President Obama and other leading Democratshave proposed creating a new governmenthealth insurance program as an option forAmericans under the age of 65, within the contextof a new, federally regulated market — typicallydescribed as a “National Health InsuranceExchange.” Supporters claim that a new governmentprogram could deliver higher‐qualityhealth care at a lower cost than private insurance,and that competition from a government programwould force private insurers to improve.
A full accounting shows that governmentprograms cost more and deliver lower‐qualitycare than private insurance. The central problemwith proposals to create a new government program,however, is not that government is lessefficient than private insurers, but that governmentcan hide its inefficiencies and draw consumersaway from private insurance, despiteoffering an inferior product.
A health insurance “exchange,” where consumerschoose between private health plans withartificially high premiums and a government programwith artificially low premiums, would notincrease competition. Instead, it would reducecompetition by driving lower‐cost private healthplans out of business. President Obama’s vision ofa health insurance exchange is not a market, but aprelude to a government takeover of the healthcare sector. In the process, millions of Americanswould be ousted from their existing health plans.
If Congress wants to make health care moreefficient and increase competition in healthinsurance markets, there are far better options.
Congress should reject proposals to create anew government health insurance program — notfor the sake of private insurers, who would besubject to unfair competition, but for the sake ofAmerican patients, who would be subject tounnecessary morbidity and mortality.