Why Public Option Is A Trap, And Its Future Death Spiral- Documented
by architek, Wed May 20, 2009 at 06:42:00 AM EDT
"Death Spiral" - Its a terrifying name. Its also the de-facto description of what the public option will undergo if it is "optional" because optional will mean not enough money will be devoted to it to avoid the "Death Spiral"
It starts with a nice, but misleading idea: "All other things being equal, public, nonprofit insurance can be cheaper than for-profit insurance"
Right? No - wrong. Because PUBLIC insurance HAS to be fairer and serve the public good and not the god of money.
The private insurance we all are hoping to replace is very profitable and expensive, because they deny care, right?
The catch is in that "if all other things are equal". The problem that eventually kills public option is that they wont, they can't be equal in profitability..
They will be extremely unequal. Any public option has to be fair to the sick. The for profit insurers don't. Not even Obama can EVER force a COMPANY to lose money. They have to make money so they avoid insuring many. That willingness to insure the sick makes the public option the insurance of last resort for many, inherently a money loser. It will drive up its losses or it will have to raise its premiums
(This is one of several links documenting these so-called "Death Spirals")
If the risk pool gets sicker. And the higher the premiums go, the fewer people, healthy or sick can afford it.
Their only public option will become Medicaid loans for the indigent. (Which people are eligible for ONLY AFTER THEY OWN OR MAKE VIRTUALLY NOTHING.)
We need to admit that problem and accept subsidies will be needed, large ones. (Schumer knows that revenue neutrality will kill public option. He wants that money for Wall Street)
Of course, the insurance companies figured out long ago, that they need to apply reverse psychology to get what they want.
The trick in 2009 is to play Brer Rabbit and the Briar Patch..
They cant let on that they want public option, that its there to kill single payer... They can't let on that they know how and why it will die! - (see below) They have to say the opposite.
So they lie now saying the public option has an "unfair advantage" - They say they dont want the US to be thrown into the Briar Patch of adverse selection whose ways they know like their own territory. But of course, that is what they want, because there, they know they will win AS LONG AS PUBLIC OPTION IS AN OPTION, (as long as we preserve private insurance, and its extra administrative costs need to be borne by everybody, that ALSO helps doom affordability.)
Another paper documenting Death Spirals:
Death Spiral or Euthanasia? The Demise of Generous Group Health Insurance Coverage
The reasons why "public option" WILL inevitably become "Death Spiral":
1.Public Option is now supposed to be revenue neutral, which is an impossible condition to place on it given that.
2. Public Option's risk pool will be far sicker than that of private insurers, IT WONT BE PROFITABLE AT ALL. It cannot be revenue neutral.
THEY ARE SETTING PUBLIC OPTION UP TO FAIL.
Of course, there is actually a big difference that we NEED public option to have, its a "disadvantage" and it is caused by the public option doing the right thing. That "right thing" is community rating instead of pricing by risk.
By accepting the sick.. they accept that the plan will have higher costs than the private plans. The healthy will leave and their risk pool will become sicker. Without the needed subsidies their premiums will rise. And rise, and rise.
By 2020, the pundits will announce "We tried universal healthcare and we failed. The public option will be ended, and almost all of the millions left uninsured will not be able to find private insurance they can afford, with the additional problem of having been identified by their previous coverage as probably bad risks.
Our golden window of opportunity to enact healthcare reform will have passed and the US will be by then a Third World nation. Most skilled Americans who could emigrate elsewhere will have, leaving communities with no real tax base. Eventually, the government will become a dictatorship, and to remain in power, we will blame our problems on somebody else. We will enter a suicidal war which will result in the destruction of all humanity.