One of the more contentious issues to emerge so far in the health care reform debate is what President Obama has referred to as the “public plan.”
The president has described it as a Medicare-like health insurance program that anyone could join. It doubtless would be a very comprehensive plan run by the government and largely subsidized by taxpayers, just like Medicare. And because Medicare imposes price controls on both hospitals and physicians, you can bet the public plan would, too.
Proponents will claim the price controls in the public plan will keep costs down—though they would be hard pressed to provide any evidence for the claim. Medicare currently has an $84 trillion unfunded liability, according to Medicare’s trustees. Indeed, when Congress created Medicare in 1965, the government’s actuaries estimated that Medicare Part A would cost $9 billion by 1990; but it actually cost $66 billion that year.
Exploding costs, not lower costs, is the rule in Medicare.
And while price controls don’t save money, Medicare’s low reimbursement rates are affecting seniors’ access to care. According to a survey by the American Medical Association, 60 percent of doctors say they are limiting the number of new Medicare patients they see.
And then there’s fraud: Senator Chuck Grassley (R-Iowa) along with other government officials suggest that Medicare has about $60 billion a year in fraud. Ponzi-schemer Bernard Madoff defrauded people out of some $50 billion and the public and media went (justifiably) berserk. Medicare has $60 billion of fraud each year and the president and the Democratic leadership in Congress want to make it a health insurance model for the country.
The biggest problem with the public plan is that it will be in direct competition with the private sector. Like Medicare, Congress will heavily subsidize it and then hide the costs, making it financially more attractive compared to the private sector.
The stakeholders in the health care system—providers, insurers, drug and medical device companies, employers, and even some patients groups—recognize the negative impact of the public plan. That’s why so many are pushing back from it.
It’s the closest we’ve been to creating a “Medicare for all” plan, and it’s just around the corner.