From the Bad Arguments File June 8, 2009Posted by Dwight Furrow in Dwight Furrow's Posts, politics.
Tags: Health insurance reform, public option
One of the proposals on health care being debated in Congress is to provide a public option. This would be a health insurance plan administered by the government—very similar to Medicare in design—that would compete with private plans. Because the government would not have to make a profit to satisfy shareholders, such a public plan would be cheaper than private plans thus driving down the cost of health insurance while covering everyone.
For years Republicans have been arguing that such a public plan would be a disaster because the government is too incompetent to administer a health plan. We would have long waiting lines to receive inferior care, know-nothing government bureaucrats would ration care and decide what treatments are appropriate, etc. Who would want that kind of care?
But according to the New York Times the new conservative argument against the public plan is quite different:
But critics argue that with low administrative costs and no need to produce profits, a public plan will start with an unfair pricing advantage. They say that if a public plan is allowed to pay doctors and hospitals at levels comparable to Medicare’s, which are substantially below commercial insurance rates, it could set premiums so low it would quickly consume the market.
Although the numbers are disputed by public plan advocates, the Lewin Group, a health care consulting firm, recently projected that a plan paying Medicare rates would prompt 119 million of the 172 million people who are privately insured to switch policies (while also providing coverage to 28 million of the 46 million uninsured).
You can’t have it both ways. If a government-run plan will be a disaster then few will sign up for it and it won’t undercut private insurance. If a government-run plan is efficient enough to drive insurance companies out of the market, it is because insurance companies are not efficient enough to compete. And why would this be a bad outcome? Isn’t that why we are revising health care? We want better health care for less cost.
If private coverage is so expensive and inefficient that it can’t compete with a public plan, what is the justification for private coverage?
Why do insurance companies have a natural right to exist if they provide over-priced, inferior service?
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