By John C. Goodman NCPA
No one should have to read left wing health care blogs. I wouldnt wish that on my worst enemy. But if youve committed some sinful act for which penance and atonement are in order its one way you can seek redemption. Once there you will find words like betrayal" sell out" and caving into the health insurance company death merchants."… (What can I say? They dont mince words.) The left is devastated by the realization that Barack Obama is going to toss their cherished public plan option" under the bus the minute he finds it to his advantage.The realization is devastating.
By public plan the left envisions a Medicare-type plan for young people. They argue that it will lower costs and put competitive pressure on private insurers to become more efficient.
So here is an exercise for the reader: Comb through everything youve ever read on this subject and see if you can come up with even one reason why a public plan would be more efficient than private plans.
I can only think of one. And it has nothing to do with efficiency.
A single-payer (or a very very large payer) could use its monopsony buying power to force providers to accept lower fees in the same way a monopoly seller can extract higher prices from consumers than they would pay in a competitive market. This is the argument used by Paul Krugman and by the Physicians for
Socialized Medicine (or whatever they call themselves these days).
The trouble is this is not what Medicare does.
Although I suspect most people on the left are completely unaware of it Medicare is actually operated by private contractors more often than not by Blue Cross.
Is there something Blue Cross does for its Medicare enrollees that is more efficient than what it does for its private sector enrollees? Not that Im aware of.
If anything its the other way around.
Moreover when Medicare pays 25 to 30 lower fees to providers that has nothing to do with Blue Cross or any other private contractor. Blue Cross does not negotiate Medicare fees with doctors. These fees are set by the federal government.
Blue Cross just pays whatever fees the law requires.
Now I do not favor government setting doctor fees. But as a matter of logic the government could set fees for every insurer not just Medicare.
And since most private insurers pay the same way Medicare pays this would be administratively easy.
So lets recap:
- There is nothing a public plan can do that a private plan cannot do as well or better especially when the public plan is administered by the private plans.
- The lower fees paid by Medicare have nothing to do with the way it is administered or anything to do with efficiency."
- The lower fees also have nothing to do with bargaining or monopsony power.
- Lower fees could be set by the government for private payers along with public payers.
- This would be a bad idea and it would have bad consequences but it is completely independent of the idea of a public plan.
