Public Health Plan: Your Only "Option"?

By Edwin J. Feulner (Archive) · Tuesday, July 28, 2009

Last month, House lawmakers set a new land-speed record by voting for the Waxman-Markey cap-and-trade (or cap-and-tax) bill before they'd even seen the final copy. Now it seems President Barack Obama is trying to top that dubious feat.

He's urging lawmakers to hurry and pass a giant health care "reform" bill, but apparently he hasn't read it. During a conference call with activist bloggers, one referred to Section 102 of the House health legislation and asked, "Will people be able to keep their insurance and will insurers be able to write new policies even though H.R. 3200 is passed?"

Obama replied, "You know, I have to say that I am not familiar with the provision you are talking about."

No, the provision wouldn't actually ban private health insurance plans. But the bill would require all new policies and all existing employer-sponsored plans to meet new detailed federal minimum benefit requirements and regulations. With the passage of the bill, millions of employees could also lose their current insurance and be shifted to a new "public option," a government-run insurance plan.

Luckily, some people have actually read the House bill. The Lewin Group, as independent consulting firm, has. In a recent report, it explained what would happen if H.R. 3200 does become law.

If fully implemented in 2011, Lewin estimates that of the 158.1 million Americans with employer-based coverage, 88.1 million people would be shifted out of their current insurance and end up in the public plan.

So much for the president's often-repeated sound bite (he said it even during the conference call with the liberal bloggers) that, "If you have health insurance, and you like it, and you have a doctor that you like, then you can keep it. Period." Tell that to the millions of Americans with employer-sponsored insurance who would lose their private coverage.

Patients wouldn't be the only people shortchanged by the government option, though. Lewin also explains that, under the House bill, the government would pay doctors and hospitals based on what Medicare pays, plus 5 percent.

"Medicare payments to hospitals are equal to only about 68 percent [of] what private insurers pay for the same services. In fact, hospital payments as a percentage of private payer rates have declined steadily since 2000. Physician payments are equal to only about 81 percent of what is paid by private insures for comparable services," Lewin reports.

This highlights the fact that, for years now, private insurance has been subsidizing the care provided to seniors under Medicare. Private insurers have shelled out more than the going rate for hospitalization and medical services, to make up for the fact that Medicare has been under-paying for them. But once there's a public "option," of course, many private insurers will be out of business. Hospitals and doctors will then have no choice but to accept Washington's lower payments, or cut back on offering care at the lower reimbursement. Some will doubtless pursue a new line of work.

Finally, it's worth asking if all these changes would actually accomplish what they're supposed to. The goal is to cover all Americans.

But Lewin writes that, "We estimate that there will be about 49.1 million uninsured people in 2011. Once the program is implemented, we estimate that the number of uninsured people would be reduced by 32.6 million people." That, of course, would leave some 16.5 million -- roughly a third of the current uncovered population -- uninsured.

Before Congress votes to blow up our existing insurance system, lawmakers and President Obama should actually read the bill they're considering -- and the Lewin report on its likely outcomes. If they do, they'll realize this so-called "reform" is change the country can't afford. 

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