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The Public Health Care Plan Problem

June 15th, 2009 – At the center of the health reform debate is something called a government-backed insurance plan, called the Public Health Care Plan. President Obama and supporters of a the Public Health Care Plan say it is required to keep private insurance companies honest and to help keep their rates low. However, many more people are concerned that this is simply a back door to a government run single payer system.

First off, America’s 1300 private health insurance companies will not be able to price themselves below cost and don’t have the same leverage over doctors that the government does. Families already pay about $1,800 year more for insurance than they should to subsidize Medicare, Medicaid and the uninsured.  As the government plan will further undercut payments to doctors and hospitals, they will shift those shortfalls to private insurers and this burden will cause private insurance rates to increase and the private health insurance industry to implode as consumers leave for the cheaper government plan.  However, once the private insurers are out of the picture the short falls for provider payments will ultimately be forced on to tax payers, causing both income tax rates and the federal deficit to soar.

We will then be left with a government run health care system. If you think dealing with insurance companies is difficult, wait until you have to go through the government to deal with a claim problem or to seek a procedure for a loved one.   When the government is the insurance carrier and has no other competition consumers will be at the government’s mercy as there won’t be many viable alternatives.

The Public Health Care Plan option will be expensive and far more expensive than the Obama administration’s rosy projections of $1.5 trillion over the next 10 years.   Is it a coincidence that they national debt is projected to triple over the same period?  Hardly.

Health reform is desparately needed, but this is not a time for a costly power grab by the government.  Rising health insurance premiums are the symptom, but not the cause of the problems we face today in America.   Health insurance carrier profits have been flat for years and health insurance company profits are among the lowest in the insurance industry, already lower than auto and life insurance company profits.

What we need is meaningful reform that addresses the underlying cost drivers that are causing health insurance premiums to increase year after year.  What we need is meaningful reform that rewards personal responsibility and healthy behavior.  What we need is reform that provides for easier plan mobility and choice among consumers, to better leverage the free markets to keep insurance premiums competitive.    What we don’t need is a government run Public Health Care Plan that opens the door to a government run health care in America.

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