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Could the individual mandate’s death resurrect the public option?

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Sven Larson
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      Sven Larson

      Sven R. Larson is a research fellow with Wyoming Liberty Group, a free-market think tank. He has written two books and numerous research papers and articles about economic policy, state budgets, health reform and the welfare state. He is often interviewed by TV, radio and newspapers on his topics of expertise.

On June 29, the Sixth Circuit federal appeals court ruled that the individual insurance mandate in Obamacare is constitutional. Today, the Eleventh Circuit appeals court ruled that the mandate is unconstitutional.

While it has been pretty clear from the beginning that the appeals courts were just stopovers on the way to the Supreme Court, the rulings call into question what will happen if the Court finds that the individual mandate is indeed unconstitutional.

Opponents of Obamacare are hoping that the Supreme Court will come to this conclusion. They assume that the entire law will then fall into pieces and that Obamacare will thus have been defeated. But this is a premature conclusion: The Obama administration has an ace up its sleeve. It’s called “the public option.”

As of today, the public option is confined to the political shadow realm, having taken a beating during the 2009 congressional fight over health care reform. However, it will resurface as soon as the time is right. That time is when the Supreme Court has declared the individual mandate unconstitutional.

The public option does what the individual mandate was supposed to do, but instead of using a string of words in a law text, the public option utilizes another instrument of force: federal taxes. Because the public option is tax-funded, it is a mandatory purchase that is even more difficult to get away from than the original individual mandate.

Ultimately, the public option is a more ominous threat to our individual and economic freedom than the individual mandate. Because it will be tax-funded, it will compete with private insurance plans on unfair terms. Little by little, it will push private plans out of the market. After all, why should employers buy private plans when they can simply dump their employees into the public option, which everyone is paying for anyway?

Once everyone is on the public option, it is going to be incredibly difficult to return to a private insurance market. As the rest of the world can tell us, the consequences of such a government monopoly are hard to exaggerate. In 2005, a Quebec court declared the Canadian government health monopoly unconstitutional, yet Canada’s system is still standing. It has proven extremely difficult to re-introduce a market-based system.

Canada, Britain, France, Germany, Denmark and Sweden all exemplify the disasters that come with a completely government-run system. In every country with government-only health care — a public-option monopoly — medicine and treatment are rationed on a systemic level. And yes, countries with socialized health care do have death panels. (My book Remaking America: Welcome to the Dark Side of the Welfare State accounts for the health care disaster in Sweden. For another good account, see here.)

It may actually prove easier to maintain a private insurance market under the individual mandate than with a public option in place. Countries like Switzerland and the Netherlands have private insurance market coupled with mandates for employers to provide, or individuals to buy, health insurance. Both countries have working, though far from perfect, private insurance markets.

The legal challenges to Obamacare’s individual mandate are well-intended and morally right in theory. It remains to be seen whether they also are morally right in practice. Friends of market-driven health care should be prepared for yet another fight, namely the fight to stop the public option once it resurfaces.

Sven R. Larson is a research fellow with Wyoming Liberty Group, a free-market think tank. He has written two books and numerous research papers and articles about economic policy, state budgets, health reform and the welfare state. He is often interviewed by TV, radio and newspapers on his topics of expertise.

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  • cda

    Health insurance should be sold on the same basis as car insurance – across state lines with insurers competing for every single customer – we should take health insurance off of employers backs, (eliminating the whole group discount market that skews the overall market) if employers want to increase wages to offset employ expenses that should be totally optional on their part

    I can pick up the phone or go online and compare dozens of different car insurance packages, choose the one right for me – based on my driving record – and my rates have stayed essentially the same for more than 15 years.   The entire health insurance market should be based on the totality of the US not just your state, you local hospital network, etc.  People should be able to travel in the US and their insurance should cover them everywhere, just like your car insurance does.  My car insurance coverage doesn’t just cover a local network and it doesn’t end at the state line.

