A swing and a miss on the public plan; Update: VA makes my point … again
posted at 8:47 am on June 25, 2009 by Ed Morrissey
George Will wrote a critique of the Obama administration’s public-plan option, tying it to the advancement of a broad Democratic agenda. Nate Silver of Five Thirty Eight attempts to rebut Will, but instead does a sleight-of-hand to combat a strawman argument. Will wrote:
The puzzle is: Why does the president, who says that were America “starting from scratch” he would favor a “single-payer” — government-run — system, insist that health care reform include a government insurance plan that competes with private insurers? […]
Assurances that the government plan would play by the rules that private insurers play by are implausible. Government is incapable of behaving like market-disciplined private insurers. Competition from the public option must be unfair because government does not need to make a profit and has enormous pricing and negotiating powers. Besides, unless the point of a government plan is to be cheaper, it is pointless: If the public option conforms to the imperatives that regulations and competition impose on private insurers, there is no reason for it.
Emphasis in original. Will’s argument is apparently this: The government does not need to make a profit and will have greater leverage with providers; therefore it will deliver the same service for less money. That’s unfair!
No, that’s actually not Will’s argument. The normally excellent Silver replaces Will’s argument with a handy reductio ad absurdum that ignores the two mechanisms of the public plan which will end most private insurance and leave the US with a single-payer system by default.
First, where in Will’s argument does he say that the public plan will deliver “the same service”? Perhaps Silver is not as familiar with Medicare as I am, or the VA as veterans are, but in truth, government-run medical plans are far worse than any private-sector insurance plan. They cover less, Medicare/Medicaid require more in deductibles and co-pays, and the payments are poorly handled. One would have thought the “government can do it just as well as the private sector” would have disappeared after the Walter Reed scandal, but the Left still clings to its illusions.
The only thing that makes Medicare bearable is the Medicare Advantage plan, a partnership between the government and private insurers, and again I say this from personal experience. Guess what’s on the chopping block in ObamaCare?
Will doesn’t argue on effectiveness, though, but on the obvious fiscal implications of a public plan. Any public plan subsidized by taxpayers is essentially a cheat. It doesn’t pay for itself, so it presents an artificially low price to the consumer. “Costs less money” is a lie. It will look cheaper as it competes against private plans, but what the price list won’t show is how much each taxpayer has already paid to provide that low, low price. Even Barack Obama admitted as much in his press conference (emphasis mine):
Now, I think that there’s going to be some healthy debates in Congress about the shape that this takes. I think there can be some legitimate concerns on the part of private insurers that if any public plan is simply being subsidized by taxpayers endlessly, that over time they can’t compete with the government just printing money.
Obama calls this “a legitimate concern” — which Silver ridicules.
The second mechanism is the desire of employers to shed the costs of health insurance. Most people in the US get their health insurance through their employer. Many employers, especially smaller companies, would love to dump them into a government-paid plan, especially if it presents an artificially low price. If one company in a market does that and reduces its internal costs through this artificially low, subsidized price, competitive pressures on the prices of products and services in that market will force other companies to follow suit. Only the largest companies would hold out, and probably not for long, to meet competitive labor demands. When the large part of businesses dump their plans, the risk pool becomes too small, and the insurers will exit the field — leaving single-payer as the default.
That’s the argument that Silver avoids, and for good reason.
Amid growing controversy over procedures that exposed 10,000 veterans to the AIDS and hepatitis viruses, the Department of Veterans Affairs is now bracing against news that one of its facilities in Pennsylvania gave botched radiation treatments to nearly 100 cancer patients.
Veterans groups and lawmakers say VA hospitals have permitted these violations because federal regulations allow doctors to work with little outside scrutiny. They say the VA health system, with its under-funded hospitals and overworked doctors, is showing signs of an “institutional breakdown,” in the words of one congressman.
An official with the American Legion who visits and inspects VA health centers said complacency, poor funding and little oversight led to the violations that failed the cancer patients in Philadelphia and possibly infected 53 veterans with hepatitis and HIV from unsterilized equipment at three VA health centers in Florida, Tennessee and Georgia.
“Lack of inspections, lack of transparency” were likely to blame, said Joe Wilson, deputy director of the Veterans Affairs and Rehabilitation Commission for the American Legion, who testified before Congress this month on transparency problems in a budgeting arm of the VA.
All this could be must be yours, under ObamaCare!