During Tuesday’s debate in the Senate Finance Committee, Senator Conrad repeated his argument that several European countries with generally excellent universal coverage systems do so without a "government-run insurance" system.

Several commenters — Klein, Yglesias, Jilani, Benen — have debunked various parts of that claim, especially regarding France’s public insurance system.

The New Republic’s Jonathan Cohn continues the discussion by describing the system used in the Netherlands, which, recalling Conrad, he describes as not having a government run insurance system. But Cohn looks deeper to discover a comprehensive federal regulatory scheme, complete with utilty-like rate regulation, that is far beyond anything Conrad and Baucus’ are is proposing.

Cohn’s conclusion, which I think is correct, is that if we fail to offer a viable public alternative as a check on private insurer behavior, then we at least need a far more extensive federal insurance regulatory scheme to overcome the natural tendency of private insurers to evade the rules and principles of a fair, universal scheme. But Congress isn’t proposing that.

But I want to push the argument further. To have the extent and quality of government intervention you need to replicate the Netherlands (or Swiss or German) system, I think you must create the equivalent — that is, include all the elements — of a national insurance scheme. That national scheme can then be implemented through private insurers functioning more as agents than market competitors. Having that regulatory scheme versus an explicit "government-run" system is thus a distinction without any meaningful difference.

Note how Cohn distinguishes the Dutch system:

Still, there’s a catch. A big catch. Private insurance in the Netherlands works because it operates more or less like a public utility. The Dutch government regulates industry practices tightly–more tightly than the reforms now moving through Congress propose to do in the United States. . . .

But the real secret to success is what happens behind the scenes, in the way government watches and regulates the insurers. . . .

The Dutch prevent "cherry picking." . . .

Perhaps more important, the Dutch have what some would consider the world’s most sophisticated scheme for "risk equalization." . .

But there’s nothing in the current bills approaching the type of price controls that the Netherlands has.

As Cohn describes the Netherlands system, the government specifies the details of basic coverage that all insurers must provide (and all consumers must buy), closely regulates the insurers’ rates using utility-like cost-of-service ratemaking, specifies individual contributions based on ability to pay and supports that through very generous subsidies.

There is also an elaborate system of federally-run risk-allocation, which moves lots of money around from one insurer to another to equalize risks and costs and to discourage efforts to "cherry pick" low-cost consumers and dump higher-cost patients on others. If you think about what this does, a perfect allocation scheme would produce the same results as a centralized insurance system that farmed out its payment/billing system.

We see similar concepts in the House and Senate bills, but not nearly the extent of government oversight and regulation or the degree of financial control to achieve the desire results.

When we’re drawing conclusions about whether there is or isn’t a "government-run" system, perhaps we look at this too closely. If we step back and look at the total system from 10,000 feet, the common pattern is equivalent to having a national insurance system, but in more decentralized variations, the accounting/payment administration is allocated to many private insurers, usually non-profit.

The private insurers still perform important functions, standing between the nationally regulated premium collection system and the nationally regulated payment system to providers. Every system, including Medicare, must perform those functions; but it’s not necessary to have all the dollars literally cycle through a central accounting system.

The private Dutch insurers don’t seem to be competing in any meaningful sense; they’re simply implementing a national insurance scheme whose essential features are determined and regulated by the national administrators. The Dutch may or may not call this a "government-run" program, and consumers may not deal directly with the national administrators, but all the critical decisions are made by the federal regulators, not the private market.

For Conrad or anyone in the Senate to say the Dutch don’t rely on a government-run, national insurance system is to miss the forest for the trees. And I suspect the same applies to Germany and other successful countries that Conrad keeps pretending don’t have a "government-run" insurance system.

More:
Uwe Reinhardt, on the German Model