  • Roman Rhyne

    “HMO With A
    Twist” Perspective

    The ultimate
    health care reform for job growth and job creation

    [moving
    fast, seizing momentum and not letting it go]

     

     

     

    CADILLAC
    health care policy for all:

                There will be three universal health plans, which can be replicated in
    every state in the United States.  These are State Plan, Employers’ Plan, and
    Medicare Plan. Expanded universal coverage is the Cadillac health care policy for all at no extra cost. All three
    plans will cover acupuncture, ambulance, chiropractic services, dental care,
    doctor visits, family planning services, hearing, hospital and emergency care,
    laboratory, maternity and newborn care, mental health services, radiology,
    prescription drugs, preventive health care, specialty care and vision care.  The State
    Plan will cover all those who are unemployed or employed [and their
    dependents] whose employers do not provide health insurance.  Funding will principally come from Medicaid
    [Medi-Cal in California].  In addition, it is proposed that 1% from the
    sales tax from the state would be earmarked for this plan.  All those who are employed and whose
    employers provide health insurance for their employees and their dependents
    will be covered by the Employers’ Plan.  All those eligible for Medicare benefits will
    be under the Medicare Plan.  Medicare is federal health insurance coverage
    for people 65 and older, certain disabled people, and those with end-stage
    renal disease [ESRD].  With fewer
    employers subsidizing health coverage for their current retirees and their spouses,
    the Medicare Plan can provide health insurance coverage for those older workers
    – the age group that has the hardest time buying individual policies.  There are 54 million Medicare beneficiaries
    throughout the United States.

     

     

    NEXT TO NOTHING:

                All three plans will have low
    co-payments and no deductible except for Medicare patients where CMS [Center for Medicaid and Medicare Services]
    will determine and retain control over individual premiums and deductible for
    Part A and B.  There will be no out-of-pocket
    cost for Part D except for co-pay since prescription drugs will be covered
    under the three plans.

     

     

    FISCAL
    IMPCT:

    § 
    The
    plan will bring about a change in consumer spending.  It is proposed that 1% from the total sales
    tax generated from the state should be earmarked for one of the plans, the
    State Plan.  The sales tax will
    definitely make a direct impact on every American.

    § 
    Every
    time one makes a purchase, the thought that a fraction of the transactions will
    help support the health insurance coverage for a segment of the society is
    enough incentive to boost the sale and purchase of any product or
    services.  If the buying spree stimulates
    the sagging economy, so much the better. 
    As membership in the HMO/medical facility increases, more jobs will be
    created.  This might even help bring
    unemployment down.

    § 
    The
    program will generate monthly income to every state.  The HMO/medical facility will have to pay
    $1.00 good will fee to the state for each member enrolled in its
    organization.  In California alone, this translates to
    approximately $38.5 million a month, $462 million a year.

    § 
    Disbursement
    of the collected funds from the good will fee will rest solely on the
    discretion of the Governor of the state as he/she deems it fit and proper.

    § 
    The
    HMO/medical facility will have to exercise due diligence in keeping track of
    its members and at the same time providing an accurate monthly roster to the
    three payers [Medicaid/Medical in California,
    the employers and Medicare].

     

  • Curt

    I also prefer my Death Panels to be administered by BCBS.

  • http://pulse.yahoo.com/_4NUONATZWPLGB3WZHAYVVSFXAQ KeepingItReal

    The public option was always the ultimate plan anyway -  the Obama administration wants to push private insurance companies out so that government can nationalize healthcare. Like Chavez, he wants strongman rule. It’s not like defeating the individual mandate is a BAD thing – it’s just the first step in neutralizing the most corrupt presidential administration in the history of the United States. Of course they’ll keep pushing their agenda – that’s what totalitarianists do. It doesn’t mean they’re going to get their way, though.

  • http://pulse.yahoo.com/_4NUONATZWPLGB3WZHAYVVSFXAQ KeepingItReal

    The public option was always the ultimate plan anyway -  the Obama administration wants to push private insurance companies out so that government can nationalize healthcare. Like Chavez, he wants strongman rule. It’s not like defeating the individual mandate is a BAD thing – it’s just the first step in neutralizing the most corrupt presidential administration in the history of the United States. Of course they’ll keep pushing their agenda – that’s what totalitarianists do. It doesn’t mean they’re going to get their way, though.