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McClaughry: Health debate - outcomes

08/03/09 5:55PM By John McClaughry
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(HOST) Commentator John McClaughry thinks that current plans for reforming our national health care system are likely to have quite a few unintended - and undesirable - consequences.  

(McCLAUGHRY) Health care "reform" is at the head of the national agenda right now. Both House and Senate have produced, but not passed, 900 page "reform" bills.

None of the pending bills would establish, at least directly, the single payer government system so beloved by liberal activists. But all of the bills contain a leading provision called the "public option". This is a favored government insurance company that would, in the President's words, keep the competing private competitors honest.

We currently have a "public option" program, in effect since 1965. It's called Medicare. It has long since buried its private competitors, and it's an inspiration for Obama and his allies.

But Medicare is now insolvent. Its hospitalization insurance fund will not be able to pay for services after 2017 unless new financing is found. Its projected unfunded liabilities between now and 2082 total $36 trillion dollars.

Medicare underpays physicians and hospitals. Obama and his allies are planning to finance much of their "reform" by further cutting payments to providers. But when Medicare payments are cut, providers contrive to perform more services to keep up their revenue. So as underpayments increase, it's likely that the government will have to force providers to ration care to hold down total payments, and penalize providers who earn too much.

Underpayments by government health care programs are a hidden tax on health insurance premiums. Because government underpays, providers overcharge private insurers to close the shortfall. This cost shift results in ever-higher insurance premiums, and struggling employers start thinking about simply dropping their employee coverage. This is not a workable model.

It's perfectly clear that government benefits enjoyed by the government-sponsored "public option" insurance company will allow that company to underprice its private competitors. Eventually employers will have no choice but to dump their employees into the government plan - even if they are charged a penalty for doing so. This is single payer on the installment plan.

Obama recently remarked that "no one will take away" your current health plan, "no matter what". But a week later he amended that to say that the government won't take away your current plan - but you might lose your current plan because your employer, who owns your plan, might be forced to choose the cheaper "public option" plan.

Here's my prediction: the pending Democratic bills will, if enacted. prove to have some annoying inconveniences, like rationing, waiting lines, maddening bureaucracies, and penalties for non-enrollment. They are likely to bring about demoralized doctors and nurses, shabby facilities, obsolete technology, declining quality of care, and of course much higher taxation, especially on job-creating small businesses.

But don't worry. President Obama, Sen. Kennedy and Speaker Pelosi can surely work those things out.
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