So now the Left-Democrats (Social-Democrats) are focused on somehow ramming the health-care public option through Congress – even though they know that a significant minority opposes it (maybe even a majority). They absolutely refuse to hear the word "No"! Anyone who opposes them is a traitor, a stooge of the Insurance Companies, the Hospitals, or some other interested exploiter – never a sincere objector.
But when pushed about the details of the plan they provide one or more of three unsatisfactory responses.
- The details have yet to be worked out
- The premiums paid to the public provider will cover the costs
- The private insurance companies are expensive because their profits are high – competition from the public plan will solve that
Let's consider these.
Number 1. is a cop out. For such a drastic proposal we need details. How is it going to be paid for? Who is going to pay for it? How much is it going to cost?
Number 2. is smoke and mirrors. Somehow the public provider will be able to cover its costs with premiums way below the private providers'. How can this happen? Which brings us to the number 3.
Number 3.- it's all the fault of the private insurance providers and their high profits. A lot of people believe this. They believe that medical insurance premiums are high because medical insurance companies make large profits. I find this puzzling. If their profits are so high (meaning their RATE of profit, not the absolute numbers) then why are there not more competitors. High rates of profit always attract competitors unless there is some real barrier to entry.
When I point this out I am told there is a barrier – the insurance companies are a cartel (a private monopoly) – they prevent entry by lower cost (premium) competitors. Really? How do they do this? And if this is the case, is not the appropriate response to break this cartel and allow vigorous PRIVATE competition? Why do we need a public, aka government, option. The government never does anything efficiently – why would anyone think the government would be good at producing medical insurance?
So where is this private medical insurance cartel and how do we break it up?
Understand this clearly, the public option, if it charges premiums below the competitive level will have to be subsidized. That means an extension of the model we have now for Medicare. Those who have private insurance will face even higher premiums, maybe much higher, because their medical costs will rise, so that the private plans end up subsidizing the public one. Private medical costs will rise becasue hospitals and doctors will not be able to make money on the public reimbursements (from the public insurer) so they will charge more to their private patients. But price-discrimination ("rich" pay more, "poor" pay less) can only be pushed so far. In addition there will be new heavy taxes – probably on the private insurance companies, which they will partially recoup by raising their premiums. The public option will grow. It will become bloated, inefficient and corrupt, like all the other public health systems - even the French one. And you and I will pay through the nose.
You can't get something out of nothing.