Can the Townhallers Be Left, Rather Than Left Behind?
by: Dean Baker
THE SIZE AND energy at the anti-health care reform protests last
weekend were impressive. While some of the leaders are clearly racist
nutballs, who can't accept that an African-American is in the White
House, many of the tens of thousands who showed up in Washington and
elsewhere came out in response to their perception of a government
that does not respond to ordinary people.
They have a basis for this complaint. It is hardly a secret that
President Obama cut deals with the health insurance industry, the
pharmaceutical industry, and other powerful interest groups. This may
have been necessary for him to get a health package through Congress,
but it's hard to blame people for being suspicious.
Many of the protesters were not against the government playing a
role in health care. In fact, one of the mostly widely expressed
concerns was that the President Obama's health care plan would worsen
the quality of Medicare.
Supporters of reform believe that this reform will be a step
forward in providing quality health care for everyone, but how
confident can anyone be in this view? If there is no public insurance
option, as is likely to be the case, how confident can we be that
regulators will prevent the sort of abuses that are currently
widespread in the insurance industry?
Insurance companies may not be able to deny coverage based on
pre-existing conditions, but that doesn't mean that they will
necessarily pay claims. In the post-reform world many families may
find they have as much trouble getting insurers to pay claims as they
do today. They may also find that insurers don't include adequate
lists of specialists in network, thereby forcing patients to either
incur large expenses for going out of network or wait months for
Supporters of reform believe that regulators will act to prevent
such abuses by insurers, but there is not much reason for this
confidence. Under any version of reform likely to pass, most insurance
regulation will still be at the state level. Many state regulators do
not have a good track record of reining in abuses by the insurance
What do we get if the federal government requires people to buy
insurance, which quite possibly would be bad insurance, and provides
subsidies to do so? By definition this would mean more people have
insurance, but it doesn't mean that people will have good health care.
And, in the process, we will have made the insurance industry, the
pharmaceutical industry and the hospital industry considerably more
This is an example of what was known in last fall's presidential
campaign as “spreading the wealth around,” but as is generally the
case in this country, the direction of redistribution is upward. The
government would be taxing ordinary people and/or requiring them to
make direct payments to insurers in order to enrich major corporations
and their top executives. Certainly, the townhallers have every right
to be upset about being forced to give their money to the
multi-millionaires running United Health, Cigna, and the rest.
This suggests two obvious options. First, we can go back to the
much maligned public option. As my libertarian friends used to say in
other contexts: “what's wrong with giving people a choice?” We know
why the insurance industry hates the public option: They don't like
competition. But what possible reason can the townhallers have for
objecting to giving people a choice? It is an option. If they don't
like it, they don't have to eat it. Surely, someone with President
Obama's communication skills can make this point.
Suppose the insurance industry is so powerful that it succeeds in
keeping the public option off the table. There is no reason to let
these guys just run off with our money. There is another possible
route to limit the upward redistribution of income, if not to limit
abuses. We simply impose compensation restrictions on the executives
of insurance companies who benefit from the public subsidies.
In other words, if insurers enroll people with a subsidy from the
government, then the pay of their executives (including stock options,
bonuses, executive jets etc.) will be capped at $2 million or $3
million, rather than the $30 million, $40 million or $50 million that
some of these honchos currently rake in. This would be an entirely
voluntary pay restriction. If the execs don't want their pay
restricted, then they don't have to accept the public subsidies.
It is clear that most of the health care reform protesters don't
have a clear conception of the policy issues. But they do have a real
basis for concern that they are about to be ripped off for the benefit
of the rich and powerful. It would be nice if those of us who support
reform could honestly assure them that this is not the case.
Dean Baker is the Co-director of the Center for Economic and Policy