President Obama and other leading Democrats
have proposed creating a new government
health insurance program as an option for
Americans under the age of 65, within the context
of a new, federally regulated market — typically
described as a “National Health Insurance
Exchange.” Supporters claim that a new government
program could deliver higher-quality
health care at a lower cost than private insurance,
and that competition from a government program
would force private insurers to improve.
A full accounting shows that government
programs cost more and deliver lower-quality
care than private insurance. The central problem
with proposals to create a new government program,
however, is not that government is less
efficient than private insurers, but that government
can hide its inefficiencies and draw consumers
away from private insurance, despite
offering an inferior product.
A health insurance “exchange,” where consumers
choose between private health plans with
artificially high premiums and a government program
with artificially low premiums, would not
increase competition. Instead, it would reduce
competition by driving lower-cost private health
plans out of business. President Obama’s vision of
a health insurance exchange is not a market, but a
prelude to a government takeover of the health
care sector. In the process, millions of Americans
would be ousted from their existing health plans.
If Congress wants to make health care more
efficient and increase competition in health
insurance markets, there are far better options.
Congress should reject proposals to create a
new government health insurance program — not
for the sake of private insurers, who would be
subject to unfair competition, but for the sake of
American patients, who would be subject to
unnecessary morbidity and mortality.
President Obama and other leading Democrats
have proposed creating a new government
health insurance program as an option for
Americans under the age of 65, within the context
of a new, federally regulated market — typically
described as a “National Health Insurance
Exchange.” Supporters claim that a new government
program could deliver higher-quality
health care at a lower cost than private insurance,
and that competition from a government program
would force private insurers to improve.
A full accounting shows that government
programs cost more and deliver lower-quality
care than private insurance. The central problem
with proposals to create a new government program,
however, is not that government is less
efficient than private insurers, but that government
can hide its inefficiencies and draw consumers
away from private insurance, despite
offering an inferior product.
A health insurance “exchange,” where consumers
choose between private health plans with
artificially high premiums and a government program
with artificially low premiums, would not
increase competition. Instead, it would reduce
competition by driving lower-cost private health
plans out of business. President Obama’s vision of
a health insurance exchange is not a market, but a
prelude to a government takeover of the health
care sector. In the process, millions of Americans
would be ousted from their existing health plans.
If Congress wants to make health care more
efficient and increase competition in health
insurance markets, there are far better options.
Congress should reject proposals to create a
new government health insurance program — not
for the sake of private insurers, who would be
subject to unfair competition, but for the sake of
American patients, who would be subject to
unnecessary morbidity and mortality.
Michael F. Cannon is director of health policy studies at the Cato Institute and coauthor of Healthy Competition: What’s Holding Back Health Care and How to Free It.