Saturday, July 18, 2009

Public Health Car Plan Is Self Financing.

In response to a comment I want to just say the public health care plan being introduced is self financing. This means it will not be subsidized by taxes:

Proposed healthcare reform legislation, including its public option, has provoked intense debate. I therefore visited the actual text of the House bill as proposed by the chairmen of the three committees with jurisdiction over reform legislation - see

The following conclusions can be extracted from that text, and below them, I've cited relevant text sections as documentation. I thought that readers discussing the topic might be interested in what is actually proposed, as opposed to second hand reports and circulating myths.

1. The proposed public option is non-profit and self-financing (i.e., paid for by the premiums it collects). Its non-profit character permits it to be a strong competitive force to drive down insurance costs. Its self-financing mechanism means that it does not add to federal expenditures - i.e., it is not a part of the costs of reform that are currently debated.

2. The public option can negotiate with drug companies to reduce costs of drugs not already the subject of Medicare negotiated prices..

3. The public option can also negotiate with providers to increase the efficiency of health care.

4. The proposed surtax on high income earners is designed to cover the entire program, but not to subsidize the public option.

I'm not endorsing the whole health care bill, as there is a lot of problems with it. But I will endorse a self financing program that beats the free market options.

I just do not feel sorry for the private sector if it can't compete with a self-financing government sponsored plan.


  1. If I was the owner of a private health care system and actually believed the government couldn't provide health care as good as the private sector I'd be saying "bring it on."

  2. I think the public option is a generally a good think to look into, but I see two major issues:

    1) If the public health plan will be competitive, why haven't non-profit businesses (like Kaiser Permanente) already offered plans for the ~40 million uninsured Americans in this country that people voluntarily sign up for? Other large insurance providers currently negotiate better prices on prescription drugs and efficient care. If it has no advantages over any other large insurance provider (many of whom are non-profit), then why do we need it?

    2) I fear that if the public option doesn't do as well as promised, there will be pressures on politicians to help it out a little, and then a little more, and then a little more, and then you have the people that brought you Hurricane Katrina response managing your health care. The problem is not the current proposal - it's what it could turn into over time that worries me.

  3. Here's a question: what advantages does the public option have over the proposal with regional insurance cooperatives?

  4. Here's a fiscal conservative's viewpoint from the Wall Street Journal:

    I don't know that I really oppose a single payer system - the benefits may outweigh the drawbacks - but I think that's what Obama is actually trying to move the country towards with the public option.

  5. Why they didn't go with something like Kaiser is a good question. Like I said, the details of the bill may not be that good, but I still think giving people the "freedom" to choose between the government and the private sector is a good thing.

    I also don't know what to think about a single payer system. Personally, I would like to give the public option a try and if it works then we don't need a single payer system and we can keep the private sector in tact.

    I will write more about the free market option so won't comment about that now.

    I'm sure in the minds of many liberals this is one step closer to a single payer system. I won't deny that. I hope that if a single payer system isn't needed we don't go there. We will have to see.

  6. That was an interesting WSJ article.

  7. I guess my issue is that to tout this as a public option, really playing on the same level as private insurance companies, is really hard to swallow. Any time you have a government-run, government-sponcered entity, that is a lot of power on your side. I'm sure that on paper they try to keep direct government hands out of a lot of it, but if I were running a private insurance company, I would be concerned about the opposing football team being coached by the referee's son, so to speak.


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