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Sunday, November 8, 2009

Public health care through the back door

Although it is perhaps too early to get excited over the new “public option” health care bill which has passed in the U.S. House of Representatives and now moves to the Senate where it is expected to receive a hostile reception from the minority Republicans and right-leaning Democrats.

Over time, the public option will grow, setting private insurance on the road to extinction …

David Frum

The new bill seems like a hodge-podge of public and private control over who pays for exorbitantly expensive health care services in the United States. Should the bill survive in anything like its current form, however, it will make the United States the last to join every other industrial nation on earth in providing some form of universal health care for its people.

Though not a not a single-payer system, the likelihood is that the proposed program will quickly evolve as a single-administrator system as the federal government seems committed to controlling health care prices.

I agree with David Frum who writes:

“The bill powerfully incentivizes smaller employers to withdraw their own health coverage and push their employees into the government plan.

“Small employers can now escape the obligation to provide health care for their employees by paying an 8% payroll tax. Many small employers will seize that offer. … Many will opt for the seeming security of the government-run plan. Over time, the public option will grow, setting private insurance on the road to extinction—or at best to a tightly regulated new role as the health equivalent of public utilities. The big decisions will be made in Washington; the insurers will comply.”

Canada spends about 2.4 per cent of our total health care costs on administration compared to the 7 per cent spent by the U.S. government. Some studies place private sector health care administration costs in the United States at a whopping 14 to 22 per cent.

Furthermore, Medicare, the US government-administered health care program, has lower costs than private insurance. This is startling when one considers that Medicare covers the over-65 group, i.e., the highest cost portion of the population.

Free market forces seem not to be doing its job of moderating prices, so perhaps the government does have to step in.

As I’ve written before, I wouldn’t exchange our flawed system for the Americans’ current money-first-or-no-care-even-for-life-threatening-conditions system. Nor do I envy Americans their exorbitant insurance costs, private-sector bureaucratic control and poor outcomes in life expectancy and infant mortality.

We should know pretty soon whether President Barack Obama has enough political capital left to push this bill through the Senate without it being gutted by compromise. Like our own health care system, theirs will be flawed, but, at least, some tens of millions of Americans will have a new option for covering their basic health care costs.

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