Blue Dogs waver on public option | Arkansas Blog

Friday, September 25, 2009

Blue Dogs waver on public option

Posted By on Fri, Sep 25, 2009 at 12:32 PM

Interesting political dynamics at work, according to Huffington Post. And Blue Dogs would probably be in the bag if they can jack Medicare rates up.

In regions where one insurer has an effective monopoly -- which includes most rural regions, but others, as well -- that insurer pays, on average, a high rate of reimbursement so that it can keep out competition. Health care providers have no incentive to work with a new insurer, which would pay lower rates, and so new competitors can't establish a network. The insurer with the monopoly is therefore free to increase premiums at will. The lack of insurance competition is a key driver of health care costs.

Medicare, however, doesn't operate that way. Its reimbursement is more closely related to the actual cost of care. The disparity between Medicare reimbursements and insurance reimbursements is greater in rural areas, since insurers must keep down premiums and costs in areas where there is greater competition. In urban areas, where the cost of living is higher, Medicare reimburses at higher rates.

Blue Dogs and others representing low-competition areas see the disparity as unjust and want the rates increased. The push for more government spending goes against their core priority of fiscal discipline, but Blue Dogs have never been known for their ideological coherence.

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