21.8.09

WAL-MART IS TO VLASIC, REDUX. It's unusual for a Common Dreams essay to say something nice about Wal-Mart. Leslie Savan manages.
Maybe the real turning point came when [Representative Anthony] Weiner [of New York] asked, "How does Wal-mart offer $4 prescriptions?" Joe [Scarborough] and co-host Mika Brzezinski looked as if they'd been thwacked by a hardback copy of Atlas Shrugged, and sat back to let the congressman explain it all to them:
They go to the pharmaceutical companies and say, "Listen, we have a giant buying pool here. You're going to give us a great deal."

Who's bigger than Wal-Mart? We are, the taxpayers. Do we do that? No. Because we have outsourced this to insurance companies who don't have necessarily as much incentive to keep those costs down because, frankly, they are getting a piece of the action.
Progressives tend to understand this stuff, but many conservatives won't trust such logic, especially in the abstract, which is how most Dems have been communicating. But Weiner, aware that if you can't visualize something it ain't going to stick, argued with a specific, familiar visual--that of a successful, supercapitalist, and, as Mika might say, "real American" company.
Is the missing incentive capitalist greed? If so, is it a consequence of employer-based health insurance provided by existing duopolies, or a consequence of insufficient competition for the risk managers who convert premiums into railroad equipment trust certificates, or do they convert lease payments into reimbursements?


What happens if Wal-Mart manages to drive down the wholesale price of pills by squeezing its vendors, as its critics suggest is business as usual in Bentonville? Those practices induced several Congresses to pass, and several presidents to sign into law, assorted price-discrimination and small-retailer protection statutes. Presumably the laws would not apply to ConCare.

An anaesthesiologist suggests ConCare's monopsonistic practices would put some vendors out of business.

The progressives' third mistake is to skimp on anesthesiology. In no medical specialty is the spread between the Medicare rates and private insurance rates greater. Progressives expect to pay anesthesiologists Medicare rates, which are 65% less than private insurance rates, without any change in the system. But there will be changes.

Some anesthesiologists will leave the field. They are already faced with lawsuits at every turn. Something else has happened in America that threatens to tip the balance for anesthesiologists. Americans have grown very fat. This complicates anesthesia tremendously. Putting in IVs, spinals and epidurals is harder. Inserting breathing tubes is much more dangerous.

Quality of care will inevitably decline. That decline will come first in obstetrics. At the hospital where I work, two anesthesiologists work in obstetrics almost around the clock, so that a woman in labor need not wait more than five minutes for her epidural. Other hospitals are less fortunate, and have on staff at most one anesthesiologist in obstetrics. The economic crunch will eventually force these hospitals to cover obstetrics "when anesthesiology is available," meaning in between regular operating room cases.

During an obstetrical emergency, these short-staffed anesthesia departments will scramble to send someone to perform the C-section. Don't forget, a baby has only nine minutes of oxygen when the umbilical cord prolapses, so time is of the essence.

The doctor's column envisions some private insurers coexisting with ConCare. Another Wall Street Journal essay (via Betsy's Page) intended as a criticism of ConCare is really about the logic behind treating ConCare as a legal monopoly.

Among the biggest reasons is a severe adverse selection problem: The sickest, most expensive patients crowded into [Maine's] DirigoChoice, unbalancing its insurance pool and raising costs. That made it unattractive for healthier and lower-risk enrollees. And as a result, few low-income Mainers have been able to afford the premiums, even at subsidized rates.

This problem was exacerbated because since the early 1990s Maine has required insurers to adhere to community rating and guaranteed issue, which requires that insurers cover anyone who applies, regardless of their health condition and at a uniform premium. These rules—which are in the Obama plan—have relentlessly driven up insurance costs in Maine, especially for healthy people.

Maybe the healthy people move to New Hampshire.
The Maine Heritage Policy Center, which has tracked the plan closely, points out that largely because of these insurance rules, a healthy male in Maine who is 30 and single pays a monthly premium of $762 in the individual market; next door in New Hampshire he pays $222 a month. The Granite State doesn't have community rating and guaranteed issue.
In order to gain the benefits of the largest possible risk pool, ConCare legislation might have to require universal participation. In doing so, however, the agency would lose the benefits of independent competitive discovery of the underlying risks. Perhaps the economics of national publicly-provided insurance come down to trading off the benefits of risk pooling against the benefits of competitive discovery, however much of that goes on in a duopoly or triopoly.

No comments: