Now that Joe Biden appears to have won the election, what will he do to our healthcare? Unless Republican legal challenges of the vote counting alter the result, Biden will be in charge of our healthcare. That’s a big question on the minds of many Americans.
The Democratic left wants socialized medicine. Senator Bernie Sanders, the ideological leader of the party (even though he’s an Independent!) has pushed for Medicare for All, a complete government takeover of healthcare. New Vice President-elect Kamala Harris supports Medicare for All, or at least she did when she was running for president. Biden never endorsed their plan, but he is willing to add a Public Option to ObamaCare. What will all that mean?
Robert Laszewski, noted insurance industry analyst, has much to say on this subject in his healthcare blog. Today I’ll begin a two-part post that discusses Laszewski’s predictions and my reactions.
Laszewski says the Biden healthcare plan is in three parts:
- Creating a government-run individual health insurance plan called the Public Option
- Fixing the ObamaCare individual health insurance subsidies for the middle class
- Giving Medicare the power to negotiate prescription drug prices
The Public Option
Let’s take the most controversial part first, the Public Option. The Public Option would be a new government-run plan that would compete with current private plans on the ObamaCare Exchange. Individuals who do not receive employer-provided insurance would be offered this Public Option along with the private plans currently available. These plans generally pay hospitals 40% less and doctors 20% less than employer-provided insurance.
Laszewski says employers worry that giving their employees access to a cheaper government plan will undermine their own benefits and ultimately back them into government health insurance whose costs they will not have control over. Insurance companies will worry a cheaper government option driven by Medicare-like reimbursement rates in the insurance exchanges will drive out commercial plans starting in the individual market and spreading to the employer market.
Healthcare providers (doctors and hospitals) will worry that introducing another government plan that pays hospitals 40% less, and doctors 20% less, will squeeze their ability to operate even more than the pressure they already feel from Medicare and Medicaid. Patients should worry that their private insurance plans will be eventually eliminated by the competition from the Public Option.
In other words, hospitals and doctors barely get by when they have to accept Medicare, Medicaid, and exchange individual plans. They make up for these low-paying customers with higher reimbursements from employer-provided insurance. If the employer-provided insurance plans have to compete with these government-subsidized plans more, the whole system of providers will be stretched to cover their costs. The eventual elimination of private insurers will mean doctors will be forced to accept lower-paying government plans.
This will create a defacto socialized medicine system, where providers’ fees are controlled by the government. As in all socialized medicine systems, this will lead to diminished access to healthcare as many doctors retire early or leave the clinical practice of medicine. Those who remain will not be incentivized to see more patients so waiting times will increase and services will be limited.
Laszewski believes that even the Democrats in Congress will reject such a radical change in our system and will not pass the Public Option. It is true this idea was rejected in 2010 during the Obama administration development of ObamaCare, but progressives have a far stronger position in the party now than they did then.
I’m less optimistic than Laszewski. The progressive Democrats have been itching for socialized medicine for the last hundred years. ObamaCare moved them closer to that goal, but they haven’t taken their eyes off the prize. The Public Option is the next step to achieve their goal and there will be great pressure on Biden and Congressional Democrats to move forward. The best defense against such radical change is a Republican-controlled Senate.