Wednesday, April 01, 2009

Obama's backdoor plan

I've brought this up before, but it needs to be revisited as the "universal" health care dealo comes to the forefront of Obamanomics. From The Corner:

Pres. Barack Obama has promised, repeatedly, that Americans who are satisfied with the health insurance they have today can keep it, even if Congress passes the sweeping reform program he favors.

But is it true?

The short answer? No. Because the health insurance they have today will no longer be offered by an employer that can't compete with the government. Obama's plan gives an employer two choices. Pay into the government system or "play" by offering insurance directly. Sounds reasonable, right?

But the new, government-run insurance plan wouldn’t be just another offering. No, it would be a “game changer” in every sense. Why? Because the government can present the fees it will pay for medical services on a take or leave it basis — and doctors and hospitals have little choice but to take it, lest they get shut out of the market completely. Private insurers, on the other hand, must negotiate contracts with their networks of service suppliers. Consequently, government-run insurance almost always charges artificially low premiums based on price and other cost controls that are rightly not part of a truly private-sector marketplace.

You see where this is going, right?

And they’re right to see it this way, as estimates provided by The Lewin Group, a health-policy consulting firm, demonstrate. According to Lewin’s analysis (summarized in a series of slides, available here), if the government-run option pays fees as Medicare does today, scores of employers would choose to “pay” instead of “play,” thus forcing workers out of their job-based plans and into the national exchange. Once there, quite predictably, workers would end up largely in the government-run plan because it would pay for hospital and physician care at rates that are only about 70 and 80 percent, respectively, of what the competing private insurers would be forced to pay for the exact same services.

Lewin’s bottom-line is thus truly alarming: They expect 118 million people would move from private coverage to government-run insurance pretty much overnight. And it would be anything but voluntary. There would be tens of millions of workers who would rather stay with their current job-based plan than sign up with the government-run plan — but they would no longer have that as an option.

End game? Universal, state run healthcare.