[Marxism] Public Option:Insurance Industry’s Trojan Horse

Louis Proyect lnp3 at panix.com
Wed Oct 28 07:11:32 MDT 2009

Public Option:Insurance Industry’s Trojan Horse
October 27, 2009 · Leave a Comment

As I suggested yesterday, the latest reincarnation of the public 
option, endorsed by Senate Majority Leader Harry Reid, in all 
probability will lay out one more circuitous route back into the 
insurance industry. The Senate plan apparently will follow the 
lines of an idea originally suggested by Senator Tom Carper, a 
Delaware Democrat. Today, nobody—journalists, politicans—know the 
details of this plan. But earlier in October, Carper talked to 
reporters and, according to an account in TPM, set forth his ideas 
in some detail.

     I think at the end of the day there will be a national plan 
probably put together not by the federal government but by a 
non-profit board with some seed money from the federal government 
that states would initially participate in because of lack of 

     How would it work? First, this won’t be a government run, 
government funded enterprise. Two, there should be  a level 
playing field so that this non-profit entity that would be stood 
up would have to play by same rules basically as for-profit 
insurance companies–the idea that secretary of Health and Human 
Services [will be] running or directing the operation of this–no way.

     We ought to have a non-profit board–it could be appointed by 
the President but a non-profit board. They’d have to retain 
earnings, create a retained earnings pool, so that if they run 
into financial problems later on the financial needs of the plan 
could be met by the retained earnings

Carper’s plan begins to sound very much like Blue Cross-Blue 
Shield, long ago launched as a non-profit cooperative that over 
time turned into a hellish health insurance conglomerate that 
includes both for-profit and non-profit franchises. (The huge–and 
hugely loathed–WellPoint is now the largest member of the network.)

Carper and other designers of weak-assed public options like to 
say “non-profit” over and over again, as if this were some cure to 
all the ills of the private insurance industry. This is far from 
the case: As I wrote back in June:

     Almost half of Americans with private health insurance are 
currently covered by non-profit plans.  As a whole, they haven’t 
proven themselves much—if any—better or cheaper than the 
for-profit insurers….The giant Kaiser Permanente is a non-profit. 
And while some of them have privatized, many of the Blue 
Cross-Blue Shields are still non-profits as well—and, in fact, got 
started as co-ops. Some of these non-profit insurers are well 
known for paying huge executive salaries and hoarding huge 
reserves, while charging the same high rates and offering the same 
rationed care as private plans—and enjoying tax exemption to boot. 
One report by the Consumers Union found the non-profit “Blues” 
stockpiling billions in cash even as they raised premiums and co-pays.

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