A friend pointed me to the following language in the CBO analysis (page 9) of the Reid bill: “CBO’s assessment is that a public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that were somewhat higher than the average premiums for the private plans in the exchanges” (emphasis added). This presumably is because the public plan would have to be self-financing, just like any old insurance company, depending (I assume) only on some seed money from the rest of the federal government.
Can they be serious? Put aside the absurdity of the notion that a public plan would operate just like Blue Cross or one of the others. (After all, the whole purpose of the public plan is to transfer wealth among constituencies in ways that market competition precludes.) Instead, consider the implications of the assertion that premiums in the public plan would be higher than those for the average of the private plans. That means automatically that only the sickest patients would opt for the public plan, even if guaranteed-issue/community-rating regulations were applied to the private plans. And the public plan is supposed to operate like a business, covering its costs? Please.
– Benjamin Zycher is a senior fellow at the Pacific Research Institute.