I'm Puzzled by Opposition to the "Public Plan"
I was puzzled by something I read today in The New York Times about so-called “public option” in the proposed health care reform plan:
[Opponents] argue that a public plan would invariably drive private insurers out of business and prompt employers to drop private coverage, pushing people who are already insured onto a plan run by the government.
How would it drive private insurers out of business? It would offer equal plans at a lower cost, that’s how. I don’t see what’s wrong with that. If we can get the same health care at a lower cost, isn’t that good? Isn’t that one of the major objectives of reform…to reduce costs?
I suppose it could be argued that there would be job losses if private insurers closed, but wouldn’t the public system pick up a large portion of those jobs. Plus, wouldn’t the dollars saved by consumers be spent elsewhere thereby creating jobs elsewhere?
What about the part where employers drop coverage thereby forcing their employees on to the private plans: what’s the problem with that? Well, I suppose you could say that the public plan could be of lower quality than a private plan, so employees would suffer.
But, wouldn’t that present a competitive disadvantage to the employer who doesn’t offer a private plan? In other words, a company would be at a disadvantage in attracting the best employees if they didn’t offer a competitive plan, private or public.
From my point of view, hiring the best people is the number one indicator of success, so I don’t see why a company would choose to offer benefits that don’t ensure they get the best of the best. (What about companies that don’t need or want to hire the best? Well, I doubt they offer gold-plated benefits presently, so it’s unlikely that a public plan will be lower quality.)
Seems to me that there is an irrational fear of a public plan. Yet, the fact is that almost half the country already has a public plan–it’s called Medicare–so I don’t see why we shouldn’t open it up to everyone.
Unfortunately, the public plan will ultimately be the only plan – leading to what is termed a “single payer system.” In this system, only the government provides and pays for healthcare.
Currently, many hospitals collect 100% payment from 30% or fewer of their patients. That means that the private paying clients must subsidize the others. As you increase the number on the public option, private pay will become far too expensive. When private pay goes away, your best doctors either leave the country and go where they can get paid and practice their profession freely, or they go underground and serve only the ultra-rich.
I’m not taking sides, just stating the facts as I know them.
Here’s a video of Barney Frank saying that the public option will ultimately lead to single payer:
http://www.youtube.com/watch?v=f3BS4C9el98
sbriansmith
17 Aug 09 at 1:01 pm
Scott,
I can’t agree with you here. If the government subsidizes an insurance plan, making it cheaper for the direct recipients, that does not bring down the total cost. To understand the overall cost, you need to add the amount of the government subsidy (collected indirectly from the recipients) to the direct costs.
Beyond that small issue, I think our entire country is missing the boat on what is really driving healthcare costs up. It’s not the insurance plan (basically just financing), it’s the actual service/product itself: doctors & hospitals & drugs. The supply of available doctors & hospitals & drugs is severely limited by tight regulations lobbied for by the AMA. To provide any kind of medical service, a person or company needs to jump through endless hoops at great cost. Simple economics tell us that when supply is constricted, prices rise. What should we do to halve or quarter the costs of healthcare? Remove regulatory hurdles in place for those who wish to provide medical service and allow consumers to freely spend their money on medical providers of their choice.
Joel Gross
19 Aug 09 at 5:07 pm
Brian–
Your implication that the public plan won’t pay claims makes no sense. The public plan is an insurance plan just like other insurance plans. What leads you to think it wouldn’t pay?
In fact, if anything, it’s exactly backwards. The reasons so many patients can pay is because they don’t have insurance. If there were a public plan, then everybody would have health insurance. The result would be that patients who don’t pay for their care now (thereby putting burden on everyone else) would be able to pay.
Scott
scottporad
24 Aug 09 at 8:43 am
I whole heartedly disagree. Government programs do not currently cover the costs of medical care, and those of us with insurance already subsidize those who use government programs.
This is from Bloomberg in Dec., 2008:
“Employers and private health insurers pay a “hidden tax” of $88.8 billion each year because government programs fail to pay enough to doctors and hospitals,”
“In 2006, hospitals earned 23.1 percent for privately insured patients, compared with a negative 10.8 percent for Medicare and Medicaid patients, according to the study.”
“The staff of the Medicare Payment Advisory Commission, an independent congressional agency, reported last week that U.S. hospitals have lost money treating Medicare patients since 2002. The margin reached minus 5.9 percent in 2007 and will probably fall to minus 6.9 percent next year, they said. Medicaid figures vary from state to state.”
http://www.bloomberg.com/apps/news?pid=20601202&sid=aeGBzglj2iyY
Medicare & Medicaid do not pay the costs to keep a hospital running. What is going to change?
sbriansmith
24 Aug 09 at 9:06 am