Health Care Socialism

In a 6/11/09 WSJ op-ed, Karl Rove, deputy chief of staff to former Pres. Bush, notes several concerns opposing a government run health insurance program.

Rove argues that a public option will eventually drive the 1300 private insurers out of the US health insurance market. He states that the lower fees that Medicare pays to hospitals (71%) and doctors ($81%) shifts costs to private insurers as doctors raise fees to offset the lost revenue. He quotes a Milliman study estimating a cost shift of $1800 per year for a typical family.

My personal experience does not support the data that Rove cites. Rove says Medicare pays less than private insurance, but my private insurance company pays 71% to my dentist for a routine procedure, less than the average percentage that Medicare pays. Why hasn’t my dentist stopped taking private insurance? Perhaps my insurance company, one of the largest in the U.S., is not typical of the private industry as a whole? I doubt it.

Rove argues that a public option “will lead to health providers offering less care.” That may or may not be true. In this downturn, a number of businesses in my industry have reduced their rates. Have we given less professional service? No. We are professionals. Will my doctor not order a blood test because of reduced reimbursement rates? I think most doctors would be insulted by such an insinuation.

Rove cites a Lewin Group estimate that “70% of people with private insurance‚Ķwill quickly lose what they now get from private companies”. That may be true. For a decade, we small employers have watched insurance rates skyrocket, far above the cost of inflation. We opt for less generous benefit plans with higher co-pays, and higher contributions from employees to offset the escalating cost. Private insurers have offered few solutions to reduce this expense. Bureau of Labor Statistics (BLS) surveys show a steady decline in companies offering health benefits. In time, only the largest companies will be able to afford this kind of benefit to their employees, reducing the competitiveness of small businesses.

Rove contends that, although Medicare pays low rates, it is too expensive. Like private health insurance, Medicare suffers from the same escalating growth of health care spending in this country, and it is a real concern. While Rove lays the blame solely on Medicare, Kathleen Sibelius rightfully sees the growth in Medicare spending as a systemic problem of the whole health care system.

Rove argues that “Medicare and Medicaid cost much more than estimated when they were adopted” and to “expect a public option to cost far more than the Obama administration’s rosy estimates.” A wise word of caution. In many remodel jobs, and a health care overhaul is a huge remodel job, it is wise to add 25% to the original estimates. Obama’s estimates could use the same prudence.

Rove argues that “the public option puts government firmly in the middle of the relationship between patients and doctors,” cautioning that, as difficult as private insurers are to deal with, government is so much worse. Well said.

Rove contends that “Republicans have plans to … put patients and their doctors in charge, bring the benefits of competition and market forces to bear, and ensure access to affordable and portable health care for every American.” Presumably, this plan is different than the one that Republicans have touted for the past 15 years.

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