Len Nichols says that there would be a level playing field between a new government health plan and private plans if “all rules of the marketplace — benefit package requirements, insurance regulations, and risk adjustment processes — apply to all plans equally, whether public or private.”
But this is a false assurance because Washington can continue to change the rules that dictate how the private marketplace must operate. A statement to be released this week by members of the Health Policy Consensus Group will explain that, “While there may be initial assurances of a level playing field, the NHP would have special advantages over private health insurance. Private plans would be forced to match the more expensive benefits promised by the government plan, but only the government plan would be able to impose price controls and draw on government policing and taxing authority.
“This will result in government using regulatory, pricing, and taxing authority to favor its plan. The new government plan inevitably will underprice private plans and drive them out of this one-sided ‘marketplace.’
“The NHP would cause millions of people to lose the coverage they have now and leave them no option but the new government health plan. Massive crowding out of private health insurance coverage would undermine the employer-based coverage that most Americans under age 65 have and prefer today.”
Research by The Lewin Group concluded that if all workers and their families were eligible for enrollment in the government insurance plan and providers were paid at Medicare payment levels that as many as 119 million people would lose or be switched out of private health coverage. This certainly defies President Obama’s assurance that people will be able to keep the coverage they have now.
Len also makes the case that “More than 30 state governments offer their employees a choice between traditional private health insurance products and a plan self-insured by the state.” That is a strong argument for allowing states, not the federal government, to make decisions about a fall-back plan. They are much better able to balance resources and costs than a federal plan designed in Washington.
And states are basically large employers offering health insurance, and they value flexibility in offering “traditional products” and a “self-insured” plan. Once again, this argues for local control, not a federally mandated benefits package and major new federal regulation of the health insurance market that would suffocate this flexibility and innovation.