Karl Rove. “How to Stop Socialized Health Care” Wall Street Journal. June 11, 2009: “a public option will undercut private insurers and pass the tab to taxpayers and health providers just as it does in existing government-run programs. For example, Medicare pays hospitals 71% and doctors 81% of what private insurers pay…Fixing prices at less than market rates will continue under any public option. Sen. Edward Kennedy’s proposal, for example, has Washington paying providers what Medicare does plus 10%. […] government-run health insurance would crater the private insurance market, forcing most Americans onto the government plan. The Lewin Group estimates 70% of people with private insurance — 120 million Americans — will quickly lose what they now get from private companies and be forced onto the government-run rolls as businesses decide it is more cost-effective for them to drop coverage. They’d be happy to shift some of the expense — and all of the administration headaches — to Washington. And once the private insurance market has been dismantled it will be gone.”
David Gratzer. “A Medicare-Style Public Option in Healthcare Would Kill Private Insurance”. US News and World Report.” A July 17, 2009: ” The model for the public plan, Medicare, isn’t an insurance, it’s a federal program. As such, the public plan option would overwhelm even the best private insurers, thanks to the unfair advantage of federal status. How? Let me count the ways.
Private insurers must comply with state regulations — like what services and procedures must be covered — where Medicare coverage doesn ‘ t. Such regulations, according to the Council for Affordable Health Insurance, push up the cost of a policy by 20 to 50 percent. As well, private insurers are taxed by state governments; Medicare isn’t.
Properly funded insurance plans must capitalize future costs; in contrast, a public plan option can simply tax or borrow enough to cover costs from one year to the next (think Fannie Mae).
A Medicare-style plan will set prices with providers, not negotiate them.
The last point is probably the most significant. By paying providers less, a government option would have a major and immediate advantage over its private rivals: It could charge artificially lower premiums and provide a magnet for enrollment. In April, the Lewin Group released an analysis concluding that about 120 million Americans would shift from private plans to the public option. Lewin’s John Sheils doesn’t mince words: “The private industry might just fizzle out altogether.”
Yes, there is public and private competition in post-secondary education. But note the dramatic difference there: State colleges still pay market wages for professors. UCLA needs to reasonably compensate a talented chemistry professor, or he can pack up and move. By employing price controls, the public plan option would be at a serious advantage over its private competitors. It’s not honest to allow one athlete to start at the halfway mark of the marathon.
Fast forward 10 years and the “affordable” public plan will have captured a huge market share. President Obama will be in Illinois drafting his memoirs, but Congress will face stark choices as the plan’s costs inevitably spike. The challenges will be eerily similar to the decisions made every day by legislators in countries with government-run healthcare systems. A public plan option will lead to government-dominated healthcare, then government-rationed healthcare.”
“The End of Private Health Insurance”. Wall Street Journal (editorial). April 13, 2009: “Above every other health-care goal, Democrats this year want to institute a ‘public option’ — an insurance program financed by taxpayers, managed by government and open to everyone, much like Medicare. This new middle-class entitlement is the most important debate in Congress this year, because it really is the last stand for anything resembling private health insurance.
This public option will supposedly ‘compete’ with private alternatives. As President Obama likes to put it, those who are happy with the insurance they have now can keep it — and if they happen to prefer the government offering, well, gee whiz, that’s the free market at work. The reality is far different. Not only will the new program become the default coverage for the uninsured, but Democrats intend to game the system to precipitate — or if need be, coerce — an exodus to government from private insurance. Soon enough, that will be the only ‘option’ left.”
[…] [The public option] will only hasten the flight to government. Meanwhile, employers small and large will have every incentive to dump their plans and transfer their workers to the public rolls. The result will inevitably be a cascade of failures or withdrawals from the market by commercial insurers, with the public option as the only option for the diaspora. […] Congress will finish the job with regulatory changes. Under the aegis of a level playing field, all private plans will be forced to offer benefit packages similar to those in the public option. They will also be required to accept all comers, regardless of pre-existing conditions, and also be forced to offer similar rates to all enrollees, ending the ability to manage risk through underwriting. Any private plan will essentially become a public utility where government decides what products it must offer and how much it can charge.”