Snowe's Trigger for a Gun That Has Already Fired

by Tim Foley

categories: For Profit Insurance, Obama and Congress, Public Plan

Published May 21, 2009 @ 10:36PM PT

It’s a safe bet that you’d never want a U.S. Senator to make an alcoholic beverage for you.  There must be some toxin in the air of the Senate Chamber that makes them need to reflexively water everything down.  So it is that Sen. Olympia Snowe of Maine adds a new wrinkle to the debate as to whether a public health care option should be part of the reform package in the Senate  -- have the plan be a "fallback" only if insurers prove incapable of giving better, more affordable options.  This idea doesn’t just water down reform – it creates a trigger mechanism for a gun that has already fired.  They've already proven that they're incapable.

The model for this is Medicare Part D – and let me stop you right now to note how absurd that we’re using the incredibly complex approach of Medicare Part D as a model for anything.  But anyway, as originally written, Part D would have created a government-run prescription drug plan if and only if enough private insurers didn’t step up and participate in the program.  The conditions for the government-run drug plan never materialized, so neither did the plan.  Snowe’s trial balloon now is that people would only be offered a public health insurance option a few years down the road, if private insurance doesn’t offer enough comprehensive plans at affordable costs.  The public plan would have to be triggered – if somehow, the insurers reduce costs and increase access in a quantifiable way, they’d never have to compete against it.

The problem with a trigger like this is the gun has already fired.

Health Care for America Now released a report yesterday on the non-competitive nature of the insurance market we see today, and how monopolization correlates nicely both with increased costs and executive compensation.  Let’s go with Maine, since it’s Sen. Snowe’s home state. “Maine’s largest health insurer holds a 78 percent share of the market,” the report notes.  When a few companies have a monopoly on the product, they can set whatever rates they want.  Private insurance has consistently shown disinterest in decreasing costs or expanding access.  They’d much rather pass the higher cost of health care onto employers who, in turn, have begun passing them on to individuals more and more.  The Minneapolis Star Tribune reported this week, “Americans with employer-sponsored health insurance can expect to pay a bigger share of health care costs this year than ever before -- 41 percent.”  For families in Minneapolis, they estimate, that will come to almost $7,000 out of pocket per family.  That’s the world we live in now.  We also know what the world will look like tomorrow, as the Center for American Progress has put together a projection based on Congressional Budget Office data:  average premiums will rise more than 70% in the next 8 years, even faster than they have the previous 8 years.  Snowe may think employer-based insurance can turn this runaway train around voluntarily, but a Hewlitt Associates survey says as many as 20% of businesses are contemplating dropping health benefits in the next 3 to 5 years if this trend continues.  So, good luck with that.

My point is we already have a non-competitive, unsustainable and rapidly-worsening health care system that’s reliant on private insurance.  The CEOs and titans of the insurance industry have more than ample opportunity to change the circumstances on the ground.  They’re either incapable or haven’t had incentive to change it - and it's actually made them rich not to change it.  The threat of a public plan in the future clearly hasn't been enough to get them to change their ways – they’ve known the public plan was coming, pending the presidential election outcome, for at least two years.  Nothing changed.  HR 676 – a bill that would completely eliminate the for-profit insurance industry – gained unprecedented support in the House over two years.  Nothing changed. If anything, it got worse.  Moreover, a compromise like this now suggests a future public plan is just an empty threat – they beat it once, they’ll think, and they can beat it again.

Health care reform should not be about saving the skins of an industry who likes to profess that they understand they need “to earn out seat at the table.”  That’s true.  They haven’t earned it… or the benefit of the doubt.