Healthcare Plan B: Next worst thing

Tuesday, August 4, 2009 Comments


Earlier I wrote about the dangers of the "public option" in Obama's plan. Even without a so-called "public option," Obama's Plan B isn't much better, as it would still bring about massive government control - essentially still a gov't takeover of the health insurance industry but with the facade of a free-market system.

From The Weekly Standard:

Plan B is no day at the beach for health insurers. By imposing an exhaustive array of regulations and installing a powerful national health commissioner, it would turn health insurers into public utilities. They'd be assured a small profit, but competition among insurers would be gone and bureaucrats would be in charge.

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As you might expect, there are many, many problems with Plan B. Its first impact would be on health insurers. All but the largest five or six of 1,300 insurers across the country would be out of luck. Since Plan B would reduce the profits for insurance companies, and those with smaller margins--namely, regional, state, and local insurers--probably wouldn't be able to compete.

"It's another chapter in the book on crony capitalism," says Republican representative Paul Ryan of Wisconsin, who first described Obamacare 2.0 as "Plan B." "The government erects barriers to entry against the smaller and most innovative insurance companies and leaves the big, established firms in place."

Insurers would be allowed to offer new policies after 2013 only if they joined a government-operated "exchange." And the policies would have to include a minimum--and more extensive and expensive--set of benefits. This would deny smaller firms their competitive advantage of offering insurance packages with fewer benefits, specially tailored for a client's needs.

Ryan raised this point recently during a hearing of the House Ways and Means Committee, asking about a small Milwaukee insurer. The answer he got was unequivocal. The firm couldn't offer new policies outside the exchange.

The biggest impact of Plan B would be on all of us, assuming it retains most or all of the regulatory requirements and details of Obamacare. There would be victims and beneficiaries. As insurers go out of business, people would lose the coverage they've chosen. Young people, the healthy ones, would suffer even more. They'd have to pay far more for their coverage. Cheap catastrophic plans and cost-saving health savings accounts would be unavailable. By paying more, those in their 20s and 30s would subsidize the old and sick.

With all the new benefits--for mental health treatment and "professional services" and "well baby/child" services--the total cost of health insurance is bound to soar. The poor and uninsured will need a subsidy. Caps on out-of-pocket expenses will increase the cost of insurance. And so on. The price will have to be paid through higher premiums and tax hikes.


Read the whole article here.

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