NCPA - National Center for Policy Analysis


August 18, 2009

So it looks as if the public option has been sent to the death panel -- so to speak.  Over the weekend President Obama and other White House officials throttled back their demands for a new health care entitlement program that looked like Medicare for the middle class.  Liberals are in a furor and more than a few conservatives are popping champagne corks.  But dumping one of the most radical and destructive features of ObamaCare is best viewed as a tactical political retreat, not a surrender, says the Wall Street Journal.

The issue now is whether Obama's fall-back is merely to pass the public option on the installment plan.  To pose the question is to answer it, says the Journal.  "All I'm saying is, though, that the public option, whether we have it or we don't have it, is not the entirety of health care reform," Obama said Saturday in Colorado.  "This is just one sliver of it, one aspect of it."

Yet the public option wasn't some afterthought, or merely the obsession of Congress's leftward fringe, says the Journal:

  • A new government-run program would crowd out private insurers by undercutting them on consumer prices, courtesy of an intravenous drip of taxpayer dollars and its monopsony power to force doctors and hospitals to accept sub-market rates.
  • As millions of people gravitated toward "free" coverage, the public option would also vastly expand federal management of the practice of medicine, shaping the treatments and care patients can receive to save on costs.

There are plenty of other ways of "getting there" without a public option -- namely, through the federally chartered insurance cooperatives now gathering momentum in the Senate:

  • The idea of creating member-owned co-ops in the states, as Senator Kent Conrad originally proposed, isn't necessarily harmful.
  • But if regulated as advertised by Democrats like Chuck Schumer and Harry Reid, they'd be satellites of Washington and have 50 open checks drawn on the Treasury, creating the insurance industry equivalents of Fannie Mae.

Another path may be to convert private insurance companies into public utilities outright, says the Journal.  In a New York Times op-ed on Sunday, Obama reiterated his plan to regulate who the insurers must cover, how generous the benefits must be and how much they can charge, including a limit on out-of-pocket spending.  If Democrats decide to centrally plan the insurance market, in what sense is that different from a public option?

Source: Editorial, "The Public Option Goes Over," Wall Street Journal, August 18, 2009.

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