May 27, 2009

May 27, 2009 | Commentary on Health Care

Obama's Dubious Health-Care Claims

President Obama may pretend otherwise, but if Congress passes his health-care agenda, America will be taking a giant leap toward Canadian-style, government-run health care. And many Americans will find themselves left with no choice but to sign on.

How so? Start with the fact that government already controls almost half of America's health-care spending. Now consider that the Obama plan would give Washington a broad and powerful supervisory role over the remainder.

Detailed legislative language hasn't been unveiled yet, but a key feature of the program is a government-run plan that supposedly would compete with private-sector plans. Congress would determine the benefits, premiums and co-payments of this plan, as well as reimbursements for doctors and hospitals and who would be eligible.

Coverage could be offered just to citizens and legal residents who lack employer-based health care or are ineligible for other government programs, like Medicaid. Or it could extend to a much broader pool.

Liberals in Congress, especially those who want a Canadian-style, "single-payer" system, can be expected to push for broad eligibility -- opening the plan to all employees and their families, starting with small companies and expanding to large ones.

The Lewin Group, a leading econometric firm, estimates such broad eligibility, combined with artificially low provider-payment rates (based on those of Medicare), would result in about 119 million Americans' being forced out of private health coverage into the new government-run plan. That's because many employers would simply drop their own plans -- leaving their workers little choice but to sign up for the government's package.

So much for the president's repeated promise that you can keep your private health plan if you like it.

Let's be honest: The idea that Congress is going to create a genuine "level playing field" for competition between the newly created government health plan and private health plans is nonsense.

Congress will be the rule-maker, financier, umpire and owner of a team in the "competition."

For starters, as a wholly owned subsidiary of Congress, the government plan would be "too big to fail," assuring it periodic taxpayer bailouts and giving it a big edge over the private sector. If Medicare can run up $38 trillion in unfinanced benefit promises, after all, then a plan modeled on it (as Senate Finance Committee Chairman Max Baucus wants) could run up big debt, too -- especially if Congress sets low rates to make it "affordable."

The president also champions "shared responsibility." That's code for an employer mandate, whereby employers must either offer a government-approved health-benefits package or pay a federal tax. The new tax revenues would probably be used to finance subsidies for coverage in the government health plan.

Employer mandates are sure to erode employer-based health-insurance coverage. That's because millions of companies would simply pay the tax rather than hassle with or spend more providing insurance that meets new federal specifications. Million of Americans, therefore, could find themselves left with no company health coverage.

Chalk up another victory for the congressional "single-payer" caucus.

Finally, congressional liberals can be expected to expand "shared responsibility" to include an individual mandate to purchase health insurance. If they do, Americans should check out the penalties imposed for not buying federally approved health insurance. This will push yet more folks onto the government plan.

Obama says that if you like the health coverage you have today, nothing will change. But with Washington controlling health care, you may have no choice in the matter.

Robert E. Moffit, Ph.D., is Director of the Center for Health Policy Studies at The Heritage Foundation.

About the Author

Robert E. Moffit, Ph.D. Senior Fellow
Center for Health Policy Studies

Related Issues: Health Care

First Appeared in the New York Post