Public Plan


The Public Plan: The hottest topic in the health reform debate is over the question of whether or not the government should form a new health plan that would compete with private insurance.

The reason this is such a big battle is because it is the fight over the future of health care in the United States: The public plan will quickly obliterate private health insurance for the vast majority of working Americans and their families, leaving them with only the "choice" of a government-run plan.

It will lead to price controls, restrictions on access to care, and a lower quality of health care throughout the health sector. This is why this battle is so important.

The Lewin data is unequivocal: If the new government plan is offered to all working Americans and their families and pays Medicare rates — the best that doctors and hospitals could hope for — it would cover 130 million Americans.

More than 118 million of them would lose the private insurance they have today as they are heaved into this new plan, breaking President Obama's promise during the campaign that people will be able to keep the coverage they have today. It simply won't be available to them.

A few other developments this week:

  • What is a public plan, exactly? Nancy-Ann DeParle, head of the White House Office of Health Reform, is meeting with many members of Congress to try to define a public plan.


    DeParle argued this week that the government could sponsor a public option that is operated by private insurers, with the government paying rates comparable to the private market. This is a false promise: When Medicare was enacted in 1965, it was one of many private insurance options available to seniors, and the legislation also promised the program would pay market rates to physicians and hospitals. Soon Medicare was the only plan for seniors and within a few years, the government was setting payment rates.

    Government is an untrustworthy business partner, frequently changing the rules after the game has begun.


  • Confusion in the administration: Dora Hughes, a top Health and Human Services adviser, told attendees of the World Health Care Congress on Tuesday that President Obama was open to dropping the public plan option, adding that he realizes that may be the only way to pass the bill.


    But she was quickly given the hook as Ms. DeParle said the next day that the White House very much wants to see a public plan option, criticizing those who oppose it on "ideological" grounds.


  • Doctors aren't engaged: Physicians and hospitals seem to be so focused on what their payment rate will be this year that they are losing sight of how dramatically this public plan would impact them in the future if virtually all of their patients were on a plan that pays them less than their costs.


Private polls taken by the administration show overwhelming support for the public plan option because most Americans see it as simply another choice. But the fact is that they would soon have the choice of one plan — run by the government, financed by taxpayers, and driven by politics.

As you will see from our featured articles section below, the issue is getting more ink than any in the health reform debate. The reason this is such a hot button issue is because it gets to the essential question about who is in control of health care in the future — politicians or ourselves.



Video Contest: Amy Menefee is taking the lead in a new video contest the Galen Institute is sponsoring. We're looking for creative submissions around questions like whether government is the best way to expand health coverage and whether health care in other countries is indeed better than in the U.S., as we hear so often.

We offer a fact sheet to give people some background and pointers.

First prize is $3,000, second prize is $1,000, and third prize is $500. Join in the fun and submit your video. Here's how:


Videos will be judged on quality, creativity and message. Contest ends May 15, 2009. See full rules and conditions on our YouTube group.



More Signatures: We also have several new signatories to our Consensus Group statement on the dangers of the health reform prescriptions offered by President Obama and congressional leaders: Prof. Steve Parente of the University of Minnesota; Heartland Institute colleagues Joe Bast, Greg Scandlen, and Jeff Emanuel; and former Medicare Trustee Prof. Tom Saving of Texas A&M University and his colleague Prof. Andy Rettenmaier.

And we already have nearly 1,000 signatures on our Do No Harm petition. Please do join us in adding your voice and in sending it to your colleagues to make sure your views are heard.



Back from Guatemala: What a beautiful country! The scenery is like Switzerland without the snow and with volcanic peaks instead of the Alps creating majestic views. But the country is so deeply troubled economically, suffering from centuries of oppressive governments and economic policies that leave at least a third of its 12 million citizens in severe poverty.

Many children simply can't go to school because their families will not eat if they don't beg for money or find ways to earn meager incomes, like renting walking sticks to hikers climbing some of the country's 34 volcanoes.

As I reported in our last newsletter, I went there to attend and speak at the annual conference of the Association of Private Enterprise Education, composed of teachers and scholars from colleges and universities, public policy institutes, and industry who study and support private enterprise ideas and systems around the world. I was honored to have been elected to the board of directo
rs of the APEE.

We had dinner at the beautiful Universidad Francisco Marroquin that is training young people in market-based economic policies in hopes this new generation of leaders will be able to guide the country forward.

APEE board member Tom Saving also arranged for us to visit a state-of-the-art hospital in Guatemala City that is one of a network of six private hospitals operated by the Grupo Hospitalario Guatemala.

