Published January 05, 2009
Beware a politician’s promises.
In his pursuit of national health care reform, President-elect Barack Obama has repeatedly promised Americans two big things:
-- that if they like the health insurance they have today, nothing will change, and
-- that his health reform plan will save the typical American family $2,500 annually in health care costs.
Yet, if Obama sticks with the health proposals he has outlined so far, it is highly unlikely that either of these promises can be kept. And that’s putting it charitably.
The main problem is that Obama has proposed creating a new government-sponsored enterprise — a taxpayer-financed health plan, run by federal officials, that would “compete” directly with private health plans. Moreover, the “competition” would take place through a new “national health insurance exchange,” something the president-elect envisions as a kind of national shopping mall for coverage, managed by Washington.
Unfortunately, rigorous analysis indicates this approach would end up displacing much of today’s existing private health coverage. Millions of Americans, especially those now getting coverage provided by their employers, would lose the private insurance plans they have today.
A government-run health plan is, of course, not a new idea. A perennial favorite among “liberal” health policy wonks, the program’s most recent high-profile champions include Tom Daschle, Obama’s choice for secretary of the U.S. Department of Health and Human Services (HHS), and Senator Max Baucus, chairman of the powerful Senate Finance Committee.
In the Obama version, the new government health plan would be open to the uninsured and those ineligible for other government coverage, like Medicare and Medicaid. It would feature comprehensive benefits like those available in the Federal Employees Health Benefits Program (FEHBP), the program that covers members of Congress, federal workers and retirees.
It sounds reasonable, but there’s one little problem with using the FEHBP as a model: It offers no government health plan at all. The FEHBP promotes premium-saving competition among a wide variety of health plans, but they are all private plans, ranging from managed care plans to health savings accounts.
In the FEHBP system, all of the risks and liabilities are assumed by private-sector plans, not by the taxpayers. But under the proposed new government health plan, taxpayers would be saddled with all the risks, losses, and liabilities—just as with the recent series of big bailouts.
Worse, in the Obama version, government officials would not only participate in the national competition by entering their own plan, they would also set the rules for the competition itself. It would be like having an umpire who not only makes the calls, but also fields one of the teams on the field. Some “fair” competition.
But “fairness” is not the biggest issue. What really matters is how it would affect your health coverage.
When the Obama health plan was unveiled, the Lewin Group, a nationally respected and politically independent econometrics firm based in Virginia, put it under the microscope. Their October 2008 analysis estimated the plan would help 26.6 million Americans gain health insurance coverage. A good thing, to be sure.
But Lewin concluded that the proposal would produce some very unpleasant changes, as well. Many employers would stop offering private coverage, switching an estimated 18.6 million employees over to the new government plan. Overall, Lewin estimated, 21.6 million Americans would lose their existing private health coverage, while the ranks of those insured by government (i.e., taxpayers) — under Medicaid and SCHIP, as well as the new plan — would swell by an estimated 48.3 million. These are bad things.
More recently, in a special Capitol Hill briefing, the Lewin Group unveiled an updated analysis of the government plan, based on different design elements. They projected that the loss of private health insurance coverage could range from a low of 10.4 million to a high of 118.5 million, depending on such factors as the pool of eligible enrollees and the kind of payment rates adopted by the new government plan.
Employers make the key decision to keep or dump health insurance; employees have little or no say in that decision. That’s why no one can promise that “nothing will change” for individuals and families who like their existing coverage.
President-elect Obama promised many changes. But in health care, he promised that change would ensure patient choice of doctor and care, without government interference. He also promised that (1) those who want to keep their current coverage would have no problem doing so and (2) those without coverage would get the same kind of insurance available to members of Congress. These are wonderful promises. But they can’t be kept with the approach he has suggested taking.
Robert Moffit is director of The Heritage Foundation’s Center for Health Policy Studies.