Public option would worsen care

Arguing for government-managed health care modeled on Medicare is like urging car companies to emulate GM.

Medicare lacks the profit motive that, in truly competitive markets, drives private enterprises to innovate, increase efficiency and lower prices. The only disciplines on Medi-care are congressional authorization, oversight and budgetary processes. Health care allocation decisions thereby become politicized

Medicare obtains its revenues largely through payroll taxes on current workers, not from its subsidized “premiums” ($96 per month, deducted from Social Security).

Medicare dictates reimbursement rates for services to Medicare patients. For identical services, Medi-care rates are roughly 70 percent of private insurance rates for hospitals and 80 percent of private rates for physicians (the Lewin Group, Staff Working Paper No. 4, April 8).

Medicare dictates maximum fees (and thus maximum co-pays) that providers can charge. Health care providers have a schedule of prices for the same service that vary not by level of service, but rather by the identity of the payer, with Medicare/

Medicaid charged the least.

In effect, private insurance plans cross-subsidize and boost quality of care to Medicare patients. If the current health care system were funded at Medicare rates, it would collapse.

Even though government controls Medicare’s costs by law and coerces Medicare’s “revenues” by taxation, the Medicare hospital trust fund will be exhausted in eight years, by 2017. Unfunded liabilities total in the tens of trillions of dollars. The trust fund can be brought into long-term balance only by more than doubling the Medicare payroll tax on current workers (from 2.9 to 6.78 percent), by cutting Medicare expenditures by 53 percent or by a combination thereof (according to the Medicare trustees’ current Annual Report).

A government-run “public option” like Medicare would bankrupt us. It inevitably would yield lower quality and rationed health care for millions of Americans.

Proven ways to provide quality health care at least cost are known to us: genuine price and service competition in insurance and health care markets; informed consumers; rational regulation, including malpractice reform, pre-existing condition protections and liberalized coverage mandates; economic incentives for prudent, responsible behavior; keeping promises to those in or near retirement, and helping those who truly need help.