Health Care Lie #492*: A Government Takeover of 16% of the Economy


By Joe Campbell
August 19th, 2009

*I’ve stopped counting, so that number is made up.


 
We’ve all heard this claim – that Obama’s health care reform – specifically the public option – is really a stealth attempt to socialize America and have the government take over a significant portion of our economy.

This claim isn’t true. However, unlike the fearmongering that is the invocation of “death panels,” there is a bit more substance to this accusation. But like so much of this debate, it has little to do with the bills currently under consideration which have rather weak public options. What this claim is based on are the hopes of progressives that the public option could prove to the country how great and effective government health care is and thus lead to a single-payer, Medicare For All type system.

According to Mark Schmitt of The American Prospect, the public option was latched onto by progressives early on as a potential “stealth” tool to gradually move America into a Medicare-for-all type system – as they assumed that given the choice, most citizens would prefer government-run health care. As Ezra Klein summarized Schmitt’s piece:

The reason the idea managed to catch the liberal establishment’s imagination was that it was sold as a way of achieving single-payer, or something close to it, within the current constraints of the political system.

Those on the right wing saw the fervor that accompanied discussions of the public option and soon identified it as a potential target. But the public option wasn’t designed to work as a stealth tool. Its main designer and earliest promoter, Jacob Hacker saw his policy “as an alternative to single payer” and “as a competitive alternative to private insurance” – in other words, as a way to maintain some of the advantages of the system a large number of Americans currently have while offering a different model of competition to keep insurance companies honest. The initial design of the public option – which remains intact today – would create a self-sustaining, non-profit agency that competes with private plans on a Health Insurance Exchange. Perhaps the best explanation of why this would work comes from Michael F. Cannon of the Cato Institute who – while trying to attack the possibility of a public option – made this observation:

Any payment system creates perverse incentives…which is why we need competition between different payment systems to temper the excesses of each. So if Kaiser Permanente is skimping on care, which is the perverse incentive its payment system creates, there are fee-for-service insurers on a level playing field that can lure patients away from Kaiser. That tempers the rate at which Kaiser succumbs to those perverse incentives…

This understanding of how markets work – and how a competing payment system could improve health care for all – is exactly the reason so many people were in favor of a choice between a public option and private ones before the current fear-mongering campaign.

Hacker’s policy is what President Obama has decided he wants in a public option, as he explained Time‘s Karen Tumulty:

It shouldn’t be something that’s simply a taxpayer-subsidized system that wasn’t accountable, but rather had to be self-sustaining through premiums and that had to compete with private insurers.

Tumulty later described Obama’s position on the public option:

Obama has never presented the public option as anything other than a means to an end — one that he would be perfectly willing to achieve through other avenues if necessary. His goal is twofold: to provide a low-cost alternative to the private system that already exists and to assure competition in a health-care market where it is generally lacking.

Further demonstrating that the goal of Obama’s health care reform is not to stealthily push America into a Medicare For All program, he has signalled he would be willing to accept a co-op in place of the public option. However, while Republicans had promoted the idea of co-ops as an alternative to the public option, they now are quickly moving away from this position. Ezra Klein explains:

This is a dynamic we saw in 1994. A compromise is offered, and after great anguish and infighting, Democrats grudgingly move toward it. Then the compromise is yanked away. The famous example of this is Bob Dole voting against two bills that had the name “Dole” in the title.

Someone here is acting in bad faith and has a secret agenda. It doesn’t seem to be the Democrats.

Conclusion: The public option could become a stealth path to single-payer. Just like Medicare could. Or Medicaid. Or S-Chip. Or any other legislation that has ever dealt with the serious problems in our market for health insurance. But what we’re seeing now isn’t a stealth option – as much as both progressives and right wingers may want to pretend it is. If our nation is moving towards a single-payer Medicare-for-all-system, this legislation isn’t what will get us there. That fight will come later.

And for what it’s worth: the public option isn’t the most important part of health care reform. The Health Insurance Exchange (on which the co-op or public option would sit along with private companies) is more important – as are the various reforms of the health insurance industry.

(Some other resources on the public option are this Slate magazine piece from 2006 and this report by Jacob Hacker on the advantages of allowing the public to choose a public option.)

[Image not subject to copyright.]

Tags: , , , , , , , ,

Leave a Reply