N.Y. Times columnist Paul Krugman got a phone call Saturday from the Obama administration informing him of what my column explained last month, that the “medical-industrial complex,” as team Obama puts it, is supporting Obama’s plan for health car reform. This is supposed to be a surprising alliance because 16 years ago health insurers helped sink HillaryCare, but also because big business is supposed to hate being regulated. That second reason ignores all facts, but the first one is worth considering. Why have insurers switched sides?
Krugman gets the tip of the iceberg when he writes:
What’s presumably going on here is that key interest groups have realized that health care reform is going to happen no matter what they do, and that aligning themselves with the Party of No will just deny them a seat at the table.
Most journalists spotting big business calling for regulation settle for this explanation: the companies are playing defense in order to get as light regulation as possible. But there are two much more important–and, frankly, more straightforward–reasons for health insurers to back Obama-type reshaping of the industry:
1) Some of the proposals include a federal mandate that individuals maintain health insurance. Yes, Ted Kennedy wants to require you to buy Blue Cross’s product, and Paul Krugman is wondering why Blue Cross is supporting Ted Kennedy.
2) All regulation creates a barrier to entry. Adding costly regulations and new mazes of government bureaucracy, while making top-shelf lobbyists a must keeps out new competitors.
[h/t to Clusterstock]
