Last night at the Goldman School of
Public Policy at UC Berkeley – my school! – I heard California
Insurance Commissioner David Jones, a very engaging and impressive
speaker and person, talk about Proposition 45, which will be on the
ballot this year. Prop 45 would empower the Insurance Commissioner
to review health insurance premiums for reasonableness, and rescind
excessive increases for cause. Far from revolutionary, this power
already resides in the state insurance commissioners in 37 other
states, and a similar power resides in the California Insurance
Commissioner for many other policies, such as auto and home owners
insurance. Naturally, the health insurance behemoths have raised $37
million to fight against 45.
It surprised me at first that the
California Medical Association has lined up with the insurance
companies, as has CAPG, the California Association of Physician
Groups, since doctors and health insurance companies are such
enemies. Jones opined that the docs probably feared that putting
pressure on insurance prices would cascade down to their own fees.
Makes sense. It's surprising that the nurses are for 45 – good for
them, for a change.
Dean Henry Brady puckishly asked why
there needed to be regulation at all, since there are four
predominant players in California – Kaiser, Anthem Blue Cross, Blue
Shield, and Health Net. Isn't that enough to compete? Answer: no,
it isn't. With an impressive show of wonkish economic argot, Jones
swatted that challenge away with ease, saying that in lots of fields
four isn't enough, that the barriers to entry in health insurance are
enormous – just the financial requirements are staggering – so
regulation is necessary here. He also gave some pungent examples of
unwarranted rate increases that included the ill-advised California
Blue Cross increases in 2009 that pushed the ACA over the finish
line, a true “what were they thinking?” moment.
But that set me to thinking yet again,
who exactly is it that is against health costs rising? Consumers,
yes, and consumer groups have raised some money to support Prop 45,
although not in the ballpark of the corporations with vested
interests. But who else? Everyone in the industry wants a piece of
the pie. Even some economists observe the support to employment
provided by the health care industry, which is kind of stupid if you
think about it, since it is disguised unemployment, really, employing
people wastefully where they are not needed.
When Detroit was like this, and
everyone in the industry was happy to have prices high (and quality
low, but that's another matter), the Japanese realized that ships
could carry cars and made a bundle as Detroit hollowed out. I have
always thought that health care was impregnable to foreign assault.
But I'm now wondering, is it really? There is already medical
tourism to Asia for surgery – you get the operation, airfare,
luxury hotel, and for all I know, a girl to help you through it
(speaking as a guy), and save a bundle in the process. Maybe that's
just for starters. Telemedicine is coming, and virtual visits.
Radiology is being offshored to India, especially during our night
and their day. Telemedicine can be pretty bad as it now stands –
a testimonial from an enthusiastic woman in a recent SF Chronicle
article raved about how her migraine was gone in hours after
antibiotics prescribed via telemedicine. Antibiotics for migraine?
But that can no doubt be improved. You never know what people will
come up with.
High prices leave an industry
vulnerable. Price regulation can be their best friend, fight it as
they might. But there is no boundary to the shortsightedness of the
health insurance industry, let alone private-spiritedness. It is
good to hear that at this point Yes on Prop 45 polls 10 points ahead
of No. I think I'll distribute some leaflets up and down my block.
That's the least I can do for the American economy.
budd shenkin