Monday, October 19, 2009

America Still Doesn't Get The Public Option

You still don't get it do you?

Alright. I'm gonna give this one last shot.

So the government will set up an insurance company, right? Then, if you can’t afford private insurance you can come to the government and get it at a much lower rate. The lower rate that the government offers will provide competition and that will force private insurers to lower their rates.

It sounds great! But I’m still waiting for someone to convince me that it wouldn’t lead us to a single-payer system.

Now, I understand that many of you think a single-payer system would be great. No insurance companies whatsoever. The government simply covers everybody and the taxpayers foot the bill. Of course this type of system would be impossible without raising taxes on everyone. The rich, the middle class, small business owners, investors. Everyone.

A lot of young people I’ve spoken to tell me that they wouldn’t mind all that much if they had to pay higher taxes so that everyone could have access to a government plan. But would they be willing to lose their job? Would they be willing to live in less comfortable conditions? Pay higher prices for goods and services? Subject their elderly relatives to a lower quality of medical care then they could have enjoyed otherwise?

I only ask because these are the long-term economic repercussions of single-payer and the public option will inevitably lead to such a system.

Here’s how it works:

The medical industry, made up of doctors, nurses, MRI machines, bedpans, etc. gets its money from a few places. The insurance companies and the government both pay the medical industry for the people insured under private plans as well as the millions covered by Medicare and Medicaid. The problem is that the government reimburses the hospitals far less for the care it provides than what the care actually is worth. So, the medical industry forces the insurance companies to pay more for the same care and the insurance companies pass those costs onto their policy holders.

A public option would pay the medical industry a rate comparable to those paid by Medicare and Medicaid. The difference would be that instead of the government plan covering just the elderly and the poor, it would now cover anyone who wanted it.

The private insurance industry is not very profitable- despite what the sophists in the Democratic Party would have you believe. It only makes about 3.5 cents on the dollar in annual profits.

The public option would lead to an increase in the number of people in the system without an increase in the resources it would take to adequately care for all of those people. Additionally the private insurance companies would bear the burden of the costs, since they need to make a profit to survive and the government can, and does, go as far into debt as they want. Because initially the quality of care wouldn’t differ between those under private and public plans, people would inevitably switch to the cheaper plan. Additionally, business owners would have no incentive to keep their employees on the plans they provide for their workers and could save money (at least in the short term) by dropping that coverage. The private insurers would eventually go out of business.

And here’s where the problems really begin.

Once everyone is reliant on the government to pay for the bulk of their medical costs, there are only two ways the government can afford it while paying the medical industry a rate that allows them to maintain a reasonable level of care and not falling too far into debt.

They cut back on care and take a larger role in the decisions made between you and your doctor, even fining physicians for performing procedures that government panels deem unnecessary. Or, they can raise taxes.

In Europe they do both of these things. But, the people of Europe don’t enjoy the high standard of living that we do in this country. Their employment rate is usually much higher than ours. New innovations or technologies rarely come out of these countries because their economic system discourages their citizens from being entrepreneurs. Why? Higher tax rates.

If America had adopted a single-payer system decades ago, the economic booms that the US experienced in the 80’s and 90’s would have never happened. Much of the technology that the world enjoys today would not exist. Let’s face it. What incentive would a Frenchman have to invent Google? Would a Swede have had the incentive to create Amazon? Mp3 players, cell phones. None of those things would be essential elements of human existence without American innovation and creativity and none of that creativity would have existed if we prevented the private sector from rewarding these innovations with untold wealth. High taxes destroy this incentive and a single-payer system would lead to high taxes. The public option would lead to single payer. Thus, the public option could very well be the first step in destroying everything that has enabled the American economy to become the most vibrant that the world has ever known. If you’re willing to make that sacrifice – among others- then that’s your business.

Many young Americans have become spoiled. They don’t understand how well America’s economy has actually worked over the last 30 years and that our unprecedented growth and high standard of living across the entire economic spectrum is no accident. The debate over the public health insurance option has been nasty. It’s because there is a fundamental disagreement between conservatives and liberals over what’s more important to a society in the long term. Freedom or equality. But make no mistake, the decision over the public option will have far reaching ramifications, not just in the realm of health care, but in every other aspect of all of our lives for the rest of our nation’s existence. So think about it. Really think about it.

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Storm Jingram said...

Good piece, I thought you did a really good job translating the hyperbole to reality

commoncents said...

Great post! I really like your blog!!

ps. Link Exchange?

Falling Panda said...

Thanks guys. I'm linking both of you.