The Corner Newsletter, January 23, 2020

 

Welcome to The Corner. In this issue, we talk about our plan for a health care reform that would lower health care prices without raising taxes or forcing people to change health plans.

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Open Markets Promotes Health Care Reform to Lower Prices Without Raising Taxes or Ending Private Insurance

by Phil Longman

Open Markets Policy Director Phil Longman presented a groundbreaking plan to reform health care prices, in the cover story for the current issue of the Washington Monthly.

Longman proposed a system that we’re calling Medicare Prices for All. The basic idea is simple: Have the federal government mandate that the prices Medicare pays for health care apply to all health care plans.

This plan is also relatively simple to enact. Congress would pass a law requiring that all health care providers offer prices based on what Medicare pays. Americans get to keep their insurance if they want, but everyone gets the same lower price.

This plan would accomplish the major goals of lowering health care costs and thereby making it affordable for more Americans, without requiring anyone to change plans or pay more taxes. By contrast, support for single-payer health insurance, often referred to as Medicare for All, drops substantially when citizens find out how much it costs and that it would probably mean giving up their current private health care plans.

Medicare Prices for All would also end the broad price discrimination that permeates health care today. Patients who live in places with many competing hospitals would be charged the same prices as people who live in places monopolized by one hospital. The plan would eliminate differences among large and small health care plans, as well as among doctors who are “preferred providers” or “out of network.” All providers would get the same prices for treatments given to patients with same conditions, just as they do under Medicare. Competition would shift from who can gain the most market power over prices to who can provide the highest-quality medicine.

Importantly, the plan would eliminate much of the incentive for hospitals to merge in the first place, by removing the opportunity to use their power over the market to increase prices for basic services.

Longman crafted the reform so that the cost savings would go mostly to people with commercial health care plans. Medicare Prices for All legislation would require employers and insurance companies to share the savings with employees. This could also be done through changes in the laws governing private health care plans.

The financial benefit to ordinary, working-aged Americans would be substantial. Typical middle-class heads of household receive about $14,500 in employer contributions to an employer-provided health plan and pay about $6,000 in premiums themselves. Under Medicare Prices for All, that household would see wages increase by about $6,800 to $8,200, according to calculations by Paul Hewitt, a former deputy commissioner for policy at the Social Security Administration.

In 2015, Longman was named by Sen. Bernie Sanders to a federal panel charged with planning the future of Veterans Affairs health care. Longman recommended opening the VA to more veterans and their families.

ANTI-MONOPOLY RISING:

  • The Technology 202: Pelosi's Facebook Slam Reflects Rising Tensions Between the Social Media Giant and Democrats. “Nancy Pelosi’s attacks on Facebook highlight how furious Democrats have become with the social network. The most powerful Democrat in the House accused the company with an office in her home district of cozying up to President Trump during a news conference yesterday. ‘All they want are their tax cuts and no antitrust action against them,’ Pelosi said when asked whether Facebook was too powerful. ‘And they schmooze this administration in that regard because so far that’s what they have received.’” (The Washington Post)

  • PopSockets, Tile and Other Companies Will Ask Congress to Help Stop Big Tech Bullying. “The founder and chief executive of PopSockets, a local company that makes a widely popular kickstand of sorts for smartphones, says he isn’t even an ‘expert on antitrust laws’ in Washington. But (PopSockets founder Dvid) Barnett discovered firsthand the rare power and influence of Amazon in 2018, after clashing with the e-commerce giant over policies that made it hard to sell his products on his preferred terms and prices. PopSockets soon terminated its ties with Amazon, which helped lead to sizable losses later as a result.” (The Washington Post)

  • India Orders Antitrust Probe of Amazon, Walmart's Flipkart. “India ordered an investigation of Amazon.com Inc and Walmart’s Flipkart on Monday over alleged violations of competition law in the latest setback for US e-commerce giants operating in the country. The Competition Commission of India (CCI) said it was ordering a wider probe following a review of allegations that Amazon and Flipkart were promoting some ‘preferred sellers’ and in turn hurting business for other, smaller sellers.” (The Wire)

  • U.S. Targets Drug Pricing, No-Poach Deals for Antitrust Action in 2020. “The Justice Department’s antitrust division is preparing to tackle competition issues in several important markets, including alleged price-fixing in the generic-drug industry, rules for music licensing and purported employer collusion that limits options for sought-after workers.” (TheWall Street Journal)

 WHAT WE'VE BEEN UP TO:

  • Sally Hubbard spoke to The Washington Post about how important it is for CEOs from the biggest tech firms to testify before Congress in the House Antitrust Subcommittee’s Big Tech probe. "I think it's important for the CEOs to appear in a public hearing to make clear they are accountable to our democratically elected representatives and to the American public," Hubbard said.

