State of Protest

There has been much talk about the “public health care” option or the “public health care insurance” competition. But, what is public health care? Is it horrible? Is it something to fear?

Health care that is public is care that is provided to you by the government. Public health care has been around for a very long time, and the most prominent form of public health care is the Medicare program, which is a federal benefit program to pay for health care expenses for those who are Age 65+.  Another form of public health care is Medicaid, which is a state-sponsored program that receives partial federal funding. Anyone below Age 65 can receive benefits from Medicaid if their assets and/or income are low enough to qualify (and they aren’t covered by any other form of health insurance). Another form of public health care is your local health department, which not only monitors health standards for any establishment that prepares food for consumers, but also for schools, other social programs and the general public. When I was a kid, I remember the local health department being responsible for all inoculations, education for sexually transmitted diseases, helping indigent families and pregnant mothers, and more. So, public health care is nothing new. It has been around for a long, long time. Depending on your viewpoint, the pinnacle of public health care is the Centers for Disease Control (CDC).

In a July 16, 2009 article at Reason.com,¹ Steve Chapman analogizes why more competition in health insurance is not needed. We already have enough competition. I agree with his assertion. There is an abundance of proof that the level of competition is quite high and there is no further way for the government to foster more competition. In fact, the only way the government can affect private health insurance is to pass a law. What will laws do? Laws generally provide restrictions for behavior, so a law regarding private health insurance will restrict competition. It’s inevitable.

Mr Chapman raises certain points that are contradictory. He states that a public health care plan will not save as many administrative costs over private health insurance, as many imagine it will. This is true. One must recognize, as Mr Chapman does, that even though a private health care plan will not have marketing expenses like private health insurance, it will have other expenditures, either from its own internal administration, extra payments for treatments, fraud prevention and investigation, etc. However, the main problem with our health care system is that it doesn’t cover everyone. Worse, the people who are covered are covered in a myriad of ways. A single plan with the same set of benefits for everyone greatly simplifies expenses. Not only will there be an absence of marketing expenses, but an absence of lost time and money by the medical provider determining why one individual’s plan will or will not pay for something, or in the health plans explanation of what the plan did or did not pay for. There are hundreds of thousands of man-hours lost to figuring out what private health care plans will or won’t pay for and seeking reimbursement from them.

Mr Chapman also mentions the dominance of Microsoft did not prevent Google from providing competition, which is true. However, Microsoft was sued by the United States and the European Union for anti-trust and/or monopolistic behavior. The contradiction here is that you can’t compare Microsoft to “a few health insurance providers” because Microsoft is one company and “a few” is more than a couple, which indicates existing competition. On the contrary, does Mr Chapman prove that a monopolistic entity can still have a competitor? He says that Medicare doesn’t have to advertise but a public option plan would. Really? Did Microsoft heavily advertise Windows? Nope, not until Apple became a direct competitor and not in earnest until Microsoft thought that Linux (or variants) were going to take over the desktop. Microsoft still attracted millions without any advertising at all. Microsoft DOS (and later Windows) was something you got every time you bought a new computer. Hmmm. Interesting. Maybe health care is something you get (via taxes) every time you buy something or every time you get a paycheck.

In another vein, Mr Chapman raises the school-voucher argument by stating that President Obama doesn’t want to foster competition because the government doesn’t offer participants in Medicare, Medicaid or SCHIP a voucher to select private health insurance. His point is made from one of ignorance, unfortunately. No insurance company wants to insure the aged (Medicare participants) because they are a sure-fire money pit. Expenditures for those Age 65+ will far exceed any premiums you can charge them. Unless all insurance companies collectively agreed to insure the aged, the first company out of the gate will sink under the weight of the aged who seek to be insured. Secondly, participants in Medicaid don’t have any money, which is why they qualify for Medicaid in the first place. The government cannot provide a sufficient voucher to Medicaid participants to obtain private health insurance. Medicaid, by nature, is a program that doesn’t consistently insure the same group of people. Sometimes Medicaid simply helps someone overwhelmed by current medical bills; other times it insures the indigent who don’t even have a fixed address. If we think health care providers don’t care to deal with Medicare payments, why do we think a private insurer would want to deal with government payment of premiums? What’s the difference? None. The conservative and/or libertarian plans for voucher-like tickets to health care include increased tax deductions for paying private health insurance premiums. The assumption is that you can afford the rest of the premium not paid by the tax deduction, and that you can meet the medical eligibility requirements for obtaining the insurance. The voucher system is dead on arrival.

Another complaint of the public option that Mr Chapman doesn’t address but to which his arguments apply is the cost of care and who controls those costs.

“But a public program of the sort Democrats propose doesn’t have to control costs, because in a pinch it can count on the government to keep it in business. Competition is healthy, but how are private companies supposed to compete with an operation that can tap the Treasury?”

A public program does have to control costs, just like private plans must also control costs. It doesn’t matter whether you are covered by a public or a private plan — either one must control costs. There would be no competition if private plans didn’t control costs. The question of cost control is not whether it will happen, but how. Mr Chapman says that the public plan has the US Treasury at its disposal so that it doesn’t have to control costs. This is both a reality and a false argument in the same breath. The reality is that private health plans don’t have to control costs because private health insurance gets massive tax deductions that aren’t available to other forms of private insurance, so the US Treasury is already bankrolling billions, if not trillions, in the form of lost revenue on health care that has already been delivered. Lost income is lost income, period. Additionally, the public option should be a totally separate function that is merely sponsored by government so that the revenue and expenditures of the public plan are wholly within control of the boards managing the plans. As long as the plans are entirely responsible unto themselves, there will be internal cost controls applied.

It is unfortunate that Mr Chapman compares a public health care option to a Nigerian bank scam. The problem with the analogy is that the scammer isn’t waiting for our reply. He’s already scammed us for a few too many generations. If the major countries of the world can find a way to publicly provide health care, why shouldn’t we? The citizens of Canada, France, Great Britian, Germany, et al, do not feel scammed.

1. S Chapman. The ‘Public Option’ Health Care Scam, Reason.com, July 16, 2009. [<]