A government-run health plan with free start-up capital, no need to make a profit, and the strong likelihood that Congress would bail it out for inefficiencies and losses could drive today’s private plans out of business. In fact, that is the goal of many politicians today.
The plans currently being discussed by Congress will force all health insurance plans over time to adhere to a certain government definition of “acceptable.” This will lead to reduced choices. (e.g., see Sec 203 of House Bill 3200). In general, government involvement in most things leads to more mandates, more regulations, less innovation, and fewer choices for consumers. Healthcare will be no different. Reduced choice may not be evident immediately, but it will assuredly happen over time. One example: today, a young healthy person can choose to go without health insurance. Not so under the proposed plans.
CNN Money reports that consumers would lose the freedom to choose what’s in their plan, the freedom to choose high-deductible coverage, the freedom to keep their existing plan, and the freedom to choose their doctors. http://money.cnn.com/2009/07/24/news/economy/health_care_reform_obama.fortune/index.htm
Eliminating Existing Coverage
A large majority of Americans already have health insurance. A major concern for them is whether they will be able to keep their current coverage, something the President and congressional leaders have repeatedly promised.
Some politicians say that a government-run plan will have to compete honestly and will not receive any extra funding if they run deficits. This is laughable. For many politicians, enacting government-run healthcare is the dream of a lifetime. Rest assured, they will ensure that their program gets the funding it needs to survive. This guarantee of subsequent deficit funding combined with free start-up funding and the power of the federal government will put private insurers at a disadvantage. Remember, it is the goal of many politicians to get us to a 100% government-run system.
Speaking of which, if you like your current coverage, can you keep it? In the short-term, maybe yes. In the longer-term, probably not. Both the House and Senate bills would “grandfather” existing individual and employment-based plans, HOWEVER, both bills also include other provisions that would eventually lead to nearly all current plans either adopting the new federal standard or being replaced by new coverage that meets the standard.
The Senate bill stipulates that any “significant” modification of an existing plan would trigger the loss of its grandfathered status immediately. Also, within five years all Americans would be subject to the individual mandate to either purchase “qualifying coverage” or pay a fine. Thus, under the Senate bill, beginning in 2014 anyone retaining prior individual or employer-group coverage would be fined annually for not obtaining new coverage that meets the new requirements.
In contrast, the House bill does allow grandfathered coverage to count as “acceptable” coverage for purposes of the individual mandate, but it gives grandfathered employer-sponsored plans only a five-year “grace period” after which those plans would also be required to meet the new coverage standards. http://www.heritage.org/Research/HealthCare/wm2558.cfm