The Fireside chat for July 4, 2009

Obama's Opening Remarks before the Health Care Town Hall in Annandale, Virginia (VIDEO)

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"Thank you, to the people of Minnesota..." (VIDEO)

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The cream rising to the top...

This is from a longer piece on Talking Points Memo. One of the things that I liked about the Public Option was that it was a method by which the Insurance Companies would die a slow death, and we'd transition over time to full on Single Payer.

But there's another side of this, a danger where the Insurance Companies prolong their hold over us, and keep prices high, wherein they "cream" their pools.

Simply put, they insure only healthy people, and dump the unhealthy onto the Public Option, keeping prices high as a result. Josh and Zack have more on their in their highly wonky article, but the key part (and the good news) was this from the Later Update section:

The current health care reforms drafts, at least in the Senate, would create regional risk pools that drive out the incentive to "cream." In short, if Insurance Company A insured only the lowest-risk half of a given pool, it would have to pay a subsidy that goes to the company (or public plan) insuring the highest-risk members of the pool. In other words, we would drive out the incentive to cream, while also making it illegal to deny coverage on the basis of a pre-existing condition. CMS would manage that risk-balancing process, and has apparently become quite good at it. The Netherlands does something similar, so successfully that insurers actually seek out diabetics to insure.