Paul Ryan Wants Large Insurers And Hospital System To Continue Setting Health Prices

paulryanhandsThis afternoon, in response to my question about the public option on POLITICO’s The Arena, Rep. Paul Ryan (R-WI) closed the door to compromising on the public health option:

[Comment From Igor Volsky]
Rep. Ryan — are you open to considering any kind of compromise on the public health care plan? Would you be open to modeling the open on state-based employee plans? And why can’t we design a level playing field but also allow the new public option to use its inherent advantages to get better rates? Isn’t that what WalMart does today?

Paul Ryan:  I am not open to creating any policy architecture which puts the gov’t in the position of competing with the private sector. The deck will always be stacked, and can never be ‘fair’ competition. If the goal is a truly level playing field, than it should be done through the non-profit sector, not the government.

Ryan supports competition with a non-profit because such an entity would not be able to use Medicare rates or Medicare’s leverage to secure lower prices. Currently, “insurer and hospital markets are increasingly dominated by large insurers and provider systems.” Private insurers rarely negotiate with dominant hospital systems and typically pass on the higher costs to beneficiaries in the form of higher premiums. In fact, non-profit insurers (like the Blue Crosses) and non-profit hospitals have done little to lower health care spending.

A public health care plan would do something a non-profit cannot: use Medicare’s leverage and Medicare-like prices to negotiate lower prices and — through the miracle of head-to-head competition with private plans — push insurance companies to negotiate more aggressively with providers and dramatically lower health care spending.

It’s the same way WalMart or Home Depot operate — negotiating lower rates with suppliers and passing on lower prices to customers — but Ryan is content with preserving a non-competitive health market that props up inefficient systems and providers. He prefers allowing large hospitals and insurance companies to continue setting prices.