Tuesday, September 01, 2009

Behind the "Oligarhy"

By now, everyone on Earth has seen the video of Glenn Beck forgetting a letter in the word "oligarchy" and has probably had a good chuckle or two. I know I have. Brayton has a good embed if you haven't seen it.

But what struck me is the fact that Beck used the word "oligarchy" to describe Obama. See, I'm so used to right-wingers calling Obama a Communist or a Marxist or whatever that the use of the word confused me. Mainly because "oligarchy" is, from an ideological standpoint, the polar opposite of Communism. Oligarchy describes a country ruled by a small group of elites - in a Communist society, power is supposed to rest with the "proletariat" - i.e. everyone who isn't one of the elites.

Of course, in every large-scale Communist society* that's been implemented, Communism has turned into an oligarchy as the revolutionary band that seized power essentially installed themselves as the new elites. Meet the new boss, same as the old boss. And I think this understanding is what is driving a lot of the opposition to the health care reform initiative currently on the table.

Sure, the notion that meaningful health care reform will turn America into Stalinist Russia is nutty and deserves to be treated as such. But look closer and you'll see the legitimate fear that government interference in the marketplace will lead to the concentration of power in the hands of a few, instead of the diffusion of power among the many participants in the health care process.

This fear is not without its merits. One need only look at the sordid recent history of the 2008 toy manufacturing act to see that even the best-intentioned government regulations can lead to a concentration of power in the hands of a few large companies who pay off the regulators. It's not insane to think that the well-connected politically would benefit from a government-run health care plan at the expense of the non-connected. And if you think about it, even the most batshit-crazy rumors about this reform - the death panels and such - come from the fear that the non-politically connected will be screwed.

It's a legitimate fear, but I think it's somewhat ill-placed when it comes to health care. What we have to realize is that we already live in what is essentially a health-care oligarchy, where a small group of elites (insurance companies) chooses who gets care and those not favored by the insurance companies get screwed. A lot of the rhetoric flying around from more traditional conservative sources talks about giving government power over your health decisions and taking it away from physicians and patients. Wrong - the power right now lies with insurance companies. Whatever power physicians and patients have under the new health care plan will be an improvement. Meet the new boss, marginally better than the old boss.

So if we're going to have an oligarchy, why should it be run by government rather than by private insurance companies? The answer is responsibility - who is more responsible to the people. In a traditional market, companies are responsible to their customers. Provide bad service at a high cost, and you're out of business. However, it's clear that health insurance doesn't function like a normal market. For one, insurance in general makes profits by providing as little service as possible to customers who have already paid for said services. Furthermore, health insurance includes so many variables that it's far easier to deny a claim than it is for, say, car insurance. For another, the actual consumer doesn't participate in the competition to select a provider. Most people with health insurance don't have any real choice in the matter - their employer chooses their insurer for them. There are so many levels between the consumer and the service provider that poor service on the part of the provider lead to no consequences. In such a situation, the insurance company, freed from responsibility to its consumers, is now only responsible to its investors. So while usually, disgruntled consumers are a major threat to a company's profits, in the current health care system disgruntled consumers are a mere annoyance. Government faces a greater threat from disgruntled voters than the health insurance companies face from disgruntled policyholders, so it's a little more likely to respond to public pressure when it screws up. Again, meet the new boss, marginally better than the old boss.

In an ideal world, we'd be able to nuke the entire health-care system and start from scratch, possibly adopting a model like the one proposed by David Goldhill in his excellent Atlantic piece. Unfortunately, the American political system is set up specifically to thwart radical reform, so we'll have to make do with incremental band-aid solutions until the political will for reform reaches the tipping point. Implementation of a public option and public subsidies for people who buy their own health insurance are steps toward the first, and most obvious, goal of any meaningful reform - breaking the employment-health insurance link. But it'll be a while before people are the consumers of their own health care - we're stuck with an oligarchy into the forseeable future, reform or no.

Which, I'm afraid, is what Glenn Beck doesn't "c". (GROAN)

*I say large-scale because Communism has worked well on a very small scale, most notably on Israeli kibbutzim.


Jacob Grier said...

I don't really disagree with anything you've said here, but if your eventual goal is to eventually move toward a more market-oriented system then there are some concerns about the options on the table. Prime among them is that it will further entrench insurance as the dominant way of paying for health care. A public option would likely be paired with federal regulations mandating what competing insurers must cover. This would make it much harder to get to the endpoint of making healthcare more of a market good and reserving insurance strictly for expensive, unpredictable medical events.

Miguel said...

So if we're going to have an oligarchy, why should it be run by government rather than by private insurance companies?

The oligarchy that you are complaining about here is not the insurance companies themselves, but rather the partnership between government and the insurance companies that make the consumer screw job possible.