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New Public Plan Option Will Not Improve Americas Health Care

Health care reform is becoming a major topic of discussion in Washington. In particular, there has been a lot of talk about creating a new public plan option to compete with private insurance plans. But there is one major problem: there is no such thing as a fair competition when the government is both a competitor, and the referee.

The creation of a public plan would allow the federal government to both compete in the market (by having its own plan), and to regulate that same market (by making the laws that govern it). In the absence of a level playing field, a public plan would increasingly crowd out private health care options, paving the way to a single-payer, or government-controlled, health care system.

Under the proposal for a new public option here is how the competition might fare:

1) The public plan, with unfair advantages, will be able to offer artificially low prices. While the new public plan might be portrayed as only an alternative option to private insurance, the government will invariably use its powers to favor the public plan. Congress, with its regulatory, pricing, and taxing authority will have the power to artificially under-price the public plan, and push private health care options out of this so-called competitive market.

2) The absence of a level playing field would cause millions of Americans to lose the private coverage that they have today. As private plans are unable to compete with the introduction of a new public plan that would receive unfair advantages, many Americans will be left with little or no choice in their health care options. Independent research shows that as many as 120 million Americans could lose the private coverage they have today because the public plan would significantly undermine the current employer-based system of private health insurance as employers drop their coverage and workers are shifted to the public plan.

3) Americans are left with one health care option the public option take it or leave it. With private plans driven out of the market, the public plan “option” would become the only “option” for many Americans. If other government health care programs, like Medicare or Medicaid, are any indication of how a public option might perform, the plan will fail to deliver the quantity and quality of benefits promised. The government would restrict patient choice by rationing, or limiting access to, health care goods and services. This not only would compromise access to high quality care for many Americans, it would spell the end of private competition and innovation in the health care sector.

That’s some competition a public plan would bring to health care.

Members of Congress who support the concept of a public plan option in health reform should be asked specifically why they favor a government-controlled system and why they are masking their true policy objectives with misleading language. It is time that these questions are answered so that the real debate over health care reform can begin. To find out more, read Heritages analysis here.

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