Health Care Insurance Reform: Let's Keep it Simple!

This morning (August 27 2009) I heard an interview on the radio with Michael Steele, the chairman of the Republican National Committee, about his views on health care reform. When the interviewer pressed him on the question of what would be wrong with more government role in health insurance, he gave an interesting example which I believe actually contradicts his whole position. Allow me to elaborate.

He cited, as an example of what happens when government becomes involved with health coverage, the Part D regulations providing some coverage of the cost of prescription medicines for those on Medicare. He related how horribly confusing and paperwork-burdened the process was to choose and apply for the coverage, and described trying to help his mother do so.

I could hardly contain myself to keep from yelling at the radio. "What!?" I wanted to say to him-"don't you realize that the Medicare Part D regulations were devised and passed by a Republican Congress under Bus and were written in a way to allow the PRIVATE SECTOR to provide CHOICE and COMPETITION in delivering this benefit?" It was thus a SIGNIFICANT DEVIATION from the way Medicare normally works. And here this Republican leader is complaining about it as if it were an example of government bureaucracy - when it is exactly the opposite: an example of the confusing tactics necessary in a free market competition for consumer dollars.

Let me explain what I mean by free market competition leading to confusion. Consider a product or service that is sold by multiple private companies. How do they compete to win over consumers to their product versus the competition? Well, if the product or service is basically the same from one to the next then consumers would just buy from the lowest-price provider, and then all the providers would have to match that price or go out of business. So the sellers need to differentiate themselves from each other and make it more difficult for consumers to decide which one is actually the lowest cost, or best value to the consumer. This is especially evident in businesses such as providing a service whose basic value to the consumer might be the same. They still find ways to differentiate themselves, which inherently tend to confuse the consumer.

Consider the way cell phone service is sold, for a good example. Have you looked at the confusing array of "plans" offered by the different carriers? The basic underlying service is the same- wireless communication- so they market it in a way that in the end makes it difficult for the consumer to decide what vendor, or even which plan within a vendor's offerings, is the best value. One plan might have a higher monthly fee but throw in free minutes for calls at certain times of day or to certain other people. "Friends and Family" plans and "free nights and weekends" abound, each with confusing names that the marketing people come up with, and with asterisks and plenty of fine print qualifying the benefit. And then of course these plans change all the time requiring the consumer to constantly re-evaluate what is best.

Now don't get me wrong, I'm all in favor of such free-market competition. I realize that it helps competition and keeps prices down and innovation up, so I'm willing to put up with such confusion and I am willing to do the research needed to make a reasonable choice. That is, when I am purchasing phone service, or a TV set, or a car. But NOT when I am purchasing life-saving medical diagnosis and treatment! Consider this: to make a good choice of a cell phone plan, you need to predict how you will use the phone - what kinds of calls, time of day, etc. Well, to choose the best health insurance plan in a confusing private marketplace you need to know when you and your family will become ill or injured and what those illnesses will be! Do you know that? If so I want your crystal ball! Furthermore, to make good decisions as to what diagnostic procedure you should have or how serious your symptoms may be, you really need a medical degree! It is one thing to be an informed consumer, but I want my doctor to make care and treatment decisions for me, NOT my for-profit health insurance company!

It should be clear to the reader that my preference is for a single-payer type of health insurance, like Medicare for All. Medicare keeps it simple - you give your ID number to the doctor's office and they take care of you without any of the confusing forms the private insurers require of both consumers and doctors. If we can't get a single-payer system we should at least have "public option" choice. Then let the competition begin: between the public option and the private one. Those who say this choice would lead to a single payer system seem to be admitting that it would be better: why else would everyone sign up for it when given a choice?

For more on this question, see: What's Wrong with Single-Payer?

Stoos out.