Health care reform part 3 - Government Health plan

In previous posts, I have defined what I think the problems are - cost, quality, coverage. I have discussed what I think can and is being done about it. Now, I'll talk about the so-called Government health plan and, equally important, the health insurance exchange and why I think these are a bad idea.

• The Government Plan is a precursor to a government take over of the health care industry - at least the financing of it -- One night, there was a clip of President Obama denying this. The President said "No one is talking about a government takeover of health care." The very next film clip was of U.S. Representative Barney Frank saying that he supports the Government Plan idea because he wants to use it to push for a single payer system. So President Obama is misinformed, someone IS talking about a government takeover of health care (at least health care financing) and that someone is a very powerful member of his own party. And I think there are many others besides Representative Frank who hold positions of power and share Rep. Frank's views.
• People in Washington will decide what benefits you need and not you - History shows this to be true. Medicare Supplement policies all must provide exactly the same benefits, following a table of benefits created by government regulators. Medicare Advantage policies which Congress created so seniors on Medicare would be able to choose benefit plans must provide exactly the same benefits as traditional Medicare. Think the individual plans offered through the exchange won't work the same way? Well Congress is right now debating whether or not abortions are to be covered - and soon they will be going medical condition by medical condition to see which ones have enough votes in Congress, and then it will be the Regulators' turn.
• It won't cut costs - Almost every state with major metropolitan areas have turned their medical assistance programs over to private carriers because the state run programs could not generate any cost savings.
• The Government Plan won't compete fairly -

1. Insurance companies must have the policies they sell and the rates they charge approved by government agencies. I know of an instance where it took a carrier 18 months to get a new policy approved for sale. Will the Government Plan be subjected to the same difficulties?
2. Private carriers must maintain reserves to pay for potential claim liabilities. If a health plan has a year where they lose money, they must increase premiums to replenish or increase their reserves. Will the Government Plan operate the way a health plan does? Not if history is any example. Government programs operate on a pay as you go basis. Medicare has an unfunded liability of over $30 trillion dollars according to one report. If the Government Plan did create a reserve, why wouldn't it end up just like the Social Security Trust Fund - drained into the federal budget?
3. See the prior bullet point on mandated policies - expect the Government Plan to kill its competition by preventing them from offering better solutions

• The Government Plan and the Health Exchange will stifle innovation and competition - contrary to whatever anyone says, there really has not been an individual health insurance market in the US. The vast majority of people are covered by group coverage or government programs. Creating a new market with 47 million people in it will stimulate a great deal of innovation and competition. Want proof? Look at the auto insurance market which is entirely an individual coverage market. Look on TV any night of the week - see the ads for Allstate, State Farm, Nationwide, Geico, Progressive, and e-sure. These are companies competing for individual auto insurance customers. They are offering innovative new products - Allstate has accident forgiveness, Progressive allows you to name your own price or customize a product, to name just two. This will happen with individual health insurance if the Government creates the market and stays out of it.
• Medical providers will be underpaid - I have seen studies across the last three decades that show every year Medicare and Medicaid do not pay fees to providers that cover the cost of rendering services. This is well documented and irrefutable. In Massachusetts, which enacted a universal health care law, costs skyrocketed. The state's response - we need to reduce what we pay to providers. Every year, Medicare announces new fees they will pay providers and almost every year the hospitals and medical associations object.
• Private insurers will be taxed to support the government plan - if Medicare or Medicaid pays a doctor less than what it costs to treat a patient, where does the doctor get the money to stay in business? Answer: from private insurance coverage. The underpayments mentioned in the bullet above are passed over to private insurers - driving up the costs of health insurance. We can expect the Government Plan to operate the same way Medicare and Medicaid does - control costs by underpaying, which in this case will kill off their competition who will have to pay this "tax."
• The truth to those who say "But many people have Medicare and Medicaid today... " - If traditional Medicare is so good, why do millions of senior citizens go out and buy Medicare Supplemental policies from private insurers? Medicare Supplemental policies are necessary because of the large amounts of money that traditional Medicare does not pay for medical services. Other seniors jump off the traditional Medicare program entirely and choose Medicare Advantage programs administered entirely by private carriers. If traditional Medicaid is so good, why have so many states turned these programs over to private carriers to run? This was necessary both for the state to save money and also because the fees paid by the states were so low that the only doctors that Medicaid recipients had trouble finding a medical provider who would treat them. Many years ago, CBS' 60 Minutes documented the horrible treatment that many Medicaid recipients received at so-called "Medicaid mills" - organizations set up to profit on treating medicaid patients.
• The Government Plan will kill jobs - Health insurers provide millions of jobs in the United States. Health insurers have been one of the slowest industries to use off shore resources to do work. Why would you introduce unfair government competition into an industry that provides millions of jobs and do so in the middle of a really bad economy, with unemployment at staggeringly high levels?