Not Ready for the Big Leagues

Obamacare would look like Obama’s first pitch.

Ideally, our health-care system would remind one of a major-league fastball: crisp, efficient in its delivery, on-target, hitting the catcher’s mitt with a pop. Our current health-care system, burdened with too many middlemen and too little competition and choice, is more like a single-A fastball: It’s not bad, but it’s not quite good enough for the big time. President Obama’s proposed health-care system would look a lot like the pitch he threw at the Major League Baseball All-Star Game: unsightly, slow, and fat.

The House legislation, which would enact Obamacare, lists this as its official purpose: “To provide affordable, quality health care for all Americans and reduce the growth in health care spending.” The bill would do exactly the opposite — while raising taxes, deficits, and unemployment; reducing wages, American competitiveness, and consumer choice; forcing millions off employer-provided insurance; and leaving the middle class with rationed care.

In short, the “America’s Affordable Health Choices Act of 2009” would not be affordable and would deny choice.

To be fair, the bill’s ends are exactly what they should be, except that “provide” should be replaced with “ensure access to.” But the means could hardly be more wrong.

By offering a “public option” to “compete” with private insurance, establishing a federally run health-insurance exchange, and dramatically increasing federal regulatory requirements on private insurers, the bill would increase the government’s role in health care and provide more Americans with government-run care. While there are disputes about the degree to which this would happen, no one disputes this basic feature. As the president’s first nominee for secretary of health and human services, Tom Daschle, says, the “public option” would be “a government-run insurance program, modeled after Medicare.” The Obama administration claims this new Medicare-like program would cut costs.

But as my recently published study for the Pacific Research Institute has shown, the costs of Medicare and Medicaid have risen far more than the costs of private care. Since 1970, Medicaid’s per-patient costs have risen 35 percent more, and Medicare’s 34 percent more, than the combined per-patient costs of all other health care in America. Across nearly 40 years, government-run health care has proven to be far more costly than privately purchased care.

The costs of a new Medicare-like “public option” would be even higher in other ways. The House bill would force all but the smallest companies to provide health insurance — or else pay a fine equivalent to 8 percent of payroll. Many employers who have long offered private insurance would do the math and decide they don’t need the headache of offering health insurance. Millions of Americans would lose their employer-provided insurance, leaving them with no choice besides the public option.

According to the Lewin Group, a prominent consulting firm, a widespread, Medicare-like “public option” would cause 118 million Americans to lose their private health insurance and be shuttled into government-run care.

The House bill would undermine private insurance in other ways as well. The “public option” would get taxpayer financing (whether now or later) and would use the coercive powers of government to dictate the prices of services provided by others — doctors, nurses, and hospitals. Private insurers don’t enjoy these advantages and would be run out of business. Private insurers would also be forbidden to sell insurance to individuals outside of the federally controlled Health Insurance Exchange — which would dictate what kinds of policies insurers could offer.

If you think the lower reimbursement rates paid to medical professionals by the “public option” would mean lower costs, think again. Medicare and Medicaid pay similarly low rates and still manage to cost much more than private care. Instead of lower costs, the result would be lower pay for medical professionals and fewer people entering the medical profession. Do those who doubt this also doubt that higher salaries attract teachers?

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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