We were introduced this week to the forty-somethingth revision to the public health care option bill. This is the latest attempt at conquering once and for all the eternal, seemingly insoluble problem of rising medical costs by reordering the architecture of health care in the state. The fatal flaw of this bill, as all of its previous iterations, is that it reorders health care precisely in the direction of exacerbating the problem.

The original concept of the bill was to establish a state-government run health insurance plan — the Colorado Option Authority — which would have rates artificially set lower than existing market plans; health care providers and insurance companies would then have a couple years to lower their rates accordingly or that option would be unleashed on the industry, and hospitals and doctors would be forced to accept it, on pain of enormous fines and risk of loss of license.

The newest version passed on Tuesday does away with a full-blown state insurance option, and instead has the Department of Insurance conjure up a “standardized plan” which insurance carriers in the small group and individual markets will be required to offer. That plan will be assigned a premium rate that is magically 18% lower, at minimum, than the rates for the plans said insurance carriers offer in 2021.

This “standardized plan” is essentially the public option of yore but instead of the state government running it as a monopoly, it merely tells the insurance companies they have to.

Furthermore, it requires hospitals and providers to accept the cut-rate plan; the fines for not doing so are less than those prescribed in the original bill, but still severe.

Perhaps even more pernicious is the continuation of the theme that has been a troubling constant in the last several years, and that is the dissipation of authority to unelected state bodies. Whereas most of the bills passed by the legislature that serve as a catheter doling out authority to the bureaucracy, gift that power to a group of bureaucrats – a department, agency, or commission — in this case that power is being vouchsafed to a single bureaucrat — the commissioner of insurance.

Those poor souls who are intimately familiar with each of the 17 pages of the new bill inform me that that “commissioner of insurance” is mentioned some 52 times. This individual is granted, among other things, the power to tell insurance carriers what plans to sell — i.e. the standardized plan — what the premium rates for that plan are to be, and what reimbursement rates hospitals and individual health care providers have to pay. It’s a pretty sweet gig if you can get it. Aspiring oligarchs the world over must be taking envious notes.

Now all of this is being done, in fairness, to try and arrest the rising costs of health care. The problem is an entangled one, inasmuch as it admittedly does not yield readily to the usual free market strictures. There are a few reasons for this, but the primary one comes down to the fact that ours is a society that is well consolidated around the idea that no one should die simply because they cannot afford a doctor. We accept that, quite rightly, as axiomatic, implicitly also accepting that that means a certain amount of health care must be subsidized. And the corollary to that is that anything which is subsidized will be over-used, and health care is.

Mark Hillman laid out the problem succinctly the other day in these pages, and that is that none of the measures put in place by governments to artificially reduce the price of health care at the point of service do anything to reduce cost of providing that care. The government, via the commissioner of insurance, can set rates wherever he likes, the cost is going to recovered somewhere, either by someone paying more, or by a reduction in quantity, or an erosion of quality.

This makes it a political question, and right now it is deemed politically expedient to make the hospitals take it on the chin; despite the fact that more than half of hospitals in the state are operating at a financially unsustainable level, with profit margins below 1 percent. But at some point we need to admit that conventional approach to health care reform, i.e. having government absorb more and more of the entire medical enterprise, is making the problem worse, and that what we are really talking about when we talk health care reform is who pays for it and how.