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Hello, Congress? You've got mail. If there were ever two important articles to educate Democratic members of Congress on the catastrophic mistake they are about to commit for a third time since 1970 on health care reform, these are those two articles. I purposefully omit reference to Republicans, as they have a vested interest in engineering this failure. Bait and switch: How the “public option” was sold, by Kip Sullivan, JD, at Physicians for a National Health Program July 20, 2009 The people who brought us the “public option” began their campaign promising one thing but now promote something entirely different. To make matters worse, they have not told the public they have backpedalled. The campaign for the “public option” resembles the classic bait-and-switch scam: tell your customers you’ve got one thing for sale when in fact you’re selling something very different.
When the “public option” campaign began, its leaders promoted a huge “Medicare-like” program that would enroll about 130 million people. Such a program would dwarf even Medicare, which, with its 45 million enrollees, is the nation’s largest health insurer, public or private. But today “public option” advocates sing the praises of tiny “public options” contained in congressional legislation sponsored by leading Democrats that bear no resemblance to the original model.
According to the Congressional Budget Office, the “public options” described in the Democrats’ legislation might enroll 10 million people and will have virtually no effect on health care costs, which means the “public options” cannot, by themselves, have any effect on the number of uninsured. But the leaders of the “public option” movement haven’t told the public they have abandoned their original vision. It’s high time they did.
..... Also from Kip Sullivan, JD, at the Physicians for a National Health Program web site: Reply to critics of "Bait and switch: How the public option was sold"August 8, 2009 “Public option” proponents who urge us to support even a token “public option” must remember how much is at stake here. At stake is not only the willingness of the public to believe that government health insurance programs can outperform the insurance industry. At stake as well is whether Congress will give the insurance industry a trillion dollars per decade of taxpayer money.
The Democrats’ legislation calls for subsidies to people under a certain income level (probably 300 or 400 percent of the poverty level) so all Americans can afford to obey the proposed law requiring them to buy insurance from either the insurance industry or the “public option.” These subsidies will probably amount to a trillion dollars per decade. If the “public option” doesn’t survive, or survives but never insures more than a tiny percent of the population, that will mean that all or nearly all of that trillion dollars will go to the insurance industry.
It is not written in stone that creation of the “public option” must go hand in hand with a huge bailout for the insurance industry. After all, one could imagine a scenario in which enrollees in the “public option” are the only ones who get subsidies. That was Hacker’s original plan. But Democrats decided early in their bill-writing process that subsidies had to go to both the “public option” and the insurance industry, and Hacker and company did not complain. That decision, plus the Democrats’ desire to achieve near-universal coverage, plus the Democrats’ decision to create only a tiny “public option,” means that if a “public option” is enacted it will be enacted only in conjunction with an enormous insurance industry bailout.
A well-fed insurance industry is bad news for both single-payer and “public option” advocates. An insurance industry strengthened by a trillion dollars per decade of new tax dollars will not only be in a better position to oppose single-payer legislation, it will also be in a stronger position to lobby Congress and the regulators to ensure the “public option” remains stunted.
“Public option” advocates should start talking about the “public option” as if it were inextricably tied to an insurance industry bailout. They should write the phrase “public-option-insurance-industry-bailout” on a Post-it note and paste it to their bathroom mirror to remind them to be honest with themselves and the public about this fact.
To sum up: “Public option” proponents who claim that any “public option” is better than no “public option” because even a skinny little program can be beefed up later are sadly mistaken. A weak “public option” may not survive to be beefed up later, and whether it survives or not, it will serve as fig leaf that will let Congress justify an insurance industry bailout. A strengthened insurance industry is the last thing either the “public option” or the single-payer wing of the universal coverage movement needs. Please say after me: A weak public option is far worse than none at all. Other parts of this article lay out the historical context of what is happening now. There have been three cycles of health care reform in the last half century – 1970-73, 1992-1994, and 2007 to date. At the dawn of each cycle, single-payer legislation had already been introduced. But early in the cycle, single-payer legislation was “taken off the table” (to quote a statement Sen. Max Baucus now wishes he had never made). Each time the Democratic leadership chose instead market-based proposals that had no track record and no evidence to support them. Each time they favored reform deemed more “politically feasible” than single-payer because it left the insurance industry in place. In all three cycles, the alternative, market-based proposal was promoted by one or two policy entrepreneurs (that is to say, it wasn’t an idea that bubbled up from the grassroots). Single-payer legislation was the first out of the chute during the 1970-1973 cycle. In January 1970, Sen. Ted Kennedy introduced what we would today call a single-payer bill. But Kennedy and other leading Democrats quickly abandoned single-payer in favor of a theory about cost containment called the “health maintenance strategy.” This strategy revolved around a new-fangled type of insurance company proposed by a Minnesota physician named Paul Ellwood that Ellwood called the “health maintenance organization.”
