Tuesday, August 18, 2009

Health care and public utilities

Read this Ramesh Ponnuru editorial on health care (via the Dish). Here's what he has to say about Wyden-Bennett:
This is another way of saying that universal coverage cannot be achieved using free-market methods — a point that many liberals correctly make. A bipartisan bill in the Senate introduced by Ron Wyden, an Oregon Democrat, purports to use the market to provide universal coverage. It would keep insurance companies in business, but only by converting them into regulated and subsidized public utilities, eliminating most existing insurance plans and expanding the I.R.S. by a quarter.
I realize he's making a critique here, but I think that the idea of insurance companies as public utilities is actually about the correct frame in which to view them. Private insurance companies wield extraordinary power over peoples' lives and provide what is essentially a public good. They work in a highly-concentrated marketplace that has enormous barriers to entry, and there tends to be little choice about what company provides one's healthcare. Since most states have one or two insurance companies that have the market cornered, I think that viewing them like public utilities is basically correct, according to the facts. And the reason why public utilities are regulated is because they are in a unique position to exert leverage in influence pricing for the marketplace.

In my experience, conservatives tend to dislike utilities because they aren't competitive. But while competition can certainly improve product (e.g. the computer industry), there are times when competition just isn't possible. Having a free-market solution to electricity in, say, L.A. wouldn't work because the startup costs would be too high and there's a finite amount of physical space to lay electrical wire. Ponnuru talks about how Wyden-Bennett would turn health insurers into public utilities (this is overstating things a little, as they will still be competing), but the status quo is that we're dealing with unregulated public utilities that aren't really restricted in terms of the abuse they can dish out. It's like if PG&E could just double your rates one month with no explanation, and obviously with no recourse for the unlucky billpayer.

The Man, The Myth, The Bio

East Bay, California, United States
Problem: I have lots of opinions on politics and culture that I need to vent. If I do not do this I will wind up muttering to myself, and that's only like one or two steps away from being a hobo. Solution: I write two blogs. A political blog that has some evident sympathies (pro-Obama, mostly liberal though I dissent on some issues, like guns and trade) and a culture blog that does, well, cultural essays in a more long-form manner. My particular thing is taking overrated things (movies, mostly, but other things too) down a peg and putting underrated things up a peg. I'm sort of the court of last resort, and I tend to focus on more obscure cultural phenomena.