The Great Irony Of Health Reform: Middle Class, Not Rich, Get Shaft

By JEFFREY H. ANDERSON | Investor’s Business Daily | Posted Monday, August 03, 2009 4:20 PM PT

That's the great irony of President Obama's ambitious health care agenda: His administration, which seems to feel little empathy for the rich, is paving the way to a two-tiered system in which only the very rich would have a choice.

Under ObamaCare, the rich would continue to get the care they want — whether here or abroad — by paying for it out of their own pockets. The rest of us would stand in line and wait for rationed care.

Most Americans want consumer freedom. They want to be able to shop for health care value — for the best care, at the best prices. They'd like to have a lot more freedom to shop for such value than they currently have.

That's why Democrats are couching their proposed expansion of government-run health care in the language of competition and choice.

Listen to the president as he pitches the centerpiece of that agenda — a "public option," a form of Medicare for all. He says it's merely a way to give Americans another choice: People can buy private health insurance, just like now, or they can instead choose the government option.

But millions of middle-class Americans who are currently happy with their employer-provided insurance would soon find that the choice isn't theirs to make.

The government would make it cheaper for employers to contribute to the government-run option than to continue providing private insurance. Millions of employers would do the math and pick the government option. The "public option" would indeed provide a choice — for millions of employers, against the wishes of millions of employees.

The Lewin Group, a prominent consulting firm, estimates that a widespread "public option" with Medicare-like reimbursement rates would result in 118 million Americans losing their private insurance and being forced into government-run care.

Meanwhile, private insurance wouldn't be able to compete on the uneven playing field that Congress would establish. In its competition with FedEx and UPS, the Post Office at least has to provide an actual service.

But the "public option" would merely use government's coercive powers to dictate the prices and availability of services provided by others — by doctors, nurses, hospitals, etc. Private insurance cannot similarly fix prices and would be run out of business.

Lower reimbursement rates, coupled with a dwindling pool of private insurers to whom to pass on costs, would mean lower incomes for medical professionals. The eventual result would be fewer people entering the medical profession. If you question this, do you think higher salaries attract teachers?

A two-tiered system would then emerge: The very rich would take their spots like first-class passengers on the Titanic, paying for fine care and not asking the price. The rest of us would take our spots in steerage class, awaiting the