Health Care Breakdown

Heath Care Breakdown

An explanation of what President Obama’s heath care reform

plan proposes and what it would mean for health care as we know it.

President Obama’s health care overhaul plan intends to provide a public health care option as an alternative to private care. The goal is to offer a more affordable health care plan for the currently un or under- insured. This new plan would theoretically create competition by offering lower prices for coverage thereby driving down the cost of private insurance plans. What this proposal fails to recognize is that there already IS competition in the health care system between the numerous existing companies.

The reason insurance prices are high is because health care costs are high. As long as health care costs remain high insurance companies cannot drop prices without reducing coverage, otherwise they fail to be profitable and are forced to go under. This same problem would exist with any proposed government plan. The government cannot create a more affordable insurance plan that offers equal coverage without dropping prices below cost or making bargains with health care professionals to drop their costs. If the new public plan did successfully negotiate lower costs with doctors, the health care system would have to make up that money by raising costs for private insurance as well as the uninsured.

As this cycle continues, more and more people would sway towards the less expensive public plan and private companies would begin to fail. Once these companies failed, the health care system would no longer have anyone to make up for its reduced cost for public health care, and therefore would have to raise prices back up for public care plans leaving us with the same problem we started with... only now we’d have a government run plan with little or no competition in the private sector.

This is a best case scenario assuming that the government initially implements a successful financial backing for their plan. The likely alternative would be that upon accepting more high risk patients at lower rates, the plan would immediately begin losing money leading to either a failure or a bailout.

Instead of working on reducing insurance costs, we must focus on reducing heath care costs and let free market competition do its job in the insurance industry.