The public option, as initially administered by private companies
Richard Epstein’s analysis of the constitutionality of the Reid bill contains a passage which appears to describe a path to a public option through regulation by the Secretary of Health and Human Services:
The most obvious feature of the Reid Bill is the incredible level of coercion it imposes on the private companies that supply health-insurance coverage, levied in a coordinated one-two attack. On the one hand, the Reid Bill imposes major requirements on how they do business. On the other, it imposes powerful financial limitations on the revenues that such firms can collect for the provision of their services.
Yet the Reid Bill contains no mechanism that guarantees that the revenues in question will be sufficient to cover the new obligations that it imposes. Instead, the Reid Bill relies on extensive but standardless delegation to the Secretary of Health and Human Services to fill in the gaps of the legislation. (The Reid Bill does not create, as does section 241 of H.R. 3962, a new Health Choices Administration with its own commissioner.)
The range of matters that are subject to administrative control under the Reid Bill transforms a large sector of the insurance industry. The traditional law of insurance gave the insurer the complete power to determine whether to accept or reject a given risk, or to determine the premiums to be charged to an insured, the policy limits, and the terms and conditions on which the policy was issued. The duties to disclose were extensive but these were correctly imposed on the insured who alone possessed the relevant knowledge about the nature and scope of the risk…
What is most striking about the combined effect of the various provisions in the Reid bill is its cavalier disregard for the long-term stability of all segments of the private health-insurance market, which are likely to be caught in a pincer between the heavy mandates for coverage on the one side and their inability to exercise any underwriting control over their book of business on the other. The Reid Bill does not achieve this objective by imposing direct restraints. Instead, its preferred method of social control lies in the power of the Secretary to designate any health plan of a given insurance company as a “qualified health plan” (“QHP”), as defined in section 1301, which allows the health-insurance company to serve customers who are eligible for financial assistance under this bill.
The size of these various benefits is sufficiently large that no company that fails to become a QHP issuer is likely to survive in an insurance market in which coverage is offered on the Exchange, as few people will prefer to purchase a full-price plan to a heavily subsidized one. The restrictions imposed on QHPs, however, are so onerous that all health insurance companies are in effect caught in an impossible bind. The only way to reach subsidized customers is to submit to ruinous financial regulation. The system, therefore, operates in effect as a direct set of controls on virtually all companies that wish to remain in the marketplace.
So the first step is regulation which essentially creates the public option in the private sector, then presumably there will be a more overt public option as private companies are squeezed, then eventually single payer. Say, haven’t we heard that somewhere before?
December 23rd, 2009 at 7:32 am
The medical care mess…
The Dem long-term goal is complete government control of medical care, as in Canada. They make no bones about that.
Their House and Senate bills take a big step in that direction. They do it by mandating the purchase of medical insurance – and then r…
December 24th, 2009 at 3:32 am
These corruptocrats want people dependent on government, and part of their method seems to be to make industry dependent on government.
The EPA is attempting a “coup” with their effort to regulate industry through absurd CO2 controls.
The health insurance industry would be controlled by several layers of bureaucrats, whose goal may well be to eliminate private insurance, in favor total government takeover.
Obama brags about AMA support for this, but they can profit from all the paper shuffling this would bring about. And removing retired and student doctors from their ranks leaves about 15% of active doctors that are AMA members. Plus … those doctors were not asked if they support the bill … it was just some AMA chiefs that see the benefits for the AMA itself.