By Mike Stephens
Retired CEO Hoag Memorial Hospital Presbyterian
True cost savings from healthcare reform legislation will be highly unlikely if the government behaves like a private health insurance company.
As announced late last week, the so-called public option will not impose what the plan will pay hospitals, doctors and other healthcare providers. Instead, the federal government would be required to negotiate rates with providers in the same way that private insurers currently do.
Analysts have predicted this requirement would result in payment rates for the public plan that would be, on average, comparable to those paid by private insurers, eliminating the cost-saving advantage initially envisioned in health reform legislation.
If this is true, then how will this country ever achieve the level of reduction in healthcare expenditures necessary to reduce the unsustainable growth we are currently experiencing?
I fail to see why government sponsored healthcare insurance programs should be required to act like private insurers.
Government programs are really programs of last resort. They are commonly referred to as the health insurance safety net. The government steps in when coverage is not available to people through the private market.
Why then, should government healthcare insurance plans be compelled to act like the private insurance market that in fact created the problem that compels the government to act?
There is a clear example of what happens when politicians impose private insurance market practices on a traditional government program. Medicare Advantage was supposed to be the example of a free market alternative to standard Medicare. In theory, it was supposed to expand benefits and lower costs.
Instead, it has expanded benefits, paid providers more and by some estimates, it costs the government 15 percent more than standard Medicare. As a result, hospitals and physicians find it much more profitable than standard Medicare.
Let’s learn from the past and not make the same mistakes.
November 7th, 2009 at 6:28 pm
I agree. The problem with Original Medicare is that it is an inefficient program, invites fraud and waste, and consequently provides inadequate payment to providers on the one side, and inadequate coverage for beneficiaries on the other side. The fact that Med Advantage fills the gaps in Original Medicare for beneficiaries and pays providers more adequately is not the “problem”; it is the solution. Cutting back MA payments will put us all back in the same mess. Why would we want more government run health coverage?
November 9th, 2009 at 10:43 am
The concept of a government institution “acting” like a private concern is logically impossible. Private firms must provide adequate value to consumers or they go out of business, whereas Government entities are effectively immune to customer satisfaction.
Also logically impossible is the notion that granting the so-called public option the power to impose what the plan will pay hospitals, doctors and other healthcare providers would *lower* costs.
Even if we ignore the economic contradictions required for such a claim to be legitimate, we’d then have to ask - lower costs for whom?
In the exact manner as Medicare, and every other example in history, imposing rates below market value will drive up costs for everyone not on the socialized plan – which will then inevitably be blamed on the “free” or “private” market.
Even if the government run insurer were required to “negotiate rates with providers”, they still act under the tremendous advantage of being funded by the federal piggy-bank.
There’s no way any degree of government involvement in any aspect of healthcare can save money, not if considered in the full economic context – especially not if political freedom counts for anything.