Commentary

A Government Plan Is Still Socialized Medicine

A recent health care “summit” held in Birmingham gave us pause to consider how the debate is being framed — either there is a “public plan” or no plan. That proposition has not been helpful to widen the debate.

The current proposals for health care reform include the option of a “public plan” rather than a single-payer system like those in Canada or Great Britain that President Barack Obama would prefer if he were designing a health care system from scratch.

But “socialized medicine” is not just about ownership; it is about who ultimately controls the resources and makes the decisions. Under the plans being considered by Congress and supported by Obama, the government would control more and more of those resources and make more and more of those decisions. And that is “socialized medicine.”

Coverage would be mandated for both employers and individuals. Government would determine what benefits insurance would have to include and force Americans to purchase health insurance that satisfies government mandates. This might require Americans who are satisfied with their insurance to switch to a plan that includes the benefits the government requires, even if that is more expensive or includes benefits they don’t want or are morally opposed to (such as abortion coverage). Obama’s often-repeated pledge that you can keep your current insurance is not meant to be taken literally — as White House spokesmen have reminded us.

The government would undertake comparative-effectiveness and cost-effectiveness research, and use the results of that research to impose practice guidelines on providers. Initially, these guidelines would be within government programs such as Medicare and Medicaid, but could eventually extend such rationing to private insurance plans. Private health insurance companies would still exist, at least initially, but would be reduced to little more than public utilities, operating much like, for example, the electric company, with the government regulating every aspect of its operation. That by itself would “socialize” much of the health-care system. But it wouldn’t stop there.

Obama also wants to set up a government-run health plan that will compete with private insurance. Such a government-run plan would have an inherent advantage in the marketplace because it would have access to funds from the U.S. Treasury. The government plan could, for instance, keep its premiums artificially low or offer extra benefits since it could rely on federal tax revenues to cover any shortfalls. Consumers would naturally be attracted to the lower-cost, higher-benefit government program, undercutting the private market — and increasing the burden on taxpayers. A government program, with its enormous market presence, could use its power to impose much lower reimbursement rates on doctors and hospitals, just as Medicare and Medicaid do now. Providers would shift their costs to private insurance, driving up premiums and making private insurance even less competitive with the taxpayer-subsidized public plan.

True, advocates of the public option promise it would play by the same rules as private insurance and pay reimbursement rates higher than Medicare. But, politicians made the same promise back when Medicare was created. It is estimated that privately insured patients pay $89 billion annually in additional insurance costs because of cost-shifting from government programs. If one assumes the new public option would have similar reimbursement policies, it would result in additional cost-shifting of as much as $36.4 billion annually.

Businesses would have every incentive to dump their workers into the public plan. Lewin Associates estimates that as many as 118.5 million Americans, nearly two out of every three people with insurance, would shift to the government program — or be pushed. The result would be a death spiral for private insurance. In the end, the vast majority of Americans would have no choice. They would be stuck in a government plan, putting the government in charge of which doctors they see or which treatments they could receive.

The current system is broken. But taken individually, most of the ideas currently being considered by Congress would make the problems we face even worse. Taken together, they amount to a complete government takeover of the American health-care system. In the end, Obama would bring us a health-care system under which the government would control one-sixth of the U.S. economy and some of the most important personal and private decisions in our lives. The American people are right to demand health-care reform. But this is not the type of reform most Americans seek.

Socialized medicine? Government-run health care? Whatever you call it, it’s still a bad idea.

Michael Tanner is a senior fellow at the Cato Institute and coauthor of Healthy Competition:What’s Holding Back Health Care and How to Free It. Michael Ciamarra is vice president of the Alabama Policy Institute.