September 29,2016

Discredited 'public option' will fail

To cut costs, health care reform requires less government, not more.


By Orrin Hatch and Fred Upton
September 29, 2016

For middle-class families with Obamacare, summer 2016 was plagued with headline headscratchers as they learned costs would be going up and choices would be going down.
Today, as the fourth enrollment season nears, the news is not getting any better. And despite repeated promises from President Obama that healthcare costs would decline, the law looks to wield even more negative financial consequences on middle-class Americans. In fact, since 2007, spending on healthcare for middle-class families has increased by nearly 25 percent.
This dire reality is Obamacare’s past, present and future; and it is rooted in the law’s fundamental failure to tackle costs and embrace the competition and transparency principles that Republicans have long championed.
Yet, despite the maze of federal rules, taxes and penalties Obamacare created for the private health insurance market, Democrats are doubling down on government interference in healthcare once again. This time, by advocating for an old, already passed-upon idea: a government-run plan option, or a so-called “public option.”
But what they forget is why this idea was not included in their original plan: it simply doesn’t work.
In a health system that values innovation, choice, first rate care and groundbreaking treatments for patients, market forces must be at play to drive efficiency and effectiveness from not only hospitals and doctors, but insurers as well.
A government-run plan counters these pillars of our system and instead only perpetuates more of Obamacare’s failed policies that have stifled competition and hiked prices for American families.
Consider that last year, 19 of 37 states on saw double-digit premium increases for the second-lowest cost silver plan, with three of these states seeing benchmark rates go up 30 percent.
While premiums spiked, competition was driven out. Obamacare’s policies forced insurers to leave the failed exchanges, with 70% of carriers experiencing financial losses that rendered some of them unable to stay in business for their patients.
Now, roughly 974 counties and nearly two million Americans across the country may be left with only one insurance plan on the exchange.
If Obamacare’s knot of federal mandates and new programs has not cut costs and improved competition, how can Washington Democrats think that more government is the answer?
In practice, a government-run plan would dictate prices to doctors and hospitals which would, in turn, cause health providers to be unable to participate in the program. It would do nothing to control costs, and instead would leave patients to pay for extra services that are not deemed essential by Washington bureaucrats.
Like Obamacare, a government-run plan would drive private insurers out of business. This time, by setting artificially low prices that ultimately would leave federal taxpayers to foot the bill when claims exceed below-market costs.
Proponents of the government-run plan need only to look to the very law they once celebrated to see how the public option would fare in practice. That inconvenient truth lies in section 1322 of Obamacare, where the law’s policies for the Consumer Operated and Oriented Plan (CO-OP) are spelled out. At the time, CO-OPS were viewed to be an alternative to the public plan option, since there was resistance to supporting it, even among Democrats.
Fast forward to today, and tens of thousands of Americans have lost their health insurance coverage from failing CO-OPs and taxpayers have footed the $1.8 billion lost on the exercise. If the botched CO-OPs experiment is any indication, a government-run plan would be an unmitigated disaster for middle class families, taxpayers and patients.
It’s undeniable that Obamacare is failing — it is driving up costs and reducing choice and access in many markets. What we need right now is more bold solutions that promote patient-focused reforms aimed to reduce healthcare costs and increase access to affordable, high-quality care. Such are central tenants of our Patient CARE Act and many other like-minded proposals from House and Senate Republicans. What we need less of is more of the same. Rather than continuing government-run mandates and regulations, our plan would empower Americans to make the best healthcare choices for themselves and their families. This is the type of reform effort that deserves discussion.
Sen. Orrin Hatch, R-Utah and Sen. Fred Upton, R-Mich. are authors of the Patient Choice, Affordability, Responsibility, and Empowerment Act.