The Heritage Foundation

The Morning Bell


TUESDAY, OCT 27, 2009
No Matter What You Call It, It’s Still Just Government-Run Health Care

Yesterday, Senate Majority Leader Harry Reid (D-NV) announced that the health care legislation he is drafting will include a government-run health insurance plan, or as many on the left like to call it “the public option.” The new wrinkle that Reid has thrown into the proposal is an “opt out” clause which would require states to pass legislation by 2014 rejecting participation in the federal government run plan. None of the committees in the House or Senate ever even voted on this new opt out scheme. But that does not really matter. Whether it is first implemented through a co-op, or a trigger, or an opt out, the end goal is the same: government-run health care for all Americans.

Hotel Harry Reid: Reid provided very few details for his “opt out” proposal, but here is what we do know: the government run plan would be available on the first day that major provisions of Obamacare would take effect in 2013, and states would have until 2014 to pass legislation declining participation in the program. This means that a one-vote majority of obstructionists in one chamber of a state legislature, by refusing to act, can consign a state’s residents to an eternity of government-run health care. In 17 states Democrats control both houses of the legislature and the state house. In another 24, Democrats control at least one legislative chamber or the governor’s mansion. That leaves a total of only 9 states where Republicans run the entire show — Texas, Utah, South Carolina, South Dakota, North Dakota, Missouri, Idaho, Florida, and Georgia. That means Americans in 41 states are all but guaranteed to have no choice but to endure the government run health plan. What opt out really means is: You’re already checked in, and if you don’t do so by 2014, you can never leave.

The Co-op Co-opt: Sens. Chuck Schumer (D-NY) and Kent Conrad (D-ND) have both pushed slightly different plans they both call co-ops. However, they both share the same fundamental flaws: advantageous federal funding and regulation designed to tilt the playing field in their direction. Heritage fellows Edmund Haislmaier, Dennis Smith, and Nina Owcharenko have explained why this model is guaranteed to fail: “Simply calling some form of a government-sponsored enterprise (GSE) a “cooperative,” for instance, would be only another type of public plan in disguise. … One need look no further than Fannie Mae and Freddie Mac to see how GSEs can distort the market and leave taxpayers with huge liabilities. Decades of market distortions generated by their implicit government backing, compounded by the effects of repeated political meddling by Congress, put those GSEs at the very epicenter of the mortgage market collapse that triggered the current financial crisis and recession.”

The Trigger Trap: A trigger is a legislative tool that would put in place automatic benchmarks that if not met, would immediately unleash the government-run system into the market. For example, if 95% of Americans as defined by the bill, don’t have adequate health coverage by a certain date, the public option would be “triggered.” What a trigger does is hold off the tough decision until future, uncertain circumstances. The public option would essentially become law today, but not go into effect until an undetermined time when economic conditions could be even worse. Had Congress enacted a trigger to save Clintoncare, the trigger would have forced states to implement HMOs at exactly the time everyone was moving away from that overly rigid version of managed care. We don’t want to repeat that mistake. It is a travesty of democracy because it allows legislators to vote for a plan now, but passes the blame for the catastrophic consequences onto their successors.

Throughout the legislative process the White House has coyly denied that the establishment of a government run health plan was essential to their health care plan. But in 2003, President Barack Obama told the AFL-CIO: “I happen to be a proponent of a single-payer universal health care program. … And that’s what Jim is talking about when he says everybody in, nobody out. A single-payer health care plan, a universal health care plan. And that’s what I’d like to see. But as all of you know, we may not get there immediately.” Opt out, the trigger, and co ops will not get to government run health care immediately. They will all take time to develop. But no matter what road they try and bring Americans down, the destination is always the same: everybody in out, nobody out; that is, was, and always will be Obama’s ultimate goal.