One of Ezra Klein’s Last Wonkblog Posts Made an Unwonky Mistake About My Obamacare Op-Ed

My New Year’s Day op-ed in the New York Times seems to have kickstarted a discussion about how to make Obamacare better. I hope you can read it if you haven’t already and get involved.

But it also attracted criticism from, surprisingly, the otherwise very smart and very cool Ezra Klein, who created the Washington Post’s Wonkblog. (He’s now leaving to create something on his own.)

Ezra wanted everyone to hear about 'What Liberals get wrong about healthcare':

Michael Moore greeted the introduction of Obamacare with an admission many liberals will cheer. “Obamacare is awful,” he wrote.

Its awfulness, Moore said, stems from “one fatal flaw: The Affordable Care Act is a pro-insurance-industry plan implemented by a president who knew in his heart that a single-payer, Medicare-for-all model was the true way to go.”

Like Moore, I’d prefer a more nationalized health-care system. But his analysis relies on a common mistake that distorts both the benefits of single-payer systems and the deficiencies peculiar to Obamacare…the problem with the Affordable Care Act isn’t the insurance industry. In fact, the main benefits of nationalized health care can be achieved in systems with hundreds, even thousands, of for-profit insurers…

Most countries rely on many, many insurers…It’s health-care providers – not insurers – who have too much power in the U.S. system [but politicians] routinely rail against for-profit insurers…

I read that line — “the problem isn’t the insurance industry” — and I wondered, is that true? Are there great universal healthcare programs in tons of other countries where insurance companies are – as under Obamacare – free to make a profit on basic health insurance? Have I been wrong about this for all these years (here’s a piece I did on universal health care on NBC’s TV Nation, some 20 years ago)?

Let’s ask the Washington Post:

…foreign health insurance plans exist only to pay people’s medical bills, not to make a profit. The United States is the only developed country that lets insurance companies profit from basic health coverage.

That’s by T.R. Reid, a longtime Post reporter who wrote a whole book about how other countries have created universal healthcare, called The Healing of America. In it he lists several “standard building blocks” they all use. They’re so important that Reid writes them in all caps. For instance:

NONPROFIT FINANCING

Another basic building block in the health care systems of every wealthy country – except the United States – is the principle that financing health care must be a nonprofit endeavor.

Why does this matter? Because what Ezra’s really worried about is how much doctors and hospitals charge Americans, which is part of what makes our healthcare system by far the most expensive on earth. What we need, he says, is for insurance companies to be more powerful so they can hold down costs.

But as T.R. Reid explains, you can’t make that happen when the insurance companies are run for-profit:

In the U.S., when Aetna or WellPoint declines to pay for a drug or a procedure, the money saved goes to enhance the insurer’s profit, not to pay for another person’s treatment. So people are less willing to tolerate cost controls.

And Ezra – what about that other thing you said – that other countries have “hundreds, even thousands” of companies providing insurance in other countries? It’s true that in nations like Japan, Germany or Switzerland they have insurance providers – except they’re NOTHING like corporations as we think of them in the U.S. It’s not just that they’re not making any profit for shareholders, they’re so heavily regulated that they’re essentially a group of public utilities welded into one system. Here’s what Reid says about them:

Japan has 3,000 payers. Germany has 220 payers. Switzerland has 70. But in many ways, the systems in these countries act like single payers…

So that’s why I said in the Times that single payer is the way to go.

After all this, you might be wondering what made me want to read The Healing of America in the first place. What caught my eye was this glowing blurb: “Extremely good, and extremely readable. It is the clearest and most useful contribution to the ongoing health care debate that I’ve read.”

Who wrote that blurb? Ezra Klein. I agree with him that the book is extremely good and extremely readable, but I think Ezra’s wrong about having read it.

P.S. In fairness to Ezra, it’s not quite true that NO countries let for-profit companies provide basic health insurance. One does: the Dutch. They decided they wanted to be like us, so in 2006 they changed their healthcare system. And now, all of a sudden, just four big corporations control almost everything.