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WaPo’s Pearlstein Promotes the Gang of Six Insurance Bailout

The Washington Post’s Steven Pearlstein echoes the Beltway’s self justification that Ted Kennedy’s success in furthering liberal causes occurred because he accepted anti-liberal compromises that the Beltway approved.

Thus it is that Pearlstein says "there’s a deal" to be had on a health reform bill if only the Democrats recognize that’s what Teddy would have wanted and embrace it.

But why is Pearlstein’s "deal" so familiar? Because it contains every element leaked out of the Senate Finance Gang of Six, including the Baucus/Conrad/Rahm bailout of the insurance industry.

Pearlstein’s "deal" would promise "universal coverage" but deliver instead a universal mandate forcing not quite everyone to purchase private insurance. There would be federal subsidies scaled down from levels in the HELP (Kennedy) Committee and House bills. And the "deal" leaves out strong rate regulation but shields the private insurance industry from any meaningful competition, unless you count an ineffective co-op, which Kennedy never supported, and which each state may or may not establish in your lifetime. Think Texas.

Pearlstein doesn’t tell us his deal is little more than a restatement of the unrepresentative "gang of six" rumors/leaks. Nor does he explain why a majority of Democrats, inspired by Ted Kennedy, should accept this, when they have already adopted stronger proposals in four Congressional committees that include measures like a public option supported by huge poll majorities.

So how can Pearlstein claim that Kennedy would somehow support this deal? Pearlstein’s history of Kennedy’s 1971 negotiations with Nixon notes that back then, like today, one goal was universal, affordable coverage for the uninsured. But he misses that the private insurance industy is dangerously more concentrated than it was then, has become relatively immune from weaker states’ regulations, and is now (if it wasn’t always) incapable of competitive behavior or efficient pricing.

As Wendell Potter and others have told us over and over, today’s industry is inherently dependent on screening out the sick, rationing coverage and denying claims, while remaining ineffective in disciplining provider rates.

There are many hydra heads of America’s health care disaster, but we know now that the problem that has to be solved in the "insurance reform" part is the for-profit insurance system itself. The anti-consumer incentives inherent in its for-profit structure and the relentless pressure from Wall Street investors to reduce "losses" are systematically pushing costs onto consumers and making meaningful insurance unaffordable for business and individuals.

Pearlstein’s deal — indeed, the hinted-at Obama/Gang of Six deal — is premised on "reforming" but preserving this destructive system. But it’s simply not sustainable, and it’s time to stop pretending otherwise.

Any worthwhile reform must therefore include some mechanism by which that system is directly confronted and replaced, either gradually but systematically or wholesale. There is no sustainable, affordable model that does not deal with that fact.

Perhaps that’s why a majority of Democrats, including Ted Kennedy, were willing to accept unattractive mandates that perpetuate an uncompetitive industrial policy in exchange for getting more people insured, but only if Americans had a choice that might — over time and under conditions yet to be defined — provide an escape and show the way out. Without that escape, nailed down and better defined, there’s little reason for Americans to embrace Pearlstein’s unworkable "deal."

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Matthew Yglesias, Chasing Phantom Deals

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John has been writing for Firedoglake since 2006 or so, on whatever interests him. He has a law degree, worked as legal counsel and energy policy adviser for a state energy agency for 20 years and then as a consultant on electricity systems and markets. He's now retired, living in Massachusetts.

You can follow John on twitter: @JohnChandley