The hospital was as modern and as well equipped as you would find in any American city with nuclear medicine diagnostic equipment, cardiac surgical centers, neonatal intensive care units, four operating rooms, and much more. Most doctors are board-certified in the U.S.

All payment is private, and prices are posted up front, with payment plans available. Prices often depend upon convenience and amenities — MRIs cost less at night for example. The most common surgeries are for gastric bypass.

This is in sharp contrast to the crowded, poorly-equipped, and under-staffed public hospitals in the country's universal health care system. Like most countries with universal coverage, people can buy their way out. A private hospital suite here costs about $85 a night with a one-to-one nurse-patient ratio. Surgical charges are about 25% of prices charged in the U.S., but that is still prohibitively expensive for the majority of Guatemala's citizens.

So much progress still needs to be made in this beautiful country.

Grace-Marie Turner

Recent News Articles and Studies

The Canadian Health System Failed Natasha Richardson
Don't Let Europe's Health Failure Drag U.S. Down
The End of Private Health Insurance
Obama Healthcare 2.0
How Many Uninsured People Need Additional Help from Taxpayers?
Why 'Quality' Care Is Dangerous
Benjamin Rush Society Debate: Is More Government the Right Rx?


The Canadian Health System Failed Natasha Richardson
Grace-Marie Turner, Galen Institute
Richmond Times-Dispatch, 04/05/09

Friends of actress Natasha Richardson say her two teenage sons are understandably distraught over her tragic death from a head injury, even blaming themselves because she was trying to learn to ski for them. It’s so important that they see it was the system that failed their mother, writes Turner. The delay between the 911 call from the ski resort and reaching the specialized trauma center in Montreal very likely cost Richardson her life. Government officials in Quebec province had made a decision not to invest in med-evac helicopters or to contract with a private company to provide services. Big ticket items are often the first to go in a centrally-planned health care system. In the U.S., about 800 medical helicopters fly 400,000 missions each year, plus about 100,000 fixed wing medical flights. Canada and other countries with government-controlled health systems spend less per capita on health care than the U.S. does, but the lack of investment in health care technologies that literally can save lives comes with a very high price.

This commentary has been published in newspapers across the country, including The Examiner, The Providence Journal, and The Richmond Times-Dispatch.

Don't Let Europe's Health Failure Drag U.S. Down
Grace-Marie Turner, Galen Institute
The Detroit News, 04/06/09

Countries that have advanced much farther down the road toward government involvement in their health sectors can help Americans learn what we would best avoid, writes Turner. For example, mandates for purchasing health coverage have proven unsuccessful at controlling costs. France has compulsory insurance, yet it has the world’s third most expensive health care system and regularly runs a deficit. This is despite the fact that French citizens effectively pay 18.8% of their incomes toward keeping this system afloat. Switzerland, which installed an individual mandate 15 years ago, is faced with mounting public expenses, forcing officials to close hospital facilities, reduce medical reimbursement rates, and restrict access to surgeries. We must instead build on the innovation and quality of American health care, putting doctors and patients in charge of medical decisions and offering people more choices of more affordable care and insurance.


The End of Private Health Insurance
The Wall Street Journal, 04/12/09

Above every other health care goal, Democrats this year want to institute a “public option” — an insurance program financed by taxpayers, managed by government and open to everyone, much like Medicare, The Wall Street Journal writes in a lead editorial. The public option would be the most radical change in the way American health care is financed — and thus provided — in at least 44 years, and maybe ever. Employers large and small will have every incentive to dump their plans and transfer their workers to the public rolls. The result will inevitably be a cascade of failures or withdrawals from the market by commercial insurers, with the public option as the only option for the diaspora. Once government takes over the majority of U.S. health care liabilities, it can either provide every service at huge and growing cost, or it can ration services. Medical innovation will be at the mercy of the price controls hashed out in Washington.

Several health policy experts have also commented on the consequences of a public plan, including Kerry Weems, former Administrator of the Centers for Medicare and Medicaid Services, and Benjamin Sasse, former U.S. assistant secretary of health; Sally Pipes and John R. Graham of the Pacific Research Institute; Robert A. Book of The Heritage Foundation; and Jeffrey H. Anderson, former senior speechwriter for the U.S. Department of Health and Human Services. And John Sheils and Randy Haught of The Lewin Group have released a new paper.