Ellwood would become rich and famous selling his HMO idea. He single-handedly convinced President Richard Nixon to endorse legislation to subsidize the formation of HMOs all over the country. While Ellwood worked the Republicans, the AFL-CIO worked the Democrats. Within a year, Kennedy and many other Democrats had been persuaded to abandon the single-payer approach in favor of legislation that would subsidize HMOs. The 1970-1973 cycle ended with the enactment of the HMO Act of 1973. Thus was the world’s first HMO industry born. As we all know now, the HMO experiment failed. Two decades later, when the 1992-1994 cycle opened, single-payer legislation was not only in place in Congress it had also been introduced in many states (the first state single-payer bill to be introduced was introduced in Ohio’s legislature in 1990). The first modern-day single-payer bill was introduced in the US House by Rep. Marty Russo (D-IL) in 1991 and in the Senate by Senator Paul Wellstone in 1992. But as was the case during the previous cycle, the Democratic leadership was seduced by an alternative to single-payer. Once again, Paul Ellwood played an important role in luring Democrats away from single-payer.
Late in 1992, candidate Bill Clinton was persuaded by representatives of a group Ellwood helped form, the Jackson Hole Group, to support something called “managed competition.” The Jackson Hole Group was a coalition of insurance company executives and conservatives who met regularly at Ellwood’s mansion in Jackson Hole, WY. The theory of “managed competition” held that if the insurance “market” were tweaked (with report cards on insurance companies, for example), competition between insurers would intensify, Ellwood’s beloved HMOs would gradually seize more market share, and this would drive industry-wide premiums down. Clinton’s endorsement of “managed competition within a budget” catapulted what might have remained an obscure idea into the political lime light. When Clinton was elected, single-payer legislation once again languished while the Clintons, with help from groups like Families USA, AFSCME, and Citizen Action (now called USAction), flogged their managed competition bill. The 1994 cycle ended with the death of Clinton’s bill in September 1994, and the unraveling of similar managed competition legislation enacted in Minnesota and Washington. .....
Déjà vu
The cycle we’re in now bears many similarities with the last two cycles. When this cycle began (2007 is as good a year to pick as the first year of this cycle, although that is somewhat arbitrary), single-payer legislation was better positioned than ever before to be taken seriously by Democrats. Single-payer bills had been introduced in several states as well as the US House (Sen. Bernie Sanders would introduce a single-payer bill in the Senate in 2008). Polls were showing that two-thirds of Americans and 60 percent of doctors support single-payer (or “Medicare for all”) legislation.
But once again an articulate policy entrepreneur appeared on the scene to sell a market-based alternative to single-payer that would leave the insurance industry at the top of the health care food chain, and once again the Democratic leadership fell for it. This time the entrepreneur was not Paul Ellwood. This time the policy entrepreneur was Jacob Hacker, a professor of political science at Berkeley. Just as Ellwood and the Jackson Hole Group had before him, Hacker said enhanced “competition” among insurance companies was the solution to the health care crisis. (The name of Hacker’s latest paper is “Healthy competition.”) This time enhanced competition would not come from “managing” competition, but from the creation of a “public option.” This time the coalition that promoted the alternative to single-payer was not the Jackson Hole Group, but HCAN, assisted by a sister coalition called the Herndon Alliance.
The Herndon Alliance was founded in 2005 by many of the same groups that would create HCAN in 2008. The Herndon Alliance paved the way for HCAN’s promotion of the “public option” with some laughable “research” claiming to find that Americans want a “public-private-plan choice” approach and don’t want a single-payer system. I have written elsewhere about the bogus “research” conducted by the Herndon Alliance. Suffice it to say here the Herndon Alliance cooked up a new and more insidious version of the “political feasibility” argument.
