Summary

The Senate Finance Committee rejected the "public option" for government-run health insurance not once but twice.  Even some democrats were wary of the public option.  These failures underscore the fact that the United States is wrestling with a fundamental shift in thinking about the proper role of government in the health care insurance business.

Analysis

There are many flaws with the "public option," which is simply a surrogate for the over-arching concept of government-run health care and government-run health insurance.
  • Medicare and Medicaid, widely touted as models of how socialized medicine is "already working" in the US, are inefficiently run and their spending growth is unsustainable.  The "excess" growth in the price tag for government-run health care exceeds that for all other aspects of health care spending, according to one recent CBO report.  This indicates that the people getting government-run health care tend, on average, to use more health care resources and spend more money than those in the private sector.  So, a major flaw in thinking about health care reform is to imagine that a bigger-better-government-run health care reform program (>$885 billion dollars bigger, for example), is somehow going to become MORE efficient than the non-government sector.  It just won't happen.
  • Perhaps the major flaw in the "public option" approach to health care reform is the belief that is possible to spread responsibility for one's own health to a large (i.e., insurance plan members) or huge (i.e., federal and state taxpayers) group.  This philosophy was heralded as a wonderful achievement when Medicare and Medicaid evolved as part of the Great Society reforms of the 1960's.  The problem with ALL of the health care reform proposals under discussion today is that they follow the same failed philosophical paradigm upon which the Great Society was based:  Collectivism is the best way to solve the health care crisis.  I argue that individualism is a far better option.  If collectivism were so much better, why is Medicare spending 9 times what it was projected to spend?  If government-run health care was the preferred strategy, then why has it become unsustainable?
I have written a summary of a health care reform plan that puts responsibility for health care on the individual, who really should be responsible for him/herself.  Our way of thinking about health care has been shaped by the Great Society paradigm for the past half-century.  It requires a paradigm shift in our thinking in order to see the wisdom of individualism as a viable alternative to collectivism.
The first reaction to this proposal is that poor people can't afford it.  That is nonsense!  In fact, this plan would save these poor people tens or even hundreds of thousands of dollars over their lifetimes, would stimulate the US economy, would be more fair than any plan based on the failed Great Society paradigm, and could be implemented within 20 years at a cost far less than our current government-run health care system.  The biggest flaw with the current "public option" debate is that we are debating the wrong issue.  Instead of debating collectivism vs. individualism directly, we seem to be debating the degree of collectivism we are willing to tolerate.

This author consults with leading institutions through GLG

Engage this author or other Legal, Economic & Regulatory Affairs experts
 
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.