NCPA - National Center for Policy Analysis


October 29, 2009

President Barack Obama and his congressional allies want to create yet another government-run health insurance program (call it Fannie Med) to cover yet another segment of the American public (the non-elderly non-poor), says Michael F. Cannon, Director of Health Policy Studies at the Cato Institute.  

The whole idea that Fannie Med would be an option is a ruse, he says:

  • Like the three "public options" we already have -- Medicare, Medicaid and the State Children's Health Insurance Program -- Fannie Med would drag down the quality of care for publicly and privately insured patients alike.
  • Fannie Med would drive private insurers out of business because it would exploit implicit and explicit government subsidies.
  • Pretty soon, Fannie Med will be the only game in town.

Should we allow states to opt out of Fannie Med, as Sen. Majority Leader Harry Reid has proposed?  According to Cannon, this seems like a good idea: if Fannie Med turns out to be a nightmare, states could avoid it. But, he explains, the state opt-out proposal is a ruse within a ruse:

  • Taxpayers in every state will have to subsidize Fannie Med, either implicitly or explicitly.
  • State officials are obsessed with maximizing their share of federal dollars; voters will crucify officials who opt out and Fannie Med supporters know that and are counting on it.

A state opt-out provision does not make Fannie Med any more moderate, says Cannon, since it's not a concession.

Source: Marilyn Werber Serafani, "Public Plan Opt-Out," National, October 26 2009; and Michael F. Cannon, "Response,", October 26, 2009.

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