March 23, 2010

Rhode Island's Lesson for America

Justin Katz

It's been an education in the future of healthcare in the United States to watch Rhode Island's three insurers seek rate increases from the state as the Democrats have forced their legislation through Congress. On Thursday, the state health insurance commissioner, Christopher Koller "slashed" proposed premium increases and:

... that's not the only effect: Koller also reallocated how insurers should spend their premium dollars.

He ordered Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare of New England to spend less than they had proposed on hospital care — a decision that could pressure insurers to negotiate lower payments to hospitals, at a time when hospitals are losing money.

The usual suspects are demagoguing about ruthless insurance companies and their endless rate increases, and Mr. Koller is bringing up "troubling trends," such as the unexplained fact that the average age of people receiving health coverage through work is going up, adding to premiums. Nobody is questioning the wisdom of allowing an unelected bureaucrat to manage every insurer in the state:

Koller does not merely rule on the total premium, but examines the factors that the insurers say underlie their need for more money — the costs of hospital care, medications, primary care, administration and profits. His only changes were: reducing inpatient and outpatient hospital costs at both Blue Cross and United, increasing United's primary-care costs, and slightly cutting the administration and profits at Blue Cross. ...

"We need to make the status quo as uncomfortable for insurers and providers as it is for employers, the people who are paying the bill," he said.

Is a healthcare system built upon mutual discomfort really the most effective approach? Artificially suppressing prices doesn't affect the factors driving those prices up, and however much provider and insurer greed may play a role, the limited number of choices, the disguising of costs within broad premiums and through government subsidies, and the requirements and restrictions that the state government places on the market are exponentially greater factors.

If we wish to bring down costs, we're going to have to increase the degree to which consumers must consider the price of each service. Unfortunately, our government — convinced of its own need for more power — is moving in the other direction. With the intention of taking decisions out of the hands of insurers, government operatives are pulling them into their own.

At least if consumers were unhappy with the deals offered by Blue Cross, they could switch to United (and now Tufts). What are our options supposed to be if we're not happy with the decisions of Mr. Koller? And why would additional companies choose to operate within a state (or nation) in which such a functionary ultimately runs their operations?

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Justin your last paragraph sums it up quite nicely.
The ultimate outcome is that companies won't choose to operate under such conditions and the ultimate outcome of that will be a government program to insure the multi-millions these companies no longer service. Let's call this the back door to the public option with the ultimate goal of Obama and his Marxist friends being that every citizen will be forced into the feds insurance bucket.

Posted by: Tim at March 23, 2010 8:46 AM

Based on research, about 80% of the health insurance companies in the US are considered monopolies. That does not mean so in the legal (federal) sense, but in the fact that most consumers have little if any choice and those choices are not really choice.....6 of 1 and 1/2 dozen of the other.

Justin, your thinking shows the typical narrow mindedness (black or white, myopic) conservative view. The actual problems and issues are extremely complex - maybe you find it easier just to fit things into your existing world view?

Of course individual responsibility matters. So do hundreds of other things, from our environmental laws (yes, millions get sick from industrial pollutants) to the layout of our cities (public transit, walking and biking are much healthier than car-based cultures).

Let me assume for a few minutes that you are a thinking person. Apparently you are a carpenter, a trade which I myself plied for a couple decades. How do you find out the proper way to do something? How do you learn?

You MODEL. You look around at other carpenters and other projects and you see how they were done - and if they work!

Yet, when it comes to health care, you seem to think inventing a new method will somehow fix things. A miracle?

Look to Europe. Look to Japan. Look to places that are decades ahead of us and take what is best from their system - INCLUDING environment, personal responsibility, etc. etc. etc.

This is not a simple issue, and simple minds may not be able to get their brain cells around it.

We need to do "all of the above", which includes instituting Universal Coverage.

It would be great if both corporations and individuals had taken responsibility and we were not at this juncture. But just like with Wall Street, we received a lesson in what LACK of regulation does - when their are no rules or limits, we enter a world where it becomes every man for himself and survival of the very fittest.

We can do better and I hope this legislation is the state.

Posted by: s at March 23, 2010 9:44 AM

Typical leftist blather from Stuart.

No, you don't model yourself on other peoples' failures. The only consistent cause of America's successes is competition, free-market competition driven by the profit motive that naturally undermines monopolies.

Let's abolish the office of Health Insurance Commissioner and allow as many health insurance companies as possible (subject to honest advertising and financial soundness requirements) to offer their best products to our citizens. That is the only solution that will work.

