Against a public health plan

on Sep 28 in health care tagged by Trevor Hicks

I think it’s worth articulating just what it is about the “Public Plan” for health care that I don’t like. It isn’t a worry about competing with for-profit health insurers, indeed there are already quite substantial nonprofits operating in the industry. It’s not so much a worry about the slippery slope towards a socialist single-payer system. No the worry for me is that it will entrench and extend the second worst* part of Medicare into our system which is that benefits are defined more by politics than by economics. Obama may claim that a public plan will not tap into general government revenues or resources and “keep the insurance companies honest” but, as I note above, that would simply make such a plan completely superfluous. Insurance company profits currently represent about 1% of total health care spending in this country - making those profits even completely evaporate will not fix our system’s problems.

It’s clear that a public plan will, over time if not initially, tap into public funds to sweeten the benefits for determined voting blocs. It’s a sure-fire recipe for worsening, not improving, an already bleak fiscal picture for this country regarding government expenditures on health care.

* The first worst feature of Medicare is that it’s a massive regressive transfer of wealth from relatively poor workers to relatively wealthy retirees. And though Medicare taxes aren’t quite as regressive as Social Security since they lack the income cap, it is still regressive on both the revenue and benefits sides.