Wall Street Journal Editorial - Worse than the Public Option

“Worse Than the Public Option” (The Wall Street Journal Editorial Board)

It's hard to imagine a better illustration of the panic and recklessness stringing ObamaCare along in the Senate than the putative deal that Harry Reid announced this week. The Majority Leader is claiming that a Medicare "buy-in" for people from ages 55 to 64 has overcome the liberal-moderate impasse over the "public option." But if anything, this gambit is an even faster road to government-run health care.

The public option—an insurance program open to everyone, financed by taxpayers and run like Medicare—is intended as a veiled substitute for "single-payer" Canada-style insurance. Under the cover of "choice" and "competition," the entitlement would quickly squeeze out private insurance as people gravitated to "free" coverage and the government held down costs via price controls the way Medicare does now.

Mr. Reid's buy-in simply cuts out the middle man. Why go to the trouble of creating a new plan like Medicare when Medicare itself is already handy? A buy-in is an old chestnut of single-payer advocate Pete Stark, and it's the political strategy liberals have tried since the Great Society: Ratchet down the enrollment age for Medicare, boost the income limits to qualify for Medicaid, and soon health care for the entire middle class becomes a taxpayer commitment.

In the case of Medicare, this means expanding a program that is already going broke. Medicare reimburses doctors and hospitals at rates 70% to 80% below those of private insurers, which means below the actual treatment costs in many cities and regions. Providers either eat these losses—about half of U.S. hospitals are running a deficit or close to it—or they raise prices for private payers. This cost-shifting isn't dollar for dollar, but all empirical research shows that it adds tens of billions of dollars to consumer health bills, and this will accelerate if several million new patients are added to Medicare. That means higher prices for health insurance.

Adverse selection will also be a big problem, as the people who choose to join will inevitably be higher risk or in poorer health. Mr. Reid hasn't released any details on his plan, if they even exist, but would the sub-65 uninsured who join Medicare be subsidized? If so, in what sense is this one-hand-subsidizes-the-other taxpayer self-dealing a "buy-in"? It sounds simply like a huge Medicare expansion, especially if employers decide to drop coverage for anyone older than 55.

As for costs, how does adding new beneficiaries square with Democratic promises that they will cut Medicare spending on paper by two percentage points a year for the next two decades—just as the baby boomers retire and health costs continue to climb?

This last-minute, back-room ploy shows again that Democrats are simply winging it as they rush to pass something—anything—that can get 60 votes by Christmas. President Obama praised the proposal as "a creative new framework," while Finance Chairman Max Baucus told the Washington Post, "If there's 60 Senators who can reach agreement, I'm for it." Now there's a model standard to use for reordering 17% of the U.S. economy.

The latest polls show public support for the Senate plan falling into the mid-30%-range. The remaining supporters must not be paying attention.