{"id":136007,"date":"2010-01-04T11:20:49","date_gmt":"2010-01-04T16:20:49","guid":{"rendered":"tag:business.theatlantic.com,2010:\/\/3.32887"},"modified":"2010-01-04T12:45:27","modified_gmt":"2010-01-04T17:45:27","slug":"is-the-private-insurance-industry-doomed","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/136007","title":{"rendered":"Is the Private Insurance Industry Doomed?"},"content":{"rendered":"

James Suroweicki’s interesting new column sees<\/a> community rating<\/i> — the new law that will require health insurers to cover all comers at the same price regardless of their health risk — as the downfall of the private health insurance industry. Kevin Drum agrees<\/a>. I don’t. <\/p>\n

First, let’s hear James’ argument (via Daily Dish<\/a>):<\/p>\n

Congress’s support for community rating and universal access doesn’t
\nfit well with its insistence that health-care reform must rely on
\nprivate insurance companies. After all, measuring risk, and setting
\nprices accordingly,
\nis the raison d’\u00eatre of a health-insurance company….Congress is
\neffectively making private insurers unnecessary, yet continuing to
\ninsist that we can’t do without them.<\/p>\n

The truth is that we could do just fine without them: an insurance
\nsystem with community rating and universal access has no need of
\nprivate insurers.\n<\/p><\/blockquote>\n

OK, it’s true that community rating makes large-scale risk evaluation
\n— or underwriting — unnecessary, but the universal mandate to buy
\nhealth care quite obviously strengthens private insurers by adding
\nmillions of subsidized customers. Even as health care reform makes these
\ncompanies “unnecessary” it’s also making them stronger. Here’s Kevin: <\/p>\n

I agree [with James], and it’s one of the reasons that, warts and all, I support the
\ncurrent healthcare reform legislation so strongly. My take is that
\ncommunity rating at the national level can eventually lead to only two
\noutcomes: (a) the end of private health insurance completely1<\/sup> or (b) the transformation of private insurers into regulated public utilities … It’s too bad we’ll have to wait so long for this to happen, but today’s
\nhealthcare legislation puts it on the road to inevitability.<\/p><\/blockquote>\n

I’m not so sure. On the one hand, I similarly see this bill as first
\nstep rather than a final edit of the health care system. On the other
\nhand, the private insurance industry is very clearly strengthened by
\nthis health care bill. After all, the universal mandate gives them
\nmillions of additional mandatory customers. The absence of any
\nguaranteed cost control provisions means that premiums aren’t going to
\nstop growing really really fast — even though the government will be
\npaying for much of the increase with subsidies to poorer families.
\nThere is nothing in the Senate bill that guarantees a move away from
\nfee-for-service (although there are some limited efforts to find more
\naffordable means of providing care), which is the main driver of our
\nmedical inflation.<\/p>\n

One of the interesting things about the health care debate last year was
\nthat the Right rallied against the bill on the grounds of radicalism
\nand socialism when in fact the bill’s principle weakness was its lack of
\nradicalism. The truly radical ideas where policy wonks on left and
\nright could get even close to holding hands — e.g.: moving away from employer coverage and
\nthe soaring costs of fee-for-service toward a combination of health
\nsavings accounts, public insurance and all-government coverage for the
\npoor, the old, and catastrophic care — is light-years away from where
\nCongress was willing to go. <\/p>\n

A while back, I wrote that calling
\nsocialism on this bill was like watching a construction company add a
\nfourth bedroom to your house and accusing them of arson. I still think that way. I support this
\nbill, this metaphorical room addition, but eventually we’re going to
\nhave to revisit the fact that the home’s foundation remains flawed.


\n

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James Suroweicki’s interesting new column sees community rating — the new law that will require health insurers to cover all comers at the same price regardless of their health risk — as the downfall of the private health insurance industry. Kevin Drum agrees. I don’t. First, let’s hear James’ argument (via Daily Dish): Congress’s support […]<\/p>\n","protected":false},"author":1534,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-136007","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/136007","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=136007"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/136007\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=136007"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=136007"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=136007"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}