(photo: seiuhealthcare775nw/flickr)

During the debate over Obamacare Ezra Klein was a huge proponent of  health insurance exchanges using only private insurance companies. He called the exchanges the number one cost control idea in the new law. From Klein March 22, 2010 in his list of “five most promising cost controls in the health-care bill”:

(1) Create a competitive insurance market: This is the bill’s first, and most important, step. Right now, the insurance market’s version of competition is pretty brutal. Companies compete to avoid the sickest people and sign up the healthiest people. Offering the best coverage for the lowest cost isn’t much of a priority, because most consumers don’t know whose coverage is best, and the ones who really do know are probably sick customers who spend their days researching this stuff.

Outlawing the bad kind of competition while enabling the good kind, which the bill does, is more than just a humanitarian measure. It’s a cost control. The insurance “exchanges” imitate the market in which federal employees (including congressmen) purchase their health insurance.

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That means insurers will have to compete for customers in a more transparent market, where shoppers have more information, and where the relationship between price and quality is more obvious. As any free-market conservative will tell you, that should drive prices down and quality up.

And now that Klein isn’t trying to defend Democrats and President Obama’s poorly designed and corrupt health care law he has dramatically changed his tune about exchanges. From Today:

But the CBO is in the right here: No matter how much sense competition makes in theory, no matter how obvious it is that it will drive down the price of health care, the fact is that it keeps failing when we put it into practice.

When I asked Sen. Ron Wyden to give me examples of programs that made him confident that competition could work, he mentioned the Federal Employee Health Benefits Program (FEHBP) and the California Public Employees Retirement System (CalPERS). Rep. Paul Ryan has also pointed towards the FEHBP as a model for his plans. The only problem? Neither system controls costs — a fact that poses difficulties for both conservative efforts to reform Medicare and Democratic efforts to reform health care:

The Medicare program includes Medicare Advantage — a menu of competitive managed-care options meant to provide better service at a lower cost. That, too, has been a failure.

(emphasis mine)

Hopefully we can stop pretending the Affordable Care Act was some amazing cost control measure.

This is what I found so wrong with the health care debate in this country, especially during the writing of the ACA. Many liberal writers went out of their way to defend the Democrats health care plan with ridiculous statements about how great the law was despite the fact that it was built on a failed premise. We had hacks like Jon Gruber claiming the law had cost control solutions possible, even though it left out the one basic cost control (all-payer/single-payer) that has actually proven to work in all other industrialized countries.

This idea that loosely designed private health exchanges will control costs is nonsensical. People don’t want to die, the imbalance of knowledge and market power is too great, and health care is far too complicated a product for most people to know what is best. Everything indicates it can’t function like a traditional consumer market.

There are two sides of the cost control debate with different completing theories. There is the reality camp that is heavily marginalized and the pure fantasy camp, which the media treats very seriously.

The reality camp is made up of people promoting the simple proven solutions, such as single payer or all payer, that worked for decades across dozens of countries. The fantasy camp is made up of people claiming the economagic of private insurance exchanges will control costs even though the idea keeps failing with every new iteration we try.

Not surprisingly the health care industry, which makes huge profits because our Government refuses to adopt proven health care solutions, does everything possible to promote and reward the politicians, pundits, and “experts” who can be owned to defend the fantasy camp when necessary.