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Critical Condition

NRO’s health-care blog.

A Touch of Evil



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Nancy Pelosi has just characterized health-insurance companies as “immoral” and “villains.” This appears to be part of a strategy by Democratic leaders, concerned about falling public support for their health plan, to demonize insurance companies for driving up health costs. 

I just debated the Center for Media and Democracy’s Wendell Potter on Fox Business on this subject.  Wendell has donned the black hat himself, as I suppose he’d put it, having worked for the insurance industry for two decades. He now argues that insurance company mergers and Wall Street pressure for profits drive health-insurance conglomerates to engage in practices to dump policyholders when they get sick or seriously injured.

That insurance companies, of whatever size, have a profit motive, should surprise no one. Yet we as a society have decided to have insurance pay for health care because it appears to be the fairest and most neutral way to do so. No one is willing to pay all costs out of pocket because of the risks of catastrophic conditions, and the American people seem fairly exercised about the notion of a government-run public option. This leaves us with private insurers to pay for health coverage, and 70% of covered Americans rate their coverage either good or excellent. 

In fact, much of the current debate is about how to get more people, not fewer, covered by private insurance. The real way to get better coverage and better care is to promote more competition among providers and insurance companies alike, in two ways:

1. Let people buy insurance across state lines, an idea long promoted by Rep. John Shadegg. This will create a much larger market for insurance products, and will allow consumers to find the product that works for them rather than one governed by expensive state mandates.
 
2. Give people more information about costs and encourage them to act in ways that minimize costs.  Price transparency, and incentives to act on that transparency, create value driven health care, which will help drive down health costs. The Bush administration promoted this idea by creating Health Savings Accounts, which allow people to save for out of pocket expenses while having catastrophic coverage in case of serious illness. Another value-driven initiative was Hospital Compare, which allows people to compare cost and quality of hospitals in a searchable by zip code database. These kinds of initiatives can help reduce the cost of health care by driving more competition into the market. They may not prevent every callous act by an insurance company, but they will give Americans more choices and more knowledge about the costs and benefits of the available options.  



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