The Urban Institute, a prominent liberal think tank, has come out with a report that proposes that the best reason for a strong public option is that it will actually strengthen the power of private insurance companies to bargain with the local powerful medical groups and hospitals as the latter are the real culprits in the rising cost of health care. Only through the combination of public and private insurance companies can large hospital based provider groups be brought to heel and heal more cheaply. Our new bogeyman is no longer the insurance companies, it is now the doctors and hospitals. Moreover, the public option, in the view of the Urban Institute, will not be government run, only government subsidized, and therefore of no real concern to Joe the plumber or anyone else worried about government intervention.

Where to begin? The Colorado Hospital’s DATABANK project has compared financial data for 658 U.S. hospitals and published their findings in, The Impact of the Economic Crisis on Health Services for Patients and Communities. They found that 50% of U.S. hospitals were losing money, eight cents on every dollar earned. The Urban Institute’s plan should work really well for the money losing operations. Perhaps they can be forced out of business altogether and solve the over-bedded situations in America? Oops, Derek DeLia and Elizabeth Wood writing in the journal Health Affairs in an article entitled, “The Dwindling Supply Of Empty Beds: Implications For Hospital Surge Capacity,” point out that even a moderate uptick in swine flu admissions would overwhelm the bed capacities of hospitals in 30% of U.S. counties. Closing these hospitals is unlikely to help the situation unless the economists at the Urban Institute have a really complex formula that turns this finding and the rest of logic on its head.