A consistent component in the vast majority of Washington-centered reform proposals has been the inclusion of a so-called 
public plan option. The concept is that the public would be offered the opportunity to enroll in a new, public health plan, if so moved.
The health insurance industry is not too keen on this idea. They recognize that trying to compete against the mother of all 800 pound gorilla’s is an exercise in futility. It’s sort of like entering your local soft-ball tournament when the umpires are also fielding a team! Who do you think gets the calls?
When questioned about this apparent un-level playing field at a recent press conference, President Obama, acted as if the reporter and the industry had nothing to fear. He said “If private insurers say that the marketplace provides the best-quality health care, if they tell us that they are offering a good deal, then why is it that the governemt – which they say can’t run anything – suddenly is going to drive them out of business? That’s not logical.”
Huh? What slight-of-hand! He knows very well that private companies don’t have the power to dictate legislation and control reimbursement rates to providers, unlike the federal government. That’s how Medicare can reduce reimbursements and pay less for services than private carriers. By reducing reimbursements, the plan can charge lower premiums and attract more customers. Unlike private insurance companies who don’t have this ability and must price their products to cover their risk and make a profit, the government doesn’t. And guess what? Like Medicare, any losses in the program are picked up by the taxpayer! So just like current government health plans (Medicare & Medicaid) the new public option can be “managed” to attract enrollment and stick taxpayers with the tab.
Consumers have become price-sensitive, as has been the case with their employers, who have been paying the lions-share of the cost of their health care coverage, despite continued cost-shifting to their workforce. If the public plan enters the market priced with the artificial subsidy that is borne by the taxpayer, then it won’t take long before a mass exodus occurs, creating dis-enrollment that drives the private insurers out of the market. This is what happened in Canada and led to the infamous Canadian single-payor system. The Lewin Group, a respected health informatics firm owned by United Healthcare, has estimated that 119 million people could transition over from private health coverage to a public plan!10QOQ6
Of course, the use of the term “single-payor” is verboten in the Obama lexicon, knowing that it carries a stigma that can steer folks away. That’s why he has adopted the standard tag line that is included in every public pronouncement on the topic: “If you like your health care plan, you’ll be able to keep your health care plan, period.” Ha, and double-ha, I say! Without alternatives in the market, the Washington crowd winds up at the destination they intended all along, and the Obama administration can claim innocence, pointing to “market-forces” that led to the demise of the private health insurance industry.