Posted by: BobN at March 23, 2010 10:18 AM

Bob, you make the assumption that insurance companies can each offer us a different "product". That is a "product" in name only, since they all use the same infrastructure of hospitals, doctors, drugs and patient services.

Equating health care with an iron foundry or similar business is just bunk.

The success of America was, again, a complicated matter. You fail to mention once again that virtually every major advance was helped along or financed by government! Off the top of my head, here are a few- there are a LOT more:
Space Program- GPS
Nuclear Programs
Agriculture (Homesteading)
Continental Expansion (La. Purchase, etc.)

Now, I suppose you will tell us once again that Government never does anything right, but facts are facts. Please read about the development of these and other major advances and you might get the drift.

Can you stop the rhetoric for even a couple minutes and understand that those things are some of the MOST important in our history?

It makes me laugh to hear modern conservatives spout their talking points while their audience does not question the validity of their "facts".

For instance, Dick Armey (Tea Party AstroTurf Lobbyist) gave a speech the other day praising Alexander Hamilton and the Federalist Papers as the ultimate model for our constitution and way of life! When he was told that Hamilton was the ULTIMATE Big Government proponent, he simply know what to say!

Complete and total ignorance - and this guy is a lawyer and was a leading GOP Congress person!

Here is Dicks quote - laugh a little!
"The small-government conservative movement, which includes people who call themselves the tea party patriots and so forth, is about the principles of liberty as embodied in the Constitution, the understanding of which is fleshed out if you read things like the Federalist Papers," Armey explained. The problem with Democrats and other "people here who do not cherish America the way we do," he explained, is "they did not read the Federalist Papers."

Ha ha - Hamilton was one of the leading founders of this country and was 100% opposed to virtually everything the modern conservative and states rights people promote!

I have to wonder - and I am serious here - do you or any of your peers here actually read stuff like bios of the founders, the Federalist papers or anything else that doesn't come in sound bites? Really?

Posted by: Stuart at March 23, 2010 10:40 AM

Holding up Hamilton as your sole example of the Founders' view of government a typical sample of your intellectual dishonesty. Hamilton was bitterly opposed by Jefferson, Jay and Madison. There certainly was not unanimity among the Founders. However, at least they argued honestly and on the merits of the topic, which you Leftists are not able to do.

Your loud advocacy of Statism reveals your ignorance of the Federalist Papers. I suspect all you know of them is the title. Your positions on the role of government and the structure of society are in line with Wilson's; and it was Wilson who was explicitly contemptuous of the Constitution.

You libs lie loudly and long, but the length and volume of your lies do not hide their falsity.

Posted by: BobN at March 23, 2010 11:35 AM

There is something in what Stuart says, but it needs to go further in the analysis.

Let us take one of his examples, the railroads. There is no doubt that growth was aided by use of the governments Eminent Domain power, and that it was riven with corruption.

In many cases the politicians were simply corrupt, in other cases they did what they could to see that their constituencies were served by the railroad.

But, it is time to apply a rule of studying history, "if things had not happened as they had, that does not mean they would not have happened at all".

The railroads were an idea whose time had come. They would have "happened" with, or without, government aid. Suppose the railroads had needed to buy their right of ways (ignoring that they crossed "territories" which might not have had an "owner")it is possible that they would have been more efficient in their development.

As to the "Space Race" and GPS, it is often forgotten that the Space Race could not have happened without private developments. Essential to the Space Race was "miniturization", essentially that was provided by the transistor. This was clearly one hand washing the other. We had digital computers when the Russians were still using analog.

What the Space Race did was encourage private developments by giving them a purpose, it did not bestow government secrets upon the private sector.

Posted by: Warrington Faust at March 23, 2010 11:38 AM

Warrington, I am not claiming that Government should or did bang in the railroad spikes, nor am I damning industry of any type! That would be very hard to do being a business person myself!

What I am saying is that the founders and everyone since have used Government to grease the skids of innovation, and that government policy can greatly help achieve these ends - including those of medicine and health care!

The government also funded a LOT of the decoding of the Human Genome - and, as you point out, private industry did do a lot of the grunt work.

Again, I have to wonder if the conservative (Bobs, etc.) mind can't see the shades of gray. Government provides the security, safety, impetus, regulations and a lot of the other things which can either stifle or enhance capitalism.

In the end, 99% of stuff is actually accomplished by individuals, not by government. But Government allows or disallows the freedoms and rights which make that happen.

An obvious example would be slavery. It was illegal to teach a slave to read. You aren't going to get much innovation out of uneducated people!

The more that each of us has a chance to prosper, that more we accomplish as a whole. If millions are going bankrupt and losing their homes due to foreclosure because of medical bills, that part of the population is not innovating!

Bob, of course Hamilton had enemies - lots of them! However, despite any talking points he was the #2 man in the actual first Presidency (Washington) and he was part and parcel of George Washingtons world view and dreams. He founded much of our capitalist society, from the Society of Manufacturers to the professional army to the Banking system.

His viewpoint and those of his peers won the day at the Constitutional convention, and that is the basis of our country! You can't write him out of history now! But that has nothing to do with how uneducated Dick Armey and the tea partiers are.....

Also, you must know that Jefferson gave up many of his ideas of small government once he was elected President. Despite his earlier rhetoric, he kept and expanded the federal banking systems and federal power, as well as embarked on the biggest expansion of our history with Federal (TAX) money and debt - that is, the La. Purchase!

Once again, let's be honest. The strong government we enjoy today was based on the Constitutional Convention, where the ideals of Hamilton, Franklin, Washington and all the others came together in a great compromise.

Still, back to Dick Armey. I'd be embarrassed to be a US Congress leader and a lawyer and be so clueless!

The really sad thing is that the people listening to him don't know better either. Good thing we have an educated elite in this country - who actually read.

Posted by: Stuart at March 23, 2010 12:20 PM

"The ultimate outcome is that companies won't choose to operate under such conditions and the ultimate outcome of that will be a government program to insure the multi-millions these companies no longer service."

That's right. And look no further than little Rhody for a real life, textbook example. The "workers comp" crisis of the early 90's wasn't just a bolt from the blue. Year after year, leading up to the "crisis", the General Assembly added more and more costly requirements of workers comp insurance. (One was that the insurer had to pay the attorneys fees of an employee who wanted to appeal a denial of a claim.) One by one, the workers comp insurance companies said, "We're out of here", until there was no one left.

Voila the crisis: no workers comp insurance to be had in the state. Cue the hand-wringing and cries of "How did this happen?!?"

Now, fast forward to the present and the health care reform just passed. With the requirement that insurance companies now must cover everyone and every claim, how can it not turn into the Rhode Island workers comp crisis on steroids?

Posted by: Monique at March 23, 2010 7:46 PM

>>>how can it not turn into the Rhode Island workers comp crisis on steroids?


Well, every state as well as the fed. government are not as bad as RI. Assuming so would be assuming the worse!

But you are correct that cost savings are needed - and many are planned, but we need to go much further.

Fraud is a BIG part of medical costs - check out the story last week about a dentist using paper clips instead of Stainless wire in his root canals! If people are corrupt and steal, we will all be stolen from.

However, if we band together to root out waste and fraud, improve efficiency with electronic medical records, take responsibility for our own and our families health and take other such action, then we can provide basic health care for all and actually save money!

After all, that is what the rest of the civilized world does with great success.

So, you are either admitting that Americans are not capable of caring and being honest and healthy as others, or you are wrong. Pick one.

Posted by: Stuart at March 23, 2010 8:05 PM

Now just how do people "band together"to investigate fraud?
Silly leftist 1930's style BS.Kinda like "rise up against fascism".A few really committed communists went to fight in Spain while the rest of the leftists went to rallies.Wow,that really made a huge difference.The fascists were probably shaking in their boots.
Longer sentences for Medicare/Medicaid fraud and lifetime loss of medical license sounds good.
Fraud is hard to deal with via a throughly corrupted Congress of professional politicians.

Posted by: joe bernstein at March 24, 2010 4:48 AM

Fraud, unfortunately, is more of a personal crisis (lack of ethics and morality) that no amount of oversight will prevent.

If people are intent on screwing other people (and their government), they will do so, as has even been proven in these comments where people discuss "getting away" without paying sales taxes, etc.

Didn't James Madison and others say that without an ethical and moral people, a successful republic is impossible? That is where we are now.

Sure, the welfare cheat is to blame partially. But the Wall Street Cheat is capable of stealing tens of thousands of times as much, and same for the Medicare fraud. That is real money.

And that is why I hold little hope for this country in the short run. It is a failure of parenting and of society when some have raised a generation of Madoffs.

Posted by: Stuart at March 24, 2010 10:23 AM

Stuart:Stop!!I don't like it when you make some sense.It depletes my venom.
Fact is,you're right.People are either honest or not.Fraud is like cockroaches;for every one you see,there are thousands more.Where I grew up,that was not a theoretical concern.
Ethical behavior can't be taught outside the family.

Posted by: joe bernstein at March 24, 2010 5:13 PM
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