True cost savings from healthcare reform legislation will be highly unlikely if the government behaves like a private health insurance company.
As announced late last week, the so-called public option will not impose what the plan will pay hospitals, doctors and other healthcare providers. Instead, the federal government would be required to negotiate rates with providers in the same way that private insurers currently do.
Analysts have predicted this requirement would result in payment rates for the public plan that would be, on average, comparable to those paid by private insurers, eliminating the cost-saving advantage initially envisioned in health reform legislation.
If this is true, then how will this country ever achieve the level of reduction in healthcare expenditures necessary to reduce the unsustainable growth we are currently experiencing?
I fail to see why government sponsored healthcare insurance programs should be required to act like private insurers.
Government programs are really programs of last resort. They are commonly referred to as the health insurance safety net. The government steps in when coverage is not available to people through the private market.
Why then, should government healthcare insurance plans be compelled to act like the private insurance market that in fact created the problem that compels the government to act?
There is a clear example of what happens when politicians impose private insurance market practices on a traditional government program. Medicare Advantage was supposed to be the example of a free market alternative to standard Medicare. In theory, it was supposed to expand benefits and lower costs.
Instead, it has expanded benefits, paid providers more and by some estimates, it costs the government 15 percent more than standard Medicare. As a result, hospitals and physicians find it much more profitable than standard Medicare.
Let’s learn from the past and not make the same mistakes.
Mike Stephens blogs regularly at Action for Better Healthcare.