Until about 2007, when the Herndon Alliance first began publishing its “research,” there was only one variant of the “political feasibility” argument, the one that said the insurance industry is too powerful to beat. The Herndon Alliance variant claimed single-payer is not feasible because Americans don’t want it. According to this variant, American “values,” not the insurance industry, are actually the greatest impediment to single-payer. According to the Herndon Alliance, Americans “value choice of insurance company” and “they like the insurance they have and want to keep it.” HCAN and Hacker picked up these refrains and promoted them vigorously to the public and to members of Congress. This inexcusable attack on single-payer no doubt helped key committee chairs in Congress (Kennedy, Baucus, Waxman, Rangel and Miller) feel more comfortable taking single-payer off the table and concentrating on the “public option.”
By early 2009, it was clear the Hacker-HCAN-Herndon Alliance propaganda for the “public option” and against single-payer had worked with the Democratic leadership, and that the Democratic leadership would fall once again for a market-based alternative and remove single-payer from the table. The removal of single-payer legislation took place without the firing of a single shot in public by the insurance industry and the right wing. It took place at the request of the “yes but” wing.
In the House, single-payer legislation, HR 676, has been rammed back onto the table, thanks to hell-raising by the single-payer movement, including the arrests of some brave doctors and nurses who disrupted hearings in the Senate Finance Committee last May. Last Friday night, Speaker Nancy Pelosi agreed to allow a floor vote on whether to substitute HR 676 for HR 3200, the Democratic leadership’s “public option” bill. This is a significant victory for the single-payer movement, but it should not have come so late in the 2009 session. If Pelosi and the three committee chairmen who wrote HR 3200 had permitted HR 676 to go through the normal committee hearing process, single-payer advocates would have had more time to educate Congress and the public about why a single-payer system is superior to all other alternatives.
It appears almost certain that the reform cycle we’re in now will end the way the last two did – with the Democrats’ competition-based alternative to single-payer going down in flames. It is extremely important that progressives, especially progressives in the “yes but” camp, understand why this happened. Yes, the ultimate villain in these dramas was the insurance industry and their conservative allies. But universal coverage advocates must understand the role of the “yes buts,” and the policy entrepreneurs they listened to, in splitting the universal coverage movement and in seducing Democrats to support legislation that was no more likely to pass than single-payer legislation and wouldn’t have cut costs if it had passed. If they don’t see this – if they persist in believing the insurance industry is the only force single-payer advocates have to contend with – they will, wittingly or unwittingly, help perpetuate the pattern we have seen in the last three reform cycles. They will, in short, perpetuate the insanity of doing the same thing over and over, seeing it fail, and not learning from failure.
It is not inevitable that a scrawny “public option” will be strengthened
The argument that any “public option” is better than none has rarely been articulated, but I suspect we will hear it more often as the reality sinks in that the “public option” in the Democrats’ bill is a joke. “Public option” advocates who learn for the first time that the “option” in the Democrats’ bill will insure few or zero people have only two choices: to abandon the “public option” movement, which is no doubt emotionally difficult to do for those who have invested heavily in the movement, or to continue to work for the Democrats’ version of the “public option” and rationalize that choice with the argument that a tiny “public option” can always be improved once it is established.
The problem with this argument is that the “public option” is not your typical government program. The “public option” is not like the space program or the various college loan programs, to take a few examples, all of which can be expanded or contracted as the years go by without seriously threatening the very existence of the program. The “public option” will be a business. And this particular government-run business may never get very big; it may not even survive. If it doesn’t get big, or doesn’t survive, it won’t develop the huge public fan base that protects popular programs like Social Security and Medicare. In fact, the reverse could happen. A miserable early performance may cause Americans to turn against the idea of a Medicare-like program for the non-elderly. Unlike public programs, businesses don’t have an indefinite time period to develop a supportive public. Businesses don’t automatically take root and go on living forever. The “public option” must prove its ability to survive and undersell the insurance industry quickly. Moreover, the “public option” will be attempting to break into a business that has been consolidating over the last few years. The insurance industry is extraordinarily difficult to crack.
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And the inevitable failure of the "public option as a BUSINESS MODEL" (and not as a single payer model) will steer $1 Trillion dollars straight into the coffers of Big Insurance.
Crack the health insurance industry, we must.
(All bold emphases added.)
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