Obama Healthcare 2.0
Thomas P. Miller, American Enterprise Institute
The American, 04/02/09

The president’s opening offer of healthcare at a teaser rate fails to deliver what we actually need, value, and can afford, writes Miller. President Obama’s preliminary budget framework would make the health care sector that some critics claim is already too “unaffordable” even more so. The soft numbers presented in the budget amounted to $634 billion over ten years, tucked within a reserve fund that serves as a “down payment” for comprehensive health reform more likely to cost at least twice as much. Once one blows away the political smoke, there remains little evidence in the budget of a serious commitment to deliver more substantial and lasting savings. Proposals for overhauling inefficiencies in the care delivery system, sensitizing the privately insured to value trade-offs, and reacquainting senior beneficiaries with the full costs of their Medicare entitlements remain either illusory, underdeveloped, or discarded in this initial Obama budget, writes Miller. The health care portion of this budget is largely an extension of broader bait-and-switch tactics, for which the primary objective is to quickly lock in long-term structural changes in who controls health care choices. Left to less-urgent “out years” will be worries about how to renege on the too-generous terms of offers of universal coverage, comprehensive benefits, and lower list prices.

How Many Uninsured People Need Additional Help from Taxpayers?
Keith Hennessey, 04/09/09

Hennessey, former senior White House economic advisor to President George W. Bush and director of the National Economic Council, tackles an analysis of the number of uninsured Americans in his newly-launched blog. He breaks down the 45.7 million Americans without insurance to exclude those already eligible for public programs, non-citizens, and those affluent enough to afford it, and concludes that policy should focus on about 10.6 million Americans who need additional help from taxpayers in purchasing coverage.

Hennessey’s blog focuses on a wide range of economic policies, including financial market issues, tax policy, energy and climate change, and health care. Readers can get updates on blog entries either through Hennessey’s mailing list or an RSS feed.

Why 'Quality' Care Is Dangerous
Drs. Jerome Groopman and Pamela Hartzband, Beth Israel Deaconess Medical Center and Harvard Medical School
The Wall Street Journal, 04/08/09

The Obama administration is working with Congress to mandate that all Medicare payments be tied to “quality metrics.” But an analysis of this drive for better health care reveals a fundamental flaw in how quality is defined and metrics applied, write Drs. Groopman and Hartzband. In too many cases, the quality measures have been hastily adopted, only to be proven wrong and even potentially dangerous to patients. Rigid and punitive rules to broadly standardize care for all patients often break down. Yet too often quality metrics coerce doctors into rigid and ill-advised procedures. Medicine is an imperfect science, and its study is also imperfect. Rather than rigidity, flexibility is appropriate in applying evidence from clinical trials. To that end, a good doctor exercises sound clinical judgment by consulting expert guidelines and assessing ongoing research, but then decides what quality care is for the individual patient. And what is best sometimes deviates from the norms.

Benjamin Rush Society Debate: Is More Government the Right Rx?
Jason Fodeman, The Heritage Foundation
The Foundry, 04/13/09

Last week the Columbia University chapter of the newly formed Benjamin Rush Society — a group of medical students and doctors who believe in the freedom to practice medicine without government interference and the freedom for patients to access the health care of their own choosing — hosted a debate on the federal government’s role in health care. An audience of nearly 200 people attended the event, which featured two debaters arguing that universal health care should be the responsibility of the federal government and another two debaters arguing against government sponsored universal health care. Sally Pipes, president of the Pacific Research Institute and founder of the Benjamin Rush Society, argued that markets and competition can bring about coverage and choice for all. While the audience started the night largely in support of government involvement, those opposed to government-sponsored universal health care left the debate enthused and energized to bring the message of the Benjamin Rush Society back to their respective institutions, writes Fodeman.

Upcoming Events

Regulation of Follow-on Biologics: Ensuring Quality and Patient Safety
Jefferson School of Population Health Policy Forum
Tuesday, April 21, 2009, 8:00 a.m. – 3:30 p.m.
Washington, DC

Private Health Plans in Medicare: What is the Record?
The Heritage Foundation Event
Tuesday, April 28, 2009, 12:00 p.m.
Washington, DC

National Medicare Education Program Coordinating Committee Meeting
Centers for Medicare & Medicaid Services Event
Thursday, April 30, 2009. 8:30 a.m. – 12:30 p.m.
Washington, DC



Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features a commentary by Grace-Marie Turner on the major developments and issues of the week as well as summaries of writings by participants in the Health Policy Consensus Group and other articles of interest from the health policy world, plus announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at

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The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.