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Health Reform: Public vs Private Health Insurance

April 20th, 2009 – While the Senate and the Congress both are working on Health Reform bills, the more liberal bill from Congress is likely to include a government run health insurance option to directly compete with private insurance plans.

Not surprisingly, the health insurance lobbying group, America’s Health Insurance Plans (AHIP) is adamantly opposed to the government health plan option. At first glance one may be inclined to write this off as AHIP protecting its own self interests, but there is more to it than that.

AHIP’s fear is that a taxpayer funded government run program could be nearly impossible for private insurance companies to compete with. While the public has little sympathy for insurance companies, the private sector plays an important role if we want to maintain freedom of choice and for there to be viable competing plan options If the private insurance industry is unable to compete with a taxpayer funded government run plan, then in no time at all the public plan will be the only plan available.

Currently it is just the disabled and the elderly on Medicare. With a new public plan that is artificially lower priced initially, there will be a mass exodus from individual plans and employers will drop their employees insurance. In little time virtually everyone will be enrolled in the government plan. The bottom line is that when it comes to health insurance, a government run option would be the end of private health insurance.

That is exactly why most Americans see this government’s public plan as the backdoor to a single payer system or socialized medicine. If this goes through you had better believe that your taxes will go up as a result of the Government plan and here’s why. Currently with Medicare plans the government sets the rates they will pay for various treatments and procedures. Medicare pays doctors these reduced rates for given treatments and procedures. The doctors then, in turn, charge higher prices to private insurance plans to subsidize the cost of the reduced Medicare treatments. If you take private insurance out of the picture, doctors and hospitals will demand higher prices from the government, which will ultimately result in higher taxes.

So, not only will your income taxes increase, but now you have the government telling you what treatment your family members can and can not have access to. As costs rise, the government will have to respond with increased funding and/or a reduction in services provided. So what if they tell your husband or mother that he or she is too old to get that heart bypass operation? What if they put your child on a 9 month wait list for that MRI to help diagnosis a serious illness?

At least with insurance companies you can hold their feet to the fire by going to the State Insurance Commissioners’ office, which has authority over insurance companies that operate in their state. With the Government run health insurance, an appeal may literally turn into a Federal case. How quickly do you think that will be resolved and at what expense and risk to the person needing treatment?

Do you think the government can run things better than private industry? According to the Wall Street Journal, even with doctors passing costs from reduced Medicare payments to private insurance, Medicare and Medicaid alone account for 4% of America’s Gross Domestic Product. This is expected to rise to 9% by 2035.

The better option is Universal Health Insurance that forces health insurance companies to approve everyone at the same rate, based on age and gender, and regardless of pre-existing health conditions. If the government mandates that every American have health insurance then the younger healthier people will help to offset the costs of older and sicker people.

Because anyone could get onto any plan at any time, there is true plan portability and private industry will compete on providing the best benefits at the most competitive rate with the best service. In short, universal heath insurance with guarantee issue coverage is the ticket to allow the free markets to finally work as they should for health insurance.

What do you think about this? As always, your comments and opinions are most welcome.

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