Cutting Through the Public Option BS

That’s true, Ian, but that isn’t the sole issue with regard to a public option. No one thinks that this bill is the end of the road with respect to health care “reform.” A public option gets a foot in the door for reforming the system in the direction of recognizing that health care is a public good necessary for the general welfare. Hence, provision of health care and health care insurance are public utilities.

The major problem that the world faces today is ideological. The ideological presuppositions of neoliberal economics are taken to be obviously true, although this is neither “obvious” in the sense of logically necessary, nor established on the basis of evidence. Healthcare is just one instance of a vast range of issues that hang on the confusion of neoliberal economics as an ungrounded ideology and evidence-based science.

A quotation from Robert Posner’s recent article, entitled A Failure of Capitalism, about the response of some economists to Queen Elizabeth’s question as to why economists failed to predict the crisis is relevant:

Yesterday, another letter to the Queen, this one dated August 10 and signed by ten English and Australian economists, was released (it can be read online at http://www.docstoc.com/docs/9919280/queen2009b), also responding to the Queen’s question of last November but taking issue with Besley and Hennessy’s letter. The August 10 letter states that “their overall analysis is inadequate because it fails to acknowledge any deficiency in the training or culture of economists themselves.” The nub of their criticism is that “in recent years economics has turned virtually into a branch of applied mathematics, and has…become detached from real-world institutions and events.” They criticize economics education as excessively narrow, “to the detriment of any synthetic vision,” and fault Besley and Hennessy for saying nothing about “the typical omission of psychology, philosophy or economic history from the current education of economists” and for mentioning neither “the highly questionable belief in universal ‘rationality’ nor the ‘efficient markets hypothesis.'”

The present debate is essentially being confused by conservative ideology represented as scientific law, as well as a matter of common sense. The fundamental error is to conflate econometrics (model-building in the abstract) with political economy, which is based on “psychology, philosophy or economic history,” as well as political science.

The failed health care system is simply a symptom of the much more pervasive and dangerous disease of the failure of capitalism based on a neoliberal economic ideology and conservative worldview, neither of which are evidence-based. In fact, all evidence points to the obvious fact that market capitalism is essentially flawed as a socioeconomic model for nations and the world. Market economics might be great for the bazaar, but it is a ridiculous way to try and run a country — unless the objective is neo-feudalism.

So if single payer is not politically possible with this weak president and divided Democratic Party, then any sort of public option is better for advancing the progressive cause than none at all. The evidence for this is the spike in health care stocks today, when the public option has been declared dead — hopefully prematurely. The progressive Dems have to fight for this, because President Obama doesn’t seem to have the spine for it.

tjfx writes:

So if single payer is not politically possible with this weak president and divided Democratic Party, then any sort of public option is better for advancing the progressive cause than none at all.

No, it isn’t. In fact, since a weak public option with a mandate that amounts to an insurance company bailout leaves the insurance companies in a stronger position, no bill is better than a bad bill. Kip Sullivan:

[T]he “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.

“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.

And all this assumes that regulation works, which is questionable. If millions are forced to buy junk insurance, how is that a net positive from anybody’s standpoint except an insurance company CEOs?

“Since a real public option properly created to not be constrained from doing so WILL drive private insurers out of business, it will not be allowed to happen. It may be called a “public option”, but it won’t actually be allowed to operate as a public option should. A public option which won’t destroy the insurers in time, is also a public option which can’t drive down prices effectively.”

Most prophetic words said in the health care political debate so far.

There is a “Public Option” to the existing banking system that illustrates the “your savings are their profit loss” accounting identity that “Free Lunch” Oblahblah and his con-men deny with all their blather about “savings” and “productivity gains”.

Non-profit credit unions have been marginalized by the administrations, by the legislature, the Fed, Treasury, and by the consuming public. My family has been using credit unions exclusively for a decade now; I used them pretty much all my life.

You might not be able to vote for change in the booth, but there are many opportunities to vote with what little money you have, as a customer, at the bank and elsewhere. The consuming public chooses, over and over, not to do so. Example: if you pay money to be an early-DRM adopter – Kindle et.al. – then you are part of the problem.

If the “public options” that are available are ignored, then there is little surprise the powers that be do not feel pressured to deliver more choice.