Spinal Cord Advocates

In many of the discussions that we hear on radio, TV and in print, we are warned that the US Government is going to take over health care and that we’re moving toward socialized medicine. It makes for entertainment, but is it true?

In the five bills currently before Congress regarding health care reform, not a single bill suggests that the United States adopt a single-payer system (or a system where all health care is paid for by a single source - the United States government.) The single-payer system is currently in use in Canada and England, and we’ve heard the pros and cons to such a system.

The bills promote the concept of building off of our robust system of employer-based health insurance. For those people without an option for employer-based health insurance, the bills propose either a “public option” or a “non-profit insurance exchange.” Let me attempt to explain the need for such options.

Insurance works like this. Large numbers of people, called the insurance pool, pay premiums. Premiums pay for covered health care services that are being provided to a small sub-set of the larger group. If the insurance pool gets too small, or the small group gets too large, then the system doesn’t work. So, if we simply add sick people who don’t have insurance to the system, then we’ll be paying out more than we’re taking in from premiums. Therefore, we need to increase the number of people paying premiums, so they can help offset the expenses from additional sick people.

Oh, well, when it’s put like that, how many healthy people do you think will volunteer to pay for health insurance if it’s not provided by their employers?

To address this problem, the bills before Congress include a “mandate” for coverage. If everyone, regardless of their health, pays into the system, then those premiums can be use to pay for care. The next question is, if health coverage is mandatory, where can people buy the necessary insurance at a reasonable price? This is where private sector, the proposed public option and the proposed non-profit insurance exchange come in to play.

Some in Congress advocate that the private sector, in response to free-market forces will respond as it always has. If people have to have mandatory minimum amounts of health coverage, then some private entity will answer that need and begin providing that service at a competitive price. If the price is too high, then consumer will go to another supplier. If the price is too low, then the company goes out of business. Proponents of this system insist that free-market forces should be allowed to regulate prices and efficiencies.

On the other hand, some in Congress believe that the Federal Government should introduce a new program, much like Medicare, to compete with the private insurance companies. The theory is that this “public option” would introduce a cheaper alternative to the market. With a cheaper alternative, private insurers will have to lower their premiums and offer better service if they want a piece of this new market. Detractors of this plan say that the Federal Government has unfair advantages over the private insurers. President Obama says that any public option would have to compete as though it was a private insurance company.

Finally, there’s the “non-profit insurance exchange”. Under such a system, everyone who needs to purchase mandatory coverage would be able to go to a federally-run, non-profit insurance marketplace. In this marketplace, private insurance companies would offer insurance products that met the mandatory requirements. Again, free-market forces will, in theory, compel private insurance options to be priced competitively and to offer similar products.

So what’s the answer? It looks clear that the single-payer system will not fly in the 111th Congress. In both the “public option” and “insurance exchange”, there appears to be plenty of room for private insurance markets to compete for this emerging market. The private sector can be much more responsive to the needs of the community and to the efficiencies offered by technology and innovation. I don’t think Uncle Sam will be wearing a lab coat and sporting a stethoscope any time soon.