It’s difficult to figure out amidst all of the swirling mess that makes up “health care reform” just what exactly is getting reformed. President Obama learned the lesson of the Hillarycare debacle and has been pretty cagey on specifics, even when he is expecting to sign a bill on it by the end of the summer. Of course, Hillarycare was a full blown plan that could be analyzed and picked apart. Obama is not interested in having the same result so the few real details that have been leaked have been rather limited. Of course, with this Congress, who needs details? They’re more than willing to vote for a bill unread and fresh off the presses. After all, as Congressperson Malibu Stacy might say, “Thinking too much gives you wrinkles.”
But one thing is clear, if it’s going to be reform in any way that Obama and the far left of the Democratic Party care about, it’s got to have the “Public Option.” Right now the administration is having it both ways. On the one hand it’s saying that it has no intention of driving private insurers out of business, but on the other hand, reassuring Congressional Democrats that the President is still committed to having a public option as part of his vision of health care reform.
Why the Public Option? The formal answer was included in Obama’s letter to Senators Kennedy and Baucus:
“I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest.”
Competition? There are approximately 1300 health insurance providers in the US. Really, will 1301 really make the difference and suddenly lead to “a better range of choices, make the health care market more competitive, and keep insurance companies honest?” That’s all it would take, just one more provider? The idea is so ridiculous that you would have to be a White House journalist to buy it.
What makes the public option the crown jewel of any health care reform plan? It’s the camel’s nose under the tent for single payer government healthcare. No, this isn’t just Republican scare-mongering. I can hardly imagine any other conclusion for the insistence on a government healthcare plan. And it’s easy to see how it would happen. The logic is this: One of the keys of health care reform is an individual mandate, but you can’t very well have one if people cannot afford to buy health insurance, so you have to provide an option for people too poor to pay. Enter the public option. An analysis of several public option scenarios shows that premiums could be 30 to 40 percent less than comparable private plans. That of course hinges on the government paying reimbursement rates comparable to Medicare, which are 70-80 percent of what private insurers pay.
So one of the ways the Obama plan controls costs is just by paying the doctors and hospitals less. I’m sure that will make a great incentive for people to go into the medical field. And who wouldn’t want to be taxed to subsidize their competitor?
But that’s not the fiscal time bomb. First, the same analysis shows that depending on the premium rate for the public option, 119 million people could lose their private health insurance. Some of course, would voluntarily flee. If the public plan has lower premiums, what do they care what rate their doctor gets paid at? Others would find themselves dumped. Why would companies want the expense of maintaining their own health insurance coverage when a public plan can offer lower premiums? Private plans of course have to have doctors and facilities join their networks voluntarily. Not an issue for the government.
Another issue is that the Obama administration, in order to help finance their reform schemes, wants to make it more difficult for employers and employees to pay for health care benefits. One plan is to tax the employee health care benefits by capping the employee health care exclusion. That excludes company health care benefits from an employee’s taxable income. Another actually violates one of Obama’s campaign promises, not to tax health care benefits. Obama criticized John McCain’s plan to tax employer health care benefits during the campaign, but at least McCain was going to transfer the tax benefit to individuals to enable them to purchase health insurance with a tax credit. Obama is just keeping the money for the federal trough.
Driving Private health insurance out of the market has happened before. TennCare was supposed to be Tennessee’s version of “the public option.” The goal was to reduce health care costs by covering a larger group of lower income people than were normally covered by Medicaid guidelines. Many features of TennCare mirrored some of the Obama health reform proposals. The few remaining insurance companies have dumped their most expensive members onto the public plan, and the cost has far exceeded projections. Closed hospitals, doctors fleeing the state, uncontrolled spiraling cost… that’s our future.
It’s fairly easy to see how this will play out if we get the public option. First it will cover a few of the lower middle class, and then the taxes on both employers and employees will push some companies that are in marginal fiscal health (a rather large number since we are in a recession) to drop their plans. Eventually, it will make no sense to provide a health insurance benefit when it no longer provides any tax benefit to the company or to the employee. As the companies in Tennessee discovered, it was easier and less hassle to pay the extra penalty tax for not providing health insurance to it’s employees. Eventually, a health insurance benefit will be as uncommon for the average American worker as a defined benefit pension plan now is. The government will end up with the healthcare costs of most of the American workforce.
At that point, the rationing will begin, but that’s another story.
What I can’t figure out, is why the government would want to take up an open ended financial liability that it does not currently have, to provide a service that is currently being provided by the free market, and in doing so destroy large segments of the economy that is now providing that service? Anyone? Bueller? If there is a better reason than just runaway statism that wants to make dependent charges of its citizens, I would love to hear it.
Now does President Obama know what he’s doing, or does he sincerely not see how his plans would destroy the private insurance market? He gave a little clue during his June press conference on health care. When asked by ABC’s Jake Tapper how he could guarantee that cheaper public plans wouldn’t drive out employer funded private care.
“When I say if you have your plan and you like it,…or you have a doctor and you like your doctor, that you don’t have to change plans, what I’m saying is the government is not going to make you change plans under health reform…”
That’s a change from earlier comments on the same issue:
“If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.”
OK now I guess you can lose your health plan. Period.
At that point, I wouldn’t have been surprised if President Obama had turned to the camera and winked.