More on the Corporatization of Health Care

In yesterday's post, the Disease Management Care Blog correlated an apparent White House policy preference for public-private health care "coporatization" (or corporate nationalism?) with the early death of government-run "public option," the conspicuously large role of large commercial insurers in Obamacare and the astonishing faith in unproven accountable care organizations (ACOs).

If the DMCB has it right, that:

1. ... might make Obama Administration officials think that they already have the tools they need to control coordinate health care costs. 

2. ....would explain Obamacare's myriad committees, councils, panels, offices and task forces staffed by bureaucrats, experts and insiders. Someone has to reconcile the numerous and complicated private and public dimensions of a top-down approach to health reform.

3. ....ironically risks, despite the greater involvement of a democratically elected government, less transparency. Think Congress delegating responsibility to consensus meetings populated by appointees who make the Big Decisions behind closed doors. Recent examples include mammography, Avastin, coverage of oral contraceptives and the EHR meaningful use criteria. More are on the way.

4. .... could lead to new versions of crony capitalism, where getting your way depends less on the merits of your idea or what patients want and more on how familiar you are with the decision-making process and the mandarins who are calling the shots. HIMSS may be an early example.

5. .... the states' role "as laboratories of democracy" is significantly diminished.

6. ... means single payer "Medicare-for-all" has a far worse prognosis than generally appreciated by conservatives and progressives alike.  Someone should break the bad news to these guys.

7. ...that this is the medical-industrial complex on steroids.

Consider this front page Aug 22 Wall Street Journal article on the recent rescue of a Philadelphia oil refinery by the coordinated efforts of an Obama Administration official, a "well connected" D.C. private equity firm, a labor union and a Governor who leveraged personal relationships, subsidies, loosened environment regulations and union concessions to keep a failing business model afloat. The DMCB knows nothing about the petroleum business, but predicts the same kind of shenanigans are in store for health care big time.

You read it here first.

The "Coporatization" of U.S. Health Care: Why the Good Prognosis for Health Insurers & ACOs May Be Guaranteed

Corporatization

The Disease Management Care Blog is ashamed to admit it, but it's reading Edward Klein's The Amateur. While much of the book is a conservative-partisan rehash of Mr. Obama's alleged personal and political shortcomings, it did raise one issue that intrigued the DMCB:

"Corporatization."   It seems this White House likes it.

As the DMCB understands it, this is a policy agenda that favors the formation of huge corporate organizations that dominate the national business climate. Its argument is that, thanks to their size and scope, these gigantic private, public and not-for profit corporations are better able to marshal the resources it takes to launch transformative programs, achieve efficiencies, take risks and make profits that are beyond the normal reach of traditional commerce. Think about the hundreds of billions-of-dollars-approaches to housing, financial services, battery operated cars, high speed rail, solar power, privatized space travel and, last but not least, health care insurance and delivery.

A key ingredient of corporatization is "partnering" with government in a way that blurs the line between private enterprise and the public interest. Ingredients include government-backed financing, special tax breaks, loans, grants, mixed Boards of Directors and sovereign investment funds.  The downsides are quite familiar also: crony capitalism and too-big-to-fail status 

The best example of corporatization is China. Beijing centrally orchestrates many of its key economic sectors including finance, banking, housing, public transportation and heavy industry with an opaque mix of public and private companies. While political reforms and respect for human rights have been found wanting, the prospect that China could eclipse the United States in the next 25 years has prompted many in the U.S. to admire China and reexamine the merits of old fashioned capitalism and unfettered markets. For an interesting example of that thinking, see this editorial by Andy Stern that recently appeared in the Wall Street Journal.

What could this explain and what are the implications?

1. The abandonment of the government-run "public option" early in the course of creating the Affordable Care Act. Despite his hostile anti-insurer rhetoric, Mr. Obama's ultimate belief in large mega-insurance corporations, a) regulations and b) public subsidies that bind the behemoth insurers to D.C. won the day.  And it ain't going away anytime soon.

2. The near ideological support by this Administration for Accountable Care Organizations. Despite little track record that ACOs offer a viable business model, the notion of large regional providers partnering with and led by CMS is fully consistent with a belief in corporatization.  This makes the DMCB wonder if Mr. Obama's intent is to assure that ACOs succeed, no matter what.