.

    • Crap — I’d have to cancel my plan. There is no way I could absorb an increase like that. We’re already paying almost $900 — if they boosted it by $400 ??? {{shudder}}

      • Maybe I misspoke about it being raised 40% across the board, I actually don’t know. (blushes). Maybe it was raised 40% for the “high deductible” folks like me. In any case, there’s no legislation to prevent such increases.

        • No need to blush — really!

          I have permanent COBRA & my plan is tied to my former employer. I THINK that if our rates were raised that much they’d have to find another plan — but, who knows? If they’re all raising the rates like that then there might not be a choice.

          • ouch. COBRA is expensive…

            Before the big increase, my plan was a pretty good value, assuming one had $5k easily available for an emergency, or diagnostics, or PT, or mental health….Hey, wait, I’m being ripped off!

          • And, of course, we could no doubt cover everyone in the country for their whole lives on what we spent – and are spending – on the illegal Iraq “war.”

    • BTD:

      It’s general pablum about the need to “reform” the health insurance system. It would be more meaningful if the President was supporting proposals to actually reform the health insurance system in a meaningful way. The White House is not. It has pushed for the feeble Senate health bill that does nothing meaningful on reform, though it does expand Medicaid and offer, albeit inadequate, subsidies for the purchase of health insurance. To call it a band aid is an insult to band aids. Would it be a first step? Well, the proponents of the bill like to say it will be decades before health insurance reform is addressed again, so by their own logic, it is the last step for some time. Either the crisis is not quite so desperate, which seems wrong, or the notion of doing anything, however feeble, is the logic of the day. Not very inspiring.

      • It would be more meaningful if the President was supporting proposals to actually reform the health insurance system in a meaningful way. The White House is not.

        “Next time think before you pick the media darling!”

      • Why would it be “decades”? Shouldn’t the Dems be in charge for years to come, since the mess-iah was the end all, be all for Democrats? What is that you say – it’s looking pretty good for the Republicans in the next election, thanks to Obama? Hmmm, well, maybe we could just scrap the POS bill we have now, throw out the payoffs and bonuses to insurance and Big Pharma, and do, I don’t know, maybe some WORK, put in some actual EFFORT, in making sure all Americans have decent health care.

        Sorry, the answers seem so straightforward to me. I should be more sympathetic to poor Barry. I don’t have billionaire backers that installed me in office whose palms must be greased, and Republicans that control my every move, with my utmost and utter consent and delight.

  6. Krugman has finally gotten bad enough that it can’t be ignored any longer. He’s been basically shilling for months but this may be a step too far.

    I wouldn’t trust his opinion that the sun rises in the East without double checking it now.

    Lambert and the folks at corrente have done really great work in covering the “lack of reform” efforts.

    • But wasn’t he saying the other day, in reference to Barry’s statement that banker bonuses are the bomb, that we should be afraid, be very afraid, or something like that? Thought Krugman had gotten a clue at that point…

  7. Thanks for the links and the kind words [irony free!!!]

    What Krugman and the “this is our one chance for the next 30 years OH NOES!!!!” crowd miss is that single payer is morphing into a movement: See our live blog with Dr. Margaret Flowers.

    I also highly recommend this chart, which shows what an outlier we are.

    • Thank you! BTW, I thoroughly enjoy your blog. A good place to go – in addition to The Confluence – if I want actual facts and stuff ;-).

  8. OT but dayum…I’m confuzzed. First we hear that 6 million families will forclose on their homes, now this article says housing inventory is so low we’re going to run out of housing by 2011.
    So which is it?

  9. Three Wickets asked this on the other thread…

    For that matter, why aren’t the tea parties attacking Wall Street.

    The tea party grassroots attack the bailouts, but the point of the tea party banner seems to be to absorb the populism and assimilate it into the GOP, which isn’t going to go after Wall Street…the GOP wants the money that Wall Street is giving to Obama and the Dems after all.

  10. We are seeing more docs opting out of insurance here in NJ. They take $1500 for the year for you to be a member of their practice, then you can call, email, visit as much as possible with no additional cost – where they used to need 1800-2500 patients to cover all the overhead the insurance companies created they can now only see 600 patients at year and spend at least a full 1/2 hour per visit – whereas they used to spend 10 mins.

    Hey if this keeps up it will drive the insurance companies into a “death spiral” 😯

    • Sounds like a great idea.

    • But what happens if you need a procedure, which requires a different doctor (a specialist)? Do you then have to pay for the surgeon, assistants, operating room, and anesthesiologist on your own? That would be prohibitive. And how does this new type of system handle medications?

      • Well, I just realized sometimes you’re referred to a specialist, but there’s no surgery involved. But then how would you pay for those doctor costs – that would all be out of pocket, wouldn’t it? I’m just thinking – I only see my general doctor for checkups. If I broke my leg, she’d send me to someone else, wouldn’t she? If I needed a cyst removed, she would (and did) send me to a different type of doctor. It just seems like paying more than $100 a month for a doctor I may see once or twice a year wouldn’t solve the problem for people who actually have medical needs, because they usually have to see doctors beyond their general doctor….?

        • I’m just kind of talking to myself here lol So I guess maybe if a whole bunch of specialists formed a group, and you still just paid something over $100 to the whole group, then you could get your different medical needs paid…. it would be like how insurance works, but without the insurance company taking money as a middleman….?

      • I can’t answer your question about how it works but I do know this. Recently my Mom needed to have an MRI and the place she had it gave her a 36% discount. Yes, it was 900$ off the procedure. This was because she paid in cash, no insurance.

        So that 900$ goes to pay off the insurance companies. It’s insane.

        Having said that I couldn’t have paid for the procedure even with the discount. My parents have more money than I have. I think that’s true of many of us.

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