  • Sally Hubbard also spoke to The Washington Post about why smaller technology companies have not been more outspoken regarding the anti-competitive practices of larger technology companies, ahead of a House Antitrust Subcommittee field hearing. The hearing, called Competitors in the Digital Economy, took place in Colorado and gave the leaders of smaller tech firms an opportunity to testify. “We don’t often hear from those entrepreneurs because they can't afford to speak out, we haven’t had a look under the hood of these companies,” Hubbard said.

  • Sandeep Vaheesan spoke with Co-op News on the importance of using antitrust measures to help platform co-ops and small- and medium-sized businesses to compete against much larger technology companies. Vaheesan emphasized the need to make sure these same antitrust measures are not also used against these smaller firms and co-ops, adding that antitrust legislation is “a charter of economic liberty for ordinary people” and it must not be “a tool for the Chamber of Commerce and Jeff Bezos to crush the workers and small suppliers on whom their businesses depend.”

  • Phil Longman commented to the Miami Herald on hospital chains and insurers in South Florida and whether growing consolidation is good for patients. “Sometimes, through consolidation, you get real economies of scale: better coordination, integration of care,” Longman said. “But experience has shown that whatever cost savings result are generally not shared with consumers.”

  • Sally Hubbard had an interview with the Associated Press about antitrust doctrine and the anti-competitive practices of large technology companies. “Antitrust doctrine has been weakened in the last 30 years. The case law that’s come out has been heavily influenced by what’s called the Chicago School of Economics. It took antitrust law and made it all about corporate efficiency and low prices instead of what it was supposed to be about: competition,” Hubbard told the AP.

  • Sally Hubbard spoke with The American Prospect about the relocation strategies of large technology companies, such as Amazon, as a part of a political gambit to win lawmakers’ favor and limit risks. Amazon recently announced that it would open a new corporate office in New York City, placing thousands of workers in a congressional district served by Rep.Jerome Nadler (D-NY), chairman of the House Judiciary Committee, who will have significant say in the antitrust investigation of Amazon and other big tech companies. “Whether it works or not is an open question; there’s less unpredictability about Big Tech’s strategy. It’s very concerning,” Hubbard said.

  • Beth Baltzan co-authored a piece with Jeffrey Kucik in Foreign Policy titled “NAFTA’s Replacement Gives Labor Some Shelter From Globalization’s Storms.” In the article, Baltzan discusses the passage of the United States-Mexico-Canada Agreement (USMCA) last week and what it means for U.S. and Mexican workers. Baltzan and Kucik note that although this trade deal will improve parity between U.S. and Mexican labor standards, workers in both countries will face competitive pressures from lower labor standards globally. “USMCA’s political momentum in Congress is due largely to labor rights provisions crafted by Senate and House Democrats,” the authors said.

  • Open Markets Institute’s petition to the Federal Trade Commission (FTC) to ban non-competes was cited by Lexology in a report on an FTC workshop on employee non-competes. The report details how some lawmakers in Congress have been frustrated in their efforts to reform non-competes: “… these lawmakers, joined by a group of state attorneys general and the advocacy group the Open Markets Institute, petitioned the FTC to take action. Shortly thereafter, the FTC announced Thursday’s workshop.”

 

VITAL STAT: $ 1 billion

The amount of additional public incentives Amazon sought to obtain in order to build its second headquarters.

WHAT WE'RE READING:

Open Markets Employment Opportunity

You can find the full job listings here.

 

Written by: Daniel Hanley, Udit Thakur, Garphil Julien, Stella Roque Claire Kelloway
Edited by: Barry Lynn, Phil Longman, and Michael Bluhm.

 

 
NewslettersOpen Markets2020, January 2020