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The Logic of the Public Plan

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Unread 06.23.09, 05:50 PM
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The Logic of the Public Plan

On 06.23.09 12:29 PM posted by Conn Carroll

At his press conference today, President Barack Obama defended his insistence that health care reform include a government-run insurance plan, explaining:
Why would it drive private insurance out of business? If private insurers say that the marketplace provides the best quality health care; if they tell us that they’re offering a good deal, then why is it that the government, which they say can’t run anything, suddenly is going to drive them out of business? That’s not logical.

It is the President’s logic that is fuzzy here.

Congressís ability to pay doctors and other providers less will hide the true cost of the public plan. Undercutting private insurance will drive enrollment to the public plan. Thatís not competition on a level playing field.

And unlike almost every other sector of the American economy, there is no real market for health insurance in the traditional sense of the word. Most Americans receive their health insurance through their employer and have little to no choice in coverage. So a private health insurance company could provide great coverage at a reasonable price, but if a public insurance plan comes along and it appears cheaper for employers to dump their employees into that public plan, most will do just that. Independent estimates have shown that of the estimated 157 million Americans who now have private employer coverage, up to 108 million of those Americans could lose their private employer coverage, even if they like it and would prefer to keep it.

One key to fixing our outdated system of health insurance,*which almost exclusively ties coverage to the place of work, is to reform the tax treatment of health insurance to provide similar tax relief to all individuals and families, regardless of job or job status. But, of course, President Obama is against this bipartisan common sense reform.

So, why is the public plan such a make-or-break issue for the President?

Sen. Russ Feingold (D-WI) explains:

Click here to view the embedded video.
I don’t think that there is any possibility that [single-payer] will come out of this Congress. … But I would love to see it and I believe the goal here is to create whatever legislation we have in a way that could be developed into something like a single-payer system.

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