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Would Health Reform “All But Eliminate” Private Health Insurance?

By Matthew Yglesias  

"Would Health Reform “All But Eliminate” Private Health Insurance?"

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To be clear, I think that all but eliminating private health insurance would be a good idea. That said, I’d be really interested to know what Mike Tanner’s justification is for saying of the House bill “regardless of how much lipstick they put on this pig, it still is a government takeover of the health care system that would all but eliminate private insurance and force millions of Americans into a government-run system.”

For people who receive health insurance through their employers, which is to say the vast majority of the Americans who currently have health insurance, the House bill would change very little. Or, rather, the biggest change would simply be the confidence that if, in the future, you cease to get health insurance from your employer (maybe you’ll lose your job or want to change jobs) that you’ll still be able to get health care. What’s more, of the minority of Americans who would be getting health care through the new “exchange,” the majority will probably sign up for private health insurance and everyone will have the option of doing so. If the government-run public plan is, for whatever reason, vastly more appealing than the private options then it will dominate. But if you believe the government can’t run health care well, there’s no reason to think that will happen. Whatever you think of that, though, the basic fact is that even if the public option does dominate the exchange most people will still have private employer-provided insurance.

In addition to misstating these facts, Tanner says that the idea of a public option negotiating rates with health care providers is “the health care equivalent of negotiating with Tony Soprano.” It strikes me as strange to analogize a government-purchasing arrangement to a sham negotiation with a violent criminal organization. The federal government regularly negotiates with providers of goods and services. Police departments buy cars and guns and uniforms. Government offices buy light bulbs and computers and pieces of paper. Highway authorities buy cement and steel. There are definitely different kinds of issues and problems with public sector contracting activity, but “resemblance to mob extortion” isn’t among them.

The health reform being contemplated in congress involves substantially increases taxes in order to spend substantially more money. I don’t expect Cato Institute personnel to support such a program. But this kind of wild distortion doesn’t help anyone understand what’s happening. The fact of the matter is that congress is proposing just about the most small-c conservative way of pursuing universal coverage you can imagine.

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