President Obama does not buy the argument that a government-run health insurance program would drive private insurers out of the business.
He ought to think about Medicare.
Since Medicare was enacted in 1965 to insure elderly Americans, comprehensive private insurance for that segment of the population has disappeared. There are plans that cover items that Medicare does not, and there are private insurers that are paid by the government to include the elderly in privately-run coverage networks. (This approach is called Medicare Advantage, and the president says he can save $177 billion over 10 years by eliminating it.) Also, there are employer-sponsored plans that cover individuals over age 65 who are still working, though typically those private benefits are coordinated with Medicare coverage.
But there is no buy-it-yourself basic doctor and hospital coverage for Medicare’s target population. How could there be? Medicare is a government entitlement, funded by working Americans’ tax dollars. It dictates the prices it is willing to pay providers for treating the elderly, who make up the bulk of patients in most practice areas. It has the legal and administrative heft of the national government behind it. No sensible business would try to compete with that.
“A government-run plan — no matter how it is initially structured — would dismantle employer-based coverage, significantly increase costs for those who remain in private coverage, and add additional liabilities to the federal budget,” the heads of two major health insurance groups wrote to Sen. Edward Kennedy, D-Mass., in a letter released yesterday.
At a press conference held shortly after the letter’s release, the president said a public plan would be “an important tool to discipline insurance companies.”
QUESTION: Wouldn't that drive private insurance out of business?
OBAMA: Why would it drive private insurance out of business? If — if private — 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.
What seems illogical is Obama’s insistence, after our experience with Medicare coverage for the elderly, that private employer-sponsored insurance would survive as an alternative to public coverage for everyone else.
Many Democrats in and out of Congress are perfectly comfortable with the idea of a government-run “single-payer” system, which probably would give us a government-centered system similar to Canada’s. The idea of a “single-payer” system is one of the most divisive issues in the entire debate over health care reform.
The president’s positions put him firmly in the single-payer camp, even as he continues to insist that Americans who like their current coverage will be able to keep it. History argues otherwise.