Drip by painful drip, the details of the Democratic health-care-reform plan have been leaking out. And from what we can see so far, it looks like bad news for American taxpayers, health-care providers, and, most important, patients.
The plan would not initially create a government-run, single-payer system such as those in Canada and Britain. Private insurance would still exist, at least for a time. But it would be reduced to little more than a public utility, operating much like the electric company, with the government regulating every aspect of its operation.
It would be mandated both that employers offer coverage and that individuals buy it. A government-run plan, similar to Medicare, would be set up to compete with private insurers. The government would undertake comparative-effectiveness and cost-effectiveness research, and use the results to impose practice guidelines on providers. Private insurance would face a host of new regulations, including a requirement to insure all applicants and a prohibition on pricing premiums on the basis of risk. Subsidies would be extended to help middle earners purchase insurance. And the government would subsidize and manage the development of a national system of electronic medical records.
The net result would be an unprecedented level of government control over one-sixth of the U.S. economy, and over some of the most important, personal, and private decisions in Americans’ lives.
Let’s look at some of the most troubling ideas in detail.
An employer mandate. Employers would be required to insure their workers through a “pay or play” mandate. Those who did not provide “meaningful coverage” for their workers would pay a penalty, equal to some percentage of their payroll, into a national fund that would provide insurance to uncovered workers. Such a mandate is, of course, simply a disguised tax on employment. As Princeton University professor Uwe Reinhardt, the dean of health-care economists, points out, “[That] the fiscal flows triggered by mandate would not flow directly through the public budgets does not detract from the measure’s status of a bona fide tax.” Estimates suggest that an employer mandate could cost 1.6 million jobs over the first five years.
An individual mandate. As is the case with an employer mandate, an individual mandate is essentially a disguised tax. It is also the first in a series of dominoes that will lead to greater government control of the health-care system.
To implement an insurance mandate, the government will have to define what sort of insurance fulfills it. As the CBO puts it, “an individual mandate . . . would require people to purchase a specific service that would have to be heavily regulated by the federal government.” At the very least, deductible levels and lifetime caps will have to be specified, and a minimum-benefits package will likely be spelled out. This means the oft-repeated promise that “if you are happy with your current insurance, you can keep it” is untrue. Millions of Americans who are currently satisfied with their coverage will have to give it up and purchase the insurance the government wants them to have, even if the new insurance is more expensive or covers benefits the buyer does not want.
A “public option.” The government would establish a new universal-health-care program, similar to Medicare, that would compete with private insurance. Regardless of how it is structured or administered, such a plan would have an inherent advantage in the marketplace because it would ultimately be subsidized by taxpayers. It could, for instance, keep its premiums artificially low or offer extra benefits, then turn to the U.S. Treasury to cover any shortfalls. Consumers would naturally be attracted to the lower-cost, higher-benefit government program.