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Obamacare: Public Option Means Fewer, Not More, Options

July 21, 2009

By David Gratzer

Liberal blogs are littered with endorsements, ranging from “no public option = no second term” to “if you don’t like the public option, get the hell out of the way.”

The American Prospect’s Paul Waldman has called the public option “a beautiful jewel” of health reform. In the Washington Post, blogger Ezra Klein writes that a “strong” public insurance option was “the single most recognizable marker for victory.” And in an editorial, The Nation declares: “a public option is needed—but it is by no means sufficient.”

The public plan option—allowing some type of government plan, modeled after Medicare, to compete with private health insurance—is the heart of the Democratic proposal to reform American health care. It is also the most controversial idea, estranging potential Republican support and even dividing the Democrats.

What’s the problem with, to use the President’s words, a proposal that would increase “competition”? Here are my thoughts, from a U.S. News and World Report essay:

My father’s first teaching appointment in North America, after fleeing communist Hungary, was at a state university. I went to a public university. One day, my daughters may pursue their education in the state college system.

University students have the freedom to choose between private and public colleges—between the private and public sectors—and post-secondary education is the better for it. Yale and the University of Pennsylvania are strengthened by UCLA and Penn State.

Many feel passionately that the government needs to do something to increase competition in health care. A majority of American workers have a choice of one healthcare plan. I understand the frustration. The Manhattan Institute offers two options on health benefits for those eligible: Take the company plan or leave it. In many states, like Vermont, it’s worse: The whole market is dominated by just one or two companies.

And so, the call for change: President Obama campaigned on the idea of creating a health insurance exchange with a menu of competing options, including a public plan option, which would be government-run and modeled after Medicare. President Obama explained recently: “This will give them a better range of choices, make the healthcare market more competitive, and keep insurance companies honest.”

The proposal has broad support in Washington. Nancy Pelosi, speaker of the House, stated that she can’t support health-reform legislation without a government option. And the enthusiasm stretches past the beltway. More than 70 percent of Americans support the idea. It seems to work for higher education; why not for healthcare?

Here’s the problem. The model for the public plan, Medicare, isn’t an insurance, it’s a federal program. As such, the public plan option would overwhelm even the best private insurers, thanks to the unfair advantage of federal status.

How would the public plan do this? And what would be an alternative?

Original Source:



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