Proposed public health plan will put “entire health system at risk” — Opinion

 U.S. Senator Charles E. Schumer (D-New York) and other Democrats have proposed creating a federally backed insurance plan to compete with private insurance plans.

Anyone could buy insurance from the public plan and no one could be excluded because of pre-exisiting conditions, proponents say. 

According to a recent survey by the magazine Consumer Reports, 66 percent of those polled said they favored the creation of such a plan. 

But in this column, Dr. Roger Stark, a former surgeon and health-care policy analyst at the Washington Policy Center, argues the public plan will be inevitably be given an unfair advantage and will eventually drive private insurers out of business.

He writes:

The Administration’s public-versus-private “competition” plan is by far the most insidious of all the reform proposals discussed in recent history.  The new plan would appear to offer a reasonable alternative to private health insurance, yet in reality it will destroy the private market and will force all US citizens into a government controlled health care program.

The Non-Competition Health Care Plan

By Dr. Roger Stark

During the last presidential campaign, at least six national health care reform proposals were discussed and debated. Consensus on the part of the Administration and the Congressional leadership has now formed around a single, government sponsored alternative to the private health insurance market.

If enacted, the Administration’s plan would represent the largest intrusion of government control into this country’s health care since Medicare and Medicaid–perhaps even larger.

It is not an exaggeration to say our entire health care system is at risk with this new plan.

At face value the proposed government plan would function like Medicare and “compete” with private, non-Medicare insurance.  It would offer employers and individuals an alternative to obtaining health insurance in the private market.

That seems all well and good. But in reality the government would set its tax subsidized pricing well below private plans and “crowd out” the private insurance carriers. The government would also mandate that the private carriers provide a comparable benefit package, hence eliminating any chance for competition with different product lines.

So what are the actual numbers? The Lewin Group estimates that at Medicare rates, the new government plan would cover 130 million people. Out of that group, 118 million will be forced to join after opting out or losing their private coverage. To put this in perspective, there are currently 170 million people in the United States with private health insurance.

To believe that the government would “compete” with private carriers is naïve. The government would cut rates well below the private market and make its plan look much more attractive until it controlled all health insurance. After all, it is impossible to compete against an entity that can draw on the full tax resources of the United States.

This is exactly what happened with Medicare. In 1964, senior citizens had access to a wide selection of private health insurance policies. Medicare was passed in 1965, and by 1970, no private market existed, except for co-pays and deductibles, for the elderly in the United States.

Why not offer Medicare to everyone in this country? The reason is simple–we can’t afford it. The unfunded liability for Medicare today is at least $45 trillion, and it may be as high as $67 trillion. Eliminating private insurance for non-seniors would double or triple this debt.

Also, Medicare reimburses hospitals at 70% and physicians at 80% of the private insurance rate. By eliminating the private carriers, hospitals and doctors who are now cost-shifting their losses to private insurance plans would be forced to close their doors. Hence just as demand for health care increases from aging Baby Boomers the supply would decrease.

With the government in complete control of our health care system, prices and reimbursements would be fixed and subject to Congressional politics every session, access and benefits would be dictated by bureaucrats, and ultimately rationing would occur, probably, as in Canada, through the use of patient waiting lists.  Access to a waiting list is not the same as access to health care.

We are truly at the brink of losing what is left of our choice and having market competition in health care in the United States. The Administration’s public-versus-private “competition” plan is by far the most insidious of all the reform proposals discussed in recent history.  The new plan would appear to offer a reasonable alternative to private health insurance, yet in reality it will destroy the private market and will force all US citizens into a government controlled health care program.

Dr. Roger Stark is a retired surgeon and health care policy analyst with Washington Policy Center, a non-partisan independent policy research organization in Seattle.  For more information contact WPC at 206-937-9691 or washingtonpolicy.org.

To learn more:

• Visit the Washington Policy Center.
• Read the Consumer Reports Survey.
• Visit Sen. Schumer’s Web site.

Resources:

• For background on health care reform and details about different proposals visit the Kaiser Family Foundation’s Health Reform Web page.
• Visit the New York Times health care reform news page.

Washington State Health Policy Groups:

• Code Blue Now!: www.codebluenow.org
• Community Health Network of Washington: www.chnwa.org
• Healthy Washington Coalition: www.healthywacoalition.org
• Washington Health Foundation: www.whf.org
• Washington Physicians for Social Responsibility: www.wpsr.org
• Washington Policy Center: www.washingtonpolicy.org
• Washington Research Council: www.researchcouncil.org
• Washington Rural Health Association: www.wrha.com
• Washington State Hospital Association: www.wsha.org
• Washington State Biomedical Association: www.bmet.org
• Washington State Dental Association: www.wsda.org
• Washington State Medical Association: www.wsma.org
• Washington State Nurses Association: www.wsna.org
• Washington State Pharmacy Association: www.wsparx.org
• Washington State Psychiatry Association: www.wapsychiatry.org
• Washington State Psychology Association: www.wapsych.org
• Washington State Public Health Association: www.wspha.org

Tags: Health Insurance, Health-care Reform, Healthcare Policy, Insurance, Washington Policy Center

Category: Health Insurance, Health-care Policy, Insurance