Public Option won’t Work, will Lead to Single Payer

By: Ameek Sodhi

Congress has adjourned for their August recess. Apparently, they needed a break from all the hard work they’ve been doing. The ticket item when they return will be one that affects each and every American: healthcare reform. It is one- sixth of our economy, and Congress is about to dive right into its deepest problems. But before they get carried away, let’s look at all options to make the most rational and economically sound decision about the American Healthcare System.

I will give Democrats credit for wanting to pass reform in the first place. The system is clearly broken and needs fixing. All the statistics they cite regarding costs being unsustainable in the future are all correct. Good job. Regardless of their recognition of a broken system, nationalizing healthcare will not fix the problem. Let’s start with the cornerstone of any left-wing bill that will emerge from this debate: The Public Option. It will lead to a single payer system, and it won’t work. Let me explain.

Let’s say, for the sake of argument, healthcare costs $10 to produce, while $3 for administrative costs. That’s $13 for private insurance healthcare. The Public Option would come on the market and sell healthcare for say, $8 less than it costs to produce the equipment used for the procedures, let alone the doctor’s salary. How could government do such a thing? They would subsidize the $5 hole with tax dollars every year. It’s how France, England, and other countries with Socialized medicine finance their healthcare systems.

President Obama wants to get one-third of the costs to pay for this health care overhaul from taxpayers over the next ten years. It will be a subsidy to this Public Option, and it will drive private insurance out of business. The claim that you can keep your insurance if you like it does not make sense because private insurers can’t sell insurance for $8. They’ll lose money. But what’s so wrong about shutting out private insurance? Can’t government magically run health care for less money?

The CBO report tells a different tale. All the noise from the left about this report baffles me. The nonpartisan CBO’s head was appointed by the most liberal congress in decades, so criticism that the report was unfair or biased does not float very well. God Bless the guy for having the guts to present the report when he was expected to carry through for the liberals who put him in power. The report said, quite frankly, that health care costs will increase, not decrease, under the proposed legislation in Congress. It could not have been clearer. The skyrocketing costs, that we all agree are out of control, will get worse. And because of that, the deficit will increase to the tune of over 200 billion dollars. The Lewin Group along with the CATO Institute have concluded similar findings in their estimates. I find it very, very hard for anyone to defend this plan as it stands now, given the mountain of evidence against it.

None of the proposals given by Congress, thus far at least, address the fundamental problem with our healthcare system: cost.

It’s also worth considering why other countries spend less on healthcare. Other countries spend less because their citizens are waiting in line for an x-ray. People in America survive cancer 15% more than in other advanced countries because they don’t die in line waiting for chemotherapy. And, it’s important to note they eat much healthier than we do. That makes a big difference.

There is a reason people fly from all over the world to Boston, New York and Cincinnati. We have the most advanced care in the world. Let’s not mess with the world class quality we offer. The problem is that costs are much too high. So let’s fix that since it’s the main problem.

The first issue in addressing cost is that we should allow competition of insurers between state lines. As it stands now, someone in one state cannot get health insurance from an insurer in another. Insurance companies in states with higher costs feel no pressure to reduce costs because there is no competition from less expensive insurers across state lines. Let’s change that by allowing competition across states. Those same high cost insurers in certain states will be forced to reduce their prices; otherwise their consumers will simply drop their plans and buy insurance plans from less expensive out-of-state companies. Free market competition will make prices go down and quality go up because these insurers will have work to harder for less cost to keep their customers happy.

We can also do a lot to improve the employer-based structure we have now. We should allow small businesses and individuals to join pools, so that risk is spread out and therefore everyone’s costs will come down. Also, incentive based programs in companies have proven to be very effective. Some companies already pay their employees to get healthier and actually save money on healthcare costs as their employees are less prone to get preventable sicknesses. Remember, a large part of the reason we’re relatively unhealthy compared to other countries is that we eat very unhealthy.

Finally, it makes sense that all of the procedures, outcomes, and records be more transparent electronically. It would make it easier for individuals, businesses and doctors to make the most cost-effective healthcare decisions. The market works best when buyers and sellers have the most up to date and complete information. Healthcare should be no different.

Overall, I think there is a lot we can do to fix the healthcare system in our country. I hope congress looks at its own estimates and at all possible paths before it commits our tax dollars towards this effort.