The government run insurance option will enjoy the benefit of not having to operate like a real business. Like all government programs it will be able to supplement its continued operation through tax payer subsidies. This will put private insurers at a disadvantage and will eventually put them out of business.
Any federally run insurance option will likely run a mild deficit at first, but this early drain will be nothing when compared to the massive costs that will result when private insurers are no longer able to operate. At that point there will be 300+ million people under the government insurance program and it will not be able to sustain quality coverage. The costs will simply be too high, like they are for European nations and Canada, which will result in cost savings measures. These cost saving measures will include rationing of health care services, because government programs never cut the superfluous jobs of union protected bureaucrats.
Once cost savings measures are required there will be increasing push to standardize universal care in order to reduce costs. This is dangerous in medicine, because health care is highly personal and runs contrary to cold impersonal touch of government run bureaucracy. With private insurers driven out of business, there will be no alternative to those who are victimized by the new system. Without the US, where will victims of Canada’s health care system go to as a last resort?
Quality of health care will decline, because the high cost of going to medical school will not be worthwhile if the doctor turns out to be no better than a civil servant. This system will all but guarantee that the only individuals who can afford to be doctors in the US are those who were educated in developing nations. There are talented doctors from overseas, but it is naive to think there wont be a noticeable differences. This has been demonstrated in the UK where they increasingly rely on foreign doctors and nurses to provide health care services for their population. Obama’s plan to subsidize education costs is a horrible response to this situation, because it does nothing to reduce the actual cost of an education. It simply redistributes the burden of paying for that education. This doesn’t put pressure on schools to operate more efficiently and keep costs down. It’s no coincidence that as we’ve seen government backed grants and loans explode, so has the cost of a college education.
Compared to the US, the UK and Canada are rather healthy. This is due to their lifestyles, which differ greatly from ours. If the UK and Canada, with largely healthy and homogeneous populations, cannot successfully operate a nationalized health care system then it is certain that the US, with our rather unhealthy and heterogeneous population, cannot.
None of the above implies that the current insurance industry is functional. There is not enough competition in medicine and far too much overhead. There needs to be greater flexibility for insurance providers to operate in all states and significant pressure on the broader insurance industry to stop using government regulation to undermine competition.
Health care reform is not complicated. A simple reintroduction of free market forces into the insurance industry is all that is required. Currently the insurance industry has utilized government regulation to protect their profits and undermine sources of competition. This has been a role that government has been far too comfortable playing for far too long. If legislators were interested in driving down health care costs, they would take a page from organizations like CATO and REASON. These groups would recommend returning insurance to its proper role as a protector against the costs of catastrophic care. By limiting insurance to this role, it would return consumers to their rightful position as the force that pressures health care providers to reduce costs and improve efficiency. In order to retain their customers, and their bottom lines, health care providers would be forced to become efficient, innovative and responsive. This would make routine medical care more affordable, which would increase access for more Americans.
The same forces could be used to accomplish the goals of reforming the insurance industry. By forcing insurance companies to compete with rivals in other states, the market for insurance would expand and efficient practices would gain broader adoption. With the adoption of efficient operation and reduction in the bureaucratic burden, health insurance would become more affordable and available to lower income Americans. A segment of the population would likely remain that would be unable to afford care and this could be addressed with vouchers that would allow the individual to shop for their own insurance, while not disrupting the market.
These reforms do not require the creation of a new government bureaucracy or regulatory agency. As a result, they will likely not be adopted. Legislators know that the way to gain support from influential unions is to expand their ranks by creating more bureaucrats. This can only be accomplished by establishing new government agencies that can employ workers via bloated administration structures. The most effective lobbyists these days are government agencies and those they employ. It’s little wonder that no federally operated government agency ever accomplishes the task it was created for and shrinks. At the most, they simply change their name periodically. The health care reforms Democrats have proposed are largely concerned with creating busy work rather than actually improving the health care system and expanding health insurance coverage. Real reform isn’t complicated, but it takes courage to do what’s in the interest of the American people rather than the insurance industry and unions.