Lee Terry: Public option wrong way to achieve health reform

The writer, a Republican, represents Nebraska's 2nd District in the U.S. House of Representatives.

I have spent the past several months listening to concerned constituents at town halls and talking to several health care providers about health care reform. The message is clear: Skyrocketing health care costs have increased the number of uninsured Americans, and it is imperative that we address both access and rising costs.

Speaker Nancy Pelosi recently introduced a revamped health care bill, the Affordable Health Care for America Act, H.R. 3962. While progress is made in certain areas — for example, by establishing medical homes — the overwhelming majority of the 1,990-page bill advances the agenda of those seeking a pathway to a single-payer nationalized health care system.

While we all agree that reform is needed, this is not the correct path. This new bill has the potential to catalyze a total government takeover of our nation's health care system.

Government competition is not fair competition. The government has a huge advantage, being in a position to both make the rules and administer a government-run option that would push other competitors out of the market.

— Start-up costs: A government-run health care plan would have distinct unfair advantages over private sector plans. The public health insurance option would be the beneficiary of $2 billion in start-up funds and 90 days' work of premiums as reserves, courtesy of the U.S. Treasury.

Though the bill requires that the government option be self-financed through premiums, it would have the implicit backing of the federal government — one that taxpayers are all too familiar with given recent experiences with Fannie Mae and Freddie Mac, whose “implicit” government backing has cost taxpayers $85 billion.

Government sets the price: Under the revamped bill, the secretary of Health and Human Services would “negotiate” reimbursement rates with doctors and hospitals — an open-ended statement, with no language to prohibit the secretary from imposing Medicare reimbursement levels.

The federal government would have unparalleled leverage in negotiations with health care providers. The Lewin Group estimates that the government-run plan would underpay health care providers, compensating them at 20 to 30 percent below what private health plans pay. The government-run option would artificially lower prices, shifting costs to those with private health insurance.

— Shift in cost: Health care providers would be forced to charge patients with private insurance more to offset expected losses. As private health insurance premiums rise (estimated to average $460 for every American), more Americans would be crowded out of private health insurance and into the government-run option.

The Lewin Group estimates that up to 114 million individuals could lose access to their current coverage and be forced into a government option, including 106 million of those who currently receive employer-provided health care.

— Less administrative costs: Much of the public option's administrative costs would be absorbed by taxpayers.

If the new health commissioner needs attorneys, it could look to the Department of Justice. If the program needs office space, it could use — free of charge — one of the many federally owned buildings in Washington, D.C.

The new government-run health insurance exchange would employ thousands of new bureaucrats, all of whom would receive health care coverage, retirement benefits and other benefits courtesy of the taxpayers. The new health exchange, as a government agency, would not have to pay income taxes or property taxes.

— Unfair competition: The government cannot be a fair competitor in a free market where it makes the rules.

Earlier this year, Energy and Commerce Committee Chairman Henry Waxman subpoenaed health insurance executives and required that they turn over financial records, salary records and travel details. Nothing prevents the chairman from requiring that actuarial data from health insurance companies be disclosed so that the government could undercut their pricing.

Furthermore, the government option would not be subject to the federal and state antitrust laws as private health insurance companies would be.

On Aug. 9, Rep. Jan Schakowsky, D-Ill., was quoted in the Washington Examiner as saying, “A public option will put the private insurance industry out of business and lead to single-payer.” On April 18, during a forum on health care reform, she said, “Those of us who are pushing for a public health insurance option don't disagree with the goal. This is not a principled fight. This is a fight about strategy for getting there, and I believe we will.”

I predict that if a government-run option became law, a complete government takeover of health care would occur within 10 years of enactment. I am firmly opposed to a government-run public option and will continue to advocate for a comprehensive free-market approach to reform that drives down cost and increases access.