[StBernard] (no subject)

[Westley Annis]

The Public Option Comeback 
The secret to its budget 'savings'? Medicare price controls.

Sounding taken aback himself, Senate Finance Chairman Max Baucus recently
declared that the public option is "alive." A better term might be undead:
This new government-run health insurance program akin to Medicare for the
middle class continues to stagger forward, zombie-like, despite what were
thought to be fatal blasts earlier this fall from Senate centrists and the
House Blue Dogs-that is, from Mr. Baucus's fellow Democrats.

***
The public option's renewed momentum is mostly the product of the raw
ideological willfulness of the progressive left. Led by Speaker Nancy
Pelosi, they're not about to let a once-in-a-generation opportunity pass
without a fight, and they view the public option as a down payment on
single-payer health care. They're right to think so; a public option will
quickly blow up the private insurance market.


In particular, Mrs. Pelosi believes she's found a political trump. A
so-called "robust" public option will cost the government less than other
plans, since it will pay doctors and hospitals fees pegged to Medicare's
price controls on thousands of services. The Congressional Budget Office has
reportedly found that these below-market payments would result in "savings"
of $110 billion, compared to requiring a public option to negotiate rates
with providers like a private company would.

Yet as the government pays less, the private sector pays more. Like Medicare
today, hospitals will shift some of their losses into higher private
insurance premiums. Meanwhile, the public option's premiums will be
artificially lower, even before the heavy subsidies that Democrats plan to
offer. As private insurance costs increase, private payers will lose market
share, intensifying the cost-shift and precipitating an exodus to government
from commercial carriers.

Democrats dismiss cost-shifting as a tall tale of the health industry. After
all, if providers can increase their revenue by charging private payers
more, why haven't they already exhausted this opportunity? Perhaps because,
contrary to Washington's fantasy of robber baron doctors, very few hospitals
behave like classical profit-maximizing firms. Most are nonprofit
institutions with social missions.

The real problem is that government pays so much below costs. A 2006 study
in the journal Health Affairs found that for each dollar of cost hospitals
incurred, they received $1.22 from private payers and only 95 cents from
Medicare. Analysts Allen Dobson and Joan DaVanzo argue that this puts
hospitals "in the unenviable position of playing the role of private-sector
tax collectors, to maintain their financial solvency."

It's true that cost-shifting isn't dollar for dollar. Providers can absorb
some underfunding by cutting services, such as by reducing hospital stays,
or investing less in research, teaching and state-of-the-art care. Yet as
the Medicare Payment Advisory Commission recently noted, given decades of
such Medicare-related losses, "a concern is whether hospitals can constrain
costs and still deliver high-quality care." For that reason the Mayo Clinic
announced this month that some of its campuses will no longer accept
Medicare patients.

"The American people are so smart," Mrs. Pelosi said at a recent press
conference, as she explained how stupid she thinks they are. "We are saying
that rather than force them to buy health insurance from the insurance
industry, let us give them the freedom to do that if they wish or to have a
public option. The more you talk mandate, the higher the support for a
public option becomes." In other words, one coercive government policy (the
individual mandate) is forcing people to think better of another coercive
government policy.

***
But the reality is that no one wants a public option except the political
left. Doctors and hospitals hate the idea as much as insurers do-and they're
far from natural allies. The media are able to counterfeit public support,
such as this week's Washington Post/ABC News poll showing 57% in favor, only
by asking rigged questions about "choice" and "competition." Who's opposed
to that?

The negotiators crafting the Senate bill, headed by Majority Leader Harry
Reid and White House Chief of Staff Rahm Emanuel, may attempt some backdoor
public option. They might allow states to opt in, or to opt out. Or the new
entitlement might be "triggered" if certain conditions aren't met. No one
should be fooled. For liberals the key is to get the architecture in place
this year and expand it over time, much like Henry Waxman and the late Ted
Kennedy did with Medicaid in the 1970s and '80s.

At least for now, we still don't see how Democrats get to 60 votes with a
public option. But its revival shows that the Democratic Party's left is
running this show, and how radical their plans for U.S. health care really
are.

Printed in The Wall Street Journal, page A20 
Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved