August 21, 2009

President Obama's fallback position on health care reform is being called Plan B.  It's Obamacare without the most controversial part, the creation of a government-run, "public" health insurance plan open to all comers at cut rate.  And Plan B is something that Obama and the health insurance lobby both agree on, says The Weekly Standard.

Plan B is no day at the beach for health insurers, explains the Standard:

  • By imposing an exhaustive array of regulations and installing a powerful national health commissioner, it would turn health insurers into public utilities.
  • They'd be assured a small profit, but competition among insurers would be gone and bureaucrats would be in charge.
  • They've dropped the right to turn down anyone with a preexisting ailment and agreed to something called "guaranteed issue and renewal" which means they'll insure anyone forever.

The insurers' only demand -- besides no government-run plan -- is that everyone be required to buy insurance, the so-called individual mandate, says the Standard:

  • Since Plan B would hike the cost of coverage, insurers would lose money unless the market is enlarged.
  • They want dropouts who insist on being uninsured held to a minimum (they'd have to pay a penalty under Plan B); Obama and congressional Democrats favor an individual mandate anyway.

As you might expect, there are many, many problems with Plan B, says the standard:

  • Its first impact would be on health insurers; all but the largest five or six of 1,300 insurers across the country would be out of luck.
  • Since Plan B would reduce the profits for insurance companies, and those with smaller margins -- namely, regional, state, and local insurers -- probably wouldn't be able to compete.
  • Insurers would be allowed to offer new policies after 2013 only if they joined a government-operated "exchange."
  • And the policies would have to include a minimum -- and more extensive and expensive--set of benefits.
  • This would deny smaller firms their competitive advantage of offering insurance packages with fewer benefits, specially tailored for a client's needs.

Source: Fred Barnes, "The Next Worst Thing; As Obamacare fails, the president turns to Plan B," The Weekly Standard, Vol. 14, Issue No. 44, August 10, 2009.

For text: 


Browse more articles on Health Issues