Buying off the insurance industry

Robert Frank has an interesting piece in today's NYT Business section. After a nice run down of why single-payer is so clearly the best solution, but insurance companies threaten any candidate who pushes for it, he suggests buying the insurance companies off:

Whenever a pie gets bigger, everyone can get a larger slice than before. Because moving to a single-payer system would make the economic pie bigger, it should be possible for everyone, including the insurance industry, to come out ahead.

The first step is to acknowledge that insurance companies are not evil, that they invested in good faith under tax laws that favored employer-provided private health insurance. To put them out of business with an overnight switch would be unjust.

Even so, they are not entitled to a permanent license to operate a system that has become economically unsustainable. The move to a single-payer plan would save far more than enough to compensate insurance companies for lost profits. Compensation for losses could start at 100 percent, then be gradually phased out as companies shifted investments elsewhere.

In a sense, he is proposing a more direct version of the MA and 1993 Clinton Health plans. Rather than use mandates and premium assistance to "buy off" insurance companies, he proposes doing so directly. This has two problems:

1. Which sounds more attractive from the point of view of the American people:

• Medicare for All, Paid for By a Tax Hike
• Medicare for All, Paid for By a Tax Hike, Plus Another Tax Hike to Pay for a Massive Give Away to Insurance Companies

2. Second, even the second plan could be sold, would the insurance companies even go along?

If I were an insurance company CEO, I would expect that once the plan gained momentum, congress would cut out the massive give away part in order to win the final votes they needed. Even if they initially included it, without the rationale of insurance companies actually performing some function or adding value (or at least appearing to do so), a later congress would probably ax the corporate welfare (this isn't the kind of small giveaway that lobbying would be enough to protect). Rather than go down this road, I'd work to kill the bill anyway, and use the huge expense (including the expense of the giveaway itself) as the main arrow in my quiver.

Better not to try to coopt the insurance companies.

Better to just say from the beginning that they're going to fight any plan tooth in nail because they want to defend their investment and profits.