Friday, December 23, 2011

The flaw in the logic ...

This Sally Kalson column appeared Sunday, when it was well worth commenting on. But today's decision by both UPMC and Highmark focuses more attention on the conflict. Yes there was a Ruth Ann Dailey bit of lunacy about preferring a Romney-Rubio ticket over Gingrich, as if there is any difference, and there was today's House Republican turnabout on the payroll tax and unemployment compensation. But the Kalson column has unexpected depth. The column is certainly worth reading, first for her emotionally raw description of her struggle with cancer. She also perfectly characterized the roles of both UPMC and Highmark in this situation, how Highmark is no company of angels, sitting on billions in what I believe they characterize as "excess revenues" while UPMC is exploiting its unique position as both insurer and near monopolistic healthcare provider to black mail Highmark.

Now, as I remember it, Republicans who continue to oppose the Affordable Care Act say that an unregulated free health care/insurance market would work better than increased regulation. Of course, we've just seen how reduced regulation worked for financial markets. I think that the situation in Pittsburgh exemplifies how the unregulated free market might work. I mean, right now health in is somewhat regulated. Rates are regulated at the state level, and people can complain about decisions made by insurers that they think are unfair. My own experience is that our state's regulators are fairly weak and ineffective in curbing cost-cutting excesses. Also mostly insurers can only operate in one state, although I know that both Aetna and Cigna have small operations in Pittsburgh. I will say that the "Blue's", Blue Cross and Blue Shield, although present in most, if not all, states, are in fact all independent operations who only coordinate in the slightest manner.

The current battle between UPMC and Highmark is evidently something that escapes regulation, yet it seems possible that UPMC could emerge as the hands down dominant player in our region. They would be limited in rate and price increases only by their ability to justify to them our weak regulators. This strikes me as an unsurprising consequence of allowing a healthcare provider to set up an insurance arm. If we couldn't see it before it was done, we should at least acknowledge it now.

At the national level Republicans are still claiming that free markets would make healthcare better and cheaper. Pittsburgh's experience with the current low level of regulation should be held up as a counter argument.

1 comment:

Paul Ricci said...

This post at the PUSH website is worth a look.