Four Reasons to Reject the Biden Public Option Government Healthcare Plan

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Posted by Alex Hendrie on Wednesday, March 10th, 2021, 3:55 PM PERMALINK

Congressional Democrats and President Joe Biden are expected to push for the “public option”  later this year – a government run, taxpayer funded healthcare plan competing with the private sector.

A public option is merely a step towards the Left’s ultimate goal of socialized healthcare, or “Medicare for All,” where the government sets prices for the entire healthcare system. The public option is the Left’s latest attempt to expand the power of the federal government, replacing patient-centered healthcare with one-size fits all care as dictated by federal bureaucrats. 

Advocates of the public option inaccurately claim it would increase competition. This is false – there is no true competition because socialized healthcare would “compete” with the private sector. The federal government would not have to be sensitive to prices or worry about turning a profit and could leverage its massive size to price out competitors. ​ For instance, a government health plan could keep premiums and deductibles artificially low and offer other incentives to enrollees that private plans could not.

By setting price controls and driving competitors out of the market, the public option would have significant negative effects on patients, taxpayers and providers. It would lead to massive tax hikes on American middle-class families, reduce access to quality care, and cut pay for doctors and hospitals.

Here are four reasons to reject the public option.

1. The Public Option Will Lead to Massive Tax Hikes

The public option will cost an estimated $800 billion per year, according to a study by Lanhee J. Chen, Tom Church, and Daniel L. Heil of the Hoover Institution. This equates to a tax hike of $2,000 per year on middle income families, could require a top income tax rate of 60 percent, or payroll taxes on families totaling $3,900 per year.

Given the public option is an incremental step toward increased government control over healthcare, this would be the first tax hike of many. By putting the country on the pathway to Medicare-for-All, it would lead to future middle-class tax increases in order to finance additional expansions of government healthcare.

In fact, instituting socialized healthcare would require $32 trillion in higher taxes over a decade, according to a study by the Urban Institute and Commonwealth Fund.

A majority of these taxes would be on the middle class, not “the rich.” The Committee for A Responsible Federal Budget finds that “impossibly high taxes on high earners” would raise just one third of the total cost. The rest—some $20 Trillion would come from us. 

Even Bernie Sanders admits that the middle class will take it on the chin to pay for Medicare-for-All. His plan includes a new, $3.9 trillion, 4 percent payroll tax on workers, as well as trillions of dollars in taxes on employer benefits and businesses. And it still falls trillions of dollars short of paying for the full cost of the program.

2. The Public Option Harms Doctors, Hospitals, and other Providers.

A public option health plan relies on the government setting arbitrarily low payment rates for providers. In other words, any reduction in costs is through the use of price controls that cut pay for doctors, hospitals, and other healthcare providers by reimbursing providers less than typical commercial plans.

This is already the case with government healthcare programs.

Compared to employer healthcare, hospitals could see a 50 percent pay cut if Medicare payment rates were adopted, while physicians could see a 30 percent pay cut, according to a study by the Kaiser Family Foundation reviewing 19 recent studies.

Medicaid payment rates are even lower. In 2016, Medicaid reimbursed 72 percent of what Medicare reimbursed, according to an analysis by Health Affairs.

As noted by former CMS administrator Seema Verma, the low reimbursement rates provided by Medicare and Medicaid are a major impediment to care and many providers opt out of serving these populations because they lose too much money from doing so. This will not just harm healthcare providers, it will harm Americans that receive this care.

3. The Public Option Could Lead to Healthcare Shortages

By relying on price controls and price setting, the public option will create healthcare shortages that harm American patients across the country.

Healthcare shortages occur often in developed nations with government-run health care systems. Many experience understaffed hospitals and long waiting lines for even basic treatment. 

In 2019, The United Kingdom had a shortage of 10,000 doctors and 43,000 nurses, with 9 in 10 managers in the National Health Service saying that too few doctors and nurses presented a danger to patients. At any one time, 4.5 million patients were waiting for hospitalization.

Closer to home, in Canada, the typical patient had to wait a record 21.2 weeks – or five months – to receive treatment from a specialist after being referred by their general practitioner in 2017. 

Before the pandemic, the U.S. had 35 intensive care unit beds per 100,000 people – nearly three times the 12 beds Italy and five times the 7 ICU beds in the UK.

The fact is, the majority of Americans are happy with the care they already receive. 180 million Americans currently receive high quality healthcare through employer provided health insurance plans. According to a survey by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates, 81 percent of Americans were satisfied with their employer provided care.

4. A Public Option Has Failed to Offer Savings to Consumers Where it Has Been Tried

The public option has already been tried in parts of the U.S. as noted in a recent report by the Heritage Foundation. When competing on a level playing field with the private sector, a public option offers little to no savings to consumers.

For instance, New York City’s created the “MetroPlus Health Plan,” in 1969 a public benefit corporation owned and operated by the New York City Health and Hospitals Corporation. In some cases, the health plans offered by this corporation are marginally lower than private competitors, others, including its bronze plans are as much as 14 percent more expensive than the cheapest private option.

Similarly, Washington State’s recently launched “Cascade Care”  has proven to be a more costly option than private coverage available to workers. Some plans are almost 30 percent more expensive than traditional options.

Additionally, Obamacare created a form of public option over a decade ago through the creation of cooperative health insurers, or “co-ops,” designed to compete with private health plans on state exchanges. These non-profits were an alternative to private health insurers and were financed with $2.4 billion in taxpayer funding. Despite offering generous subsidies, most Obamacare co-ops failed. Of the 23 that were created, just 3 remain covering 128,000 Americans.

Photo Credit: Gage Skidmore

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