by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Under his proposal, people could choose between a government-run plan and private health plans. “You know better than anyone what works for your family,” he argued.
But private insurance would vanish in short order under a public option. Eventually, the government-run health plan would be the only one available.
The vice president’s article promises voters only good: “For the first time, insurers will have to compete for your business; they’ll have to innovate and offer more to stay viable…And this approach doesn’t force a change on folks who are happy with their insurance.”
That’s malarkey. Private insurers must cover their costs to survive. The government, on the other hand, can run a money-losing operation. So, the public option will have the ability to underprice private insurers until they’re out of business.
The public option also envisions paying doctors and hospitals rates similar to Medicare’s, which are about 40% less than those paid by private insurance. Hospitals receive 87 cents for every dollar they spend treating Medicare beneficiaries. They count on higher payments from private insurers to compensate.
If a public option’s artificially low premiums entice the privately insured away, then providers will have to raise rates for those remaining on private insurance. That would drive yet more privately insured to the public option. The cycle would continue until there were no private insurers left.