Public Option Kills Private Insurance


Former Vice President Joe Biden thinks you’ve forgotten all the broken promises of ObamaCare. In an attempt to distinguish himself from the rest of the Democratic presidential candidates, he’s polishing up his old lines from the Obama – Biden days and hoping you won’t notice.

Biden recently repeated the biggest lie of the Obama presidency – the one Politifact called “the lie of the year.” You remember, “If you like your doctor, you can keep your doctor”and “if you like your plan, you can keep your plan.” He wants you to believe his healthcare plan will deliver what the Obama plan never did.

What’s more, he wants you to believe, again, in the “Public Option.” This would be a government-run insurance product that competes with private insurance. That’s the same idea that was voted down by the Democratic Congress of President Obama. But Uncle Joe still thinks it’s a good idea.

Scott W. Atlas, writing in The Wall Street Journal, says Joe is wrong, again. Even though 57% of Americans reject the idea of eliminating private health insurance, Biden wants to do just that – but in a sneaky way. Rather than admit up front his plan will eliminate private health insurance, he wants to push the “Public Option” – which will achieve the same ultimate result.

Atlas says, “Government insurance options mainly erode, or “crowd out,” private insurance, rather than provide coverage to the uninsured. Jonathan Gruber, the MIT economist credited with designing ObamaCare, showed in 2007 that when government insurance expands, six people go off private insurance for every 10 people who go on public insurance. The same thing is happening with Medicaid expansion. (see Medicaid Expansion Woes)

For example, in Hawaii, only seven months after offering Keiki Care in 2008, the country’s only statewide universal child health insurance, the state ended its optional program. Some 85% of those who signed up already had private insurance. Those costs were suddenly shifted to the taxpayers.

The Public Option would cause premiums for private insurance to skyrocket because of underpayment by government insurance compared with costs for services. According to the American Hospital Association, annual underpayment by Medicare and Medicaid surged to nearly $76.8 billion in 2017, nearly doubling once ObamaCare’s regulations came into play. That resulted in an increase in private insurance premiums of more than $1500 per family.

A Public Option is a slow, but steady, path to single-payer healthcare – socialized medicine. It will guarantee the government will eventually control all healthcare.

The Wall Street Journal editorial board puts it this way: “Joe Biden’s new healthcare plan is supposed to show his moderation, not that this is a virtue to progressives. Hence the back and forth this week between Mr. Biden and Bernie Sanders about single payer. But cut through the spin, and the only debate Democrats are having is whether to eliminate private health insurance in one blow or on the installment plan.”

If you go back to the days before ObamaCare, it was clear that Democratic leaders including Obama, Biden, Nancy Pelosi, and Harry Reid were all in favor of single-payer systems. The only reason they didn’t push for it then was they didn’t have the votes even in their own party. They knew the country wasn’t ready for it.

Therefore, they pushed through ObamaCare and hoped it would fail, thereby setting the stage for a single-payer solution to the crisis. Today’s Democrats now think their time has come. Biden hopes to appear like the moderate in this scenario but he’s really just pushing the same agenda by another name.

Making Health Insurance Portable


When you leave one job for another, you can take your 401K plan with you. Why can’t you do that with your health insurance?

The simple answer is ObamaCare. The architects of ObamaCare didn’t want you to be able to do that.

Before ObamaCare, there were accounts called a Health Reimbursement Arrangement (HRA), which were established by employers to enable employees to buy their own health insurance. These funds were not taxed as income to the employee, just as employer-provided insurance isn’t taxed.

John C. Goodman, writing in Forbes, says these HRAs were not widely used, however, because many insurance agents were fearful that if they knew the policies they sold were being purchased with employer money, they might be penalized.

Then came ObamaCare. The Obama administration so hated this idea that they created the highest penalty in the bill for those employers caught giving their employees pre-tax dollars to purchase their own coverage. The penalty is $100 per day per employee, or $36,500 a year!

Fortunately, the Trump administration is eliminating this penalty. Beginning next January, employers will be able to use HRAs to help employees obtain their own coverage with the administration’s blessing. What a difference a change of presidents can make.

It has always been unfair that health insurance purchased through an employer is not taxed but the same insurance purchased as an individual is taxable. HRAs is one way to get around this inequality. The pre-tax dollars of the HRA account can be spent at the discretion of the employee on the health insurance of their choice – and they can take this account with them if they change employers.

Declining Private Insurance

You may be surprised to know that the number of Americans with private health insurance has gone down under ObamaCare. This despite huge federal subsidies for those who purchase their insurance on the ObamaCare exchange, and an Employer Mandate requiring all employers with more than 50 employees to purchase health insurance.

Small businesses of 3 – 24 employees fell from 44% in 2010 to 30% in 2018. Larger businesses of 24-29 workers fell from 59% to 44%. Even in firms with up to 199 workers, 27% refuse to accept their employer’s offer of health insurance. This is probably because the ObamaCare mandates have made all insurance more expensive with higher deductibles and co-pays even if the employer pays for the premium.

Another Trump administration change is addressing this problem. Employers are allowed to deposit up to $1,800 per year in an “excepted benefit HRA” and these funds can be used to purchase short-term, limited duration (STLD) insurance. This insurance is exempt from ObamaCare regulations, making it far more affordable. These plans were only available under Obama a maximum of three months, but Trump has made them extendable up to three years.

Goodman says these changes are important in the short run but better long-term solutions are needed, such as the Sessions – Cassidy plan. Republicans should be campaigning on these reform successes now and promoting permanent solutions for the future.