Tuesday, September 29, 2009

Public Option does not increase competition required to lower costs


Today the Senate Finance Committee will be debating several amendments that contain a public option. Sen. Charles Schumer (D-NY), while debating Sen. Rockefeller's (D-WV) public option amendment, stated that the only way to achieve competition in health care is to institute a public option. During the debate the liberal Democrats referenced a chart that showed that competition does not exist right now as health care insurance companies, roughly 75%, hold a monopoly or an oligopoly in the states they operate. I agree that more competition is required to drive down cost. Where I differ, as do moderate Democrats and the majority of Republicans, the public option does not foster competition. Before my progressive friends "jump the shark", hear me out.
The trouble with the logic of a public option leading to competition is that adding just ONE additional plan does not break the oligopoly. If you have two plans offered and add one more plan, how does that increase competition? Yes it does offer another option but an oligopoly still exists. To break out of the monopoly or oligopoly trend across America, in regards to health care insurance, needs more than just one option. That being said, why are liberal Democrats lack the understanding on how to breed competition? To create the competition, as I said in what I'd suggest for health care reform, is to open the state borders.
Allow everyone in the United States to purchase health care insurance from any state in our nation will create the competition that is required for drive down the cost of health care premiums. The public option will lead to less competition. Now the public option will not act like a light switch to the private insurance programs; rather it will act as a dimmer switch. After the public option is established and running, American's will lose their current insurance program.
Democrats floated the notion that the Mayo Clinic came out in favor of a public option that is similar to Medicare. This claim was false, http://healthpolicyblog.mayoclinic.org/2009/09/23/mayo-clinics-position-on-the-public-option/, as the Mayo Clinic blog states, "If the "public plan" means a government-run, price-controlled, Medicare-like insurance model, we do not support it because it has been shown over many years that such a model has not controlled costs and had punished doctors, hospitals and others that provide high-quality, affordable care." Just a few days ago the Mayo Clinic reported, in the Star Tribune, which lost over $730M is medical costs of Medicare patients. Now, where does a hospital/clinic, like the Mayo Clinic, going to make up the lost revenues? It falls on the shoulders of those with non-government run insurance.
Sen. Debbie Stabenow (D-Mi) just claimed that, per the CBO, only 25% of those without insurance right now would opt into the public option. The popular of given of those uninsured is 48M people. Based on Sen. Stabenow, per the CBO, we are looking at 12M people. In a system that already offers health care for, roughly, 178M people how will we be able to ensure "real competition and choice" as Sen. Stabenow just said when it only affects 6.7% of the market? Any ration person understands that adding 7% to anything is not creating competition or big enough of anything to mix the overall pot. If the ultimate goal is to offer choice and to reduce cost of premiums to Americans then Congress needs to move in the direction of doing so by making health care insurance available interstate. By going interstate it will increase commerce as states like Iowa, as Democrats claim, has only 1 insurance option will be able to purchase insurance in other states and it will allow health care insurance providers to enter into more markets.