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Public Option Bad For Private Insurance, Says Grassley

What’s so bad about a public option in health care reform? It “will ultimately force private insurers out of business”, says Senator Charles Grassley.

Would that be a bad thing? Would your health care be worse off without insurance company bureaucracy rationing medical care, if you were provided with health care through a government plan?

Republicans like Senator Grassley are constantly telling us that the government is incapable of providing services as efficiently and affordably as private businesses. If that’s really true, why would a government public option for health care coverage “force private insurers out of business”? Wouldn’t insurance companies, if they’re as capable as Republicans think they are, outcompete the public option?

5 comments to Public Option Bad For Private Insurance, Says Grassley

  • Mark

    I don’t know if it’s justified or not, but the fear is that a government run public option will draw heavy subsidies from federal tax dollars. So, even if it’s run very inefficiently, due to these federal subsidies it will provide care at lower out-of-pocket cost to the consumers. This would force private companies out of business because they are not receiving these subsidies and can’t compete even if they provide very efficient and high quality care.

    Overall, such a system (if you include federal subsidies) could end up costing society far more than current private insurance plans. Are there provisions in the public option plan that would limit the amount of federal subsidies that it could receive?

    • There are in the Rockefeller amendment which is being debated today in the Senate Finance Committee. Under that plan the public option would get enough money to start itself up, but then would have to become self-sufficient, and live and die according to its own independent operations.

  • Though a public option may have unfair subsidies, it will ultimately only offer a limited core set of options for what is covered. This provides the opportunity for insurance companies to provide additional coverage to pay for things like a private room, special meals, special procedures, etc. It means that they compete in a slightly different space than where they do now, not that they cannot compete.

    The argument that a public system would cost more to society than the current system is not born out by international comparisons of countries with similar or better health systems. The US system uses 16-17% of GDP on health care spending whereas many other “socialized” and private insurance systems in other comparable countries use roughly 10% of GDP.

    Besides since people hate paying their taxes so much, tax increases associated with inept management of the health care system will contribute to voter anger and a change of government. Thus politicians will have an incentive to make the system as efficient as they can.

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