Amid the debate over whether health care reform should include a government-run “public option” plan, everyone seems to be missing one critical fact. Even without a public plan, the reform bills under consideration would impose such rigid control on private health plans that it would amount to a government-run health care system - even if the insurance companies remain technically under private ownership.
Both the House bill that passed recently and the Senate bills that have been reported out of committee give unprecedented levels of control to federal bureaucrats to pre-empt patient choice and block competitive innovation. The House bill (H.R. 3962) would create a new federal office - health choices commissioner - to make health choices for the entire nation, specifying precisely what services health plans must cover, may cover and must not cover.
The Senate bills (S. 1796 and S. 1679) would give comparable authority to the secretary of health and human services. In both cases, the requirements could make the package of covered services nearly identical for all plans from all companies. Except for a limited range of financial options (three or four “levels” of “actuarial value”), you would have no flexibility to choose a health plan that meets your individual needs.
With all benefits and coverage conditions specified by government regulations, there would be no room for people to choose what’s right for them. There would be no room for health plans or providers to innovate and find more efficient and cost-effective ways to deliver health care.
All of the inefficiencies of the current system - inefficiencies President Obama himself often describes in detail - would be locked in permanently. We still would pay providers to “do procedures” rather than keep us healthy. We would still have a fragmented system with little accountability. We still would penalize providers who provide high-quality care and subsidize those who make mistakes.
If one of these bills becomes law, even without a “public option,” we will have government-run health coverage. It will merely be administered by private companies. The federal government will be running all private health plans - individually purchased plans starting in the year 2013 or 2014 (depending on which bill) and employer-sponsored plans starting five years later.
Furthermore, the House bill also empowers - actually, requires - the health choices commissioner to determine the premiums private health plans can charge. The bill states, “The Commissioner shall deny excessive premiums and premium increases,” but nowhere does the bill define what “excessive” means. That would be entirely up to the discretion of the commissioner.
Because the health choices commissioner would be able to determine what health plans cover and what premiums they may charge, it is quite possible that the commissioner could define a package of minimum health benefits that is very expensive to provide and then define the premium required to support that benefit package (which would be substantially higher than current average premiums) as “excessive” because of lack of “affordability.”
In this worst-case scenario, every health plan would face two choices: (1) go out of business because the commissioner won’t approve a premium high enough to break even or (2) go into bankruptcy. In either case, the result would be no private plans - and post-hoc “justification” of the “necessity” of a public “option” that would be the only plan actually permitted to operate.
In short, while the House bill doesn’t impose a single-payer, Canadian-style health care system, it does give federal bureaucrats - in this administration or any future administration - the power to impose precisely such a system without any further congressional action.
To add insult to injury, we would pay vastly more for this new system - a system even less responsive to patient preferences and choices than our current system. We would face higher taxes and, according to the Congressional Budget Office, higher premiums. Both the House and Senate bills penalize employers for hiring workers, especially workers from low-income families - the people who need help the most.
The bills also impose taxes on medical devices and (in the case of the Senate bill) prescription drugs and health plans - taxes that would be passed along to those who need those products. In effect, the bills would tax those who need health care to pay for health reform.
But at least all Americans would be covered, right? Wrong. According to estimates from the CBO, 18 million to 25 million Americans would remain uninsured. And under these bills, they would have to pay heavy tax penalties to punish them for their misfortune - and perhaps even serve jail time for “willful failure to pay” those tax penalties.
Is this the type of “reform” we want?
Robert A. Book is senior research fellow in health economics at the Heritage Foundation.