31 October, 2009

Ezra vs. the Public Option

Actually, this is quite a good post by Ezra and expresses well my own qualms about the public option:

This also illuminates one of the more problematic inconsistencies in the health-care debate. Insurers have been blamed for, among other things, doing too much to discriminate against bad health-care risks and refusing to pay for care far too often. They've been blamed, in other words, for saying "no." But they've also been blamed for doing too little to control costs.

But that is how they control costs. We saw this in the late-'90s, when tightly managed care brought cost growth down to the 4 percent range but also triggered a public backlash (it did not, however, appear to hurt health outcomes). Insofar as the public option has been presented as a big part of the answer to our health-care woes, it's been in part because it won't do the things that make insurers unpopular (the saying "no"), and in part because it will control costs. But the only way to make both those things true at once is to give the public option pricing power along the lines of Medicare, which it doesn't have in either the House or Senate bills.

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