There are two main problems in the health-care system: Coverage and cost.
Insurers are responsible for the coverage problem in the sense that not everyone
can afford their product. That's true for companies that sell TVs and fancy
dinners and keyboards. But we don't care if those companies refuse to sell their
products to poor people. We do care if insurers do. This problem, happily, isn't
particularly hard to solve. A mixture of subsidies and regulations -- much like
the mixture being considered in the current bills -- could answer the coverage
question without too much trouble.
The other question is whether the private insurance industry is
behind the relentless rises in cost. And here the argument begins to falter.
Insurance profits are not a big slice of the system's costs. The average insurer
has a 3 percent profit margin. You sometimes hear that it's administrative costs
that are behind the cost problems. That's not true, as far as I can tell, and in
any case, administrative costs are more about how large
an insurer is than whether it's public or private.
The problem is that the really expensive things aren't controlled by
insurers. Surgeries are expensive. So too are drugs. Nights in the hospital.
Consultations with specialists. But those are all popular things. The way to
make health care cheaper is for insurers to say "no" more often, as they did in
the late '90s. It worked. Cost growth slowed sharply. There was never any
convincing evidence -- that I know of, at least -- that outcomes worsened. But
we hated that. So they stopped.
Tuesday, August 18, 2009
Saying 'No' More Often
A different insight from Ezra Klein in the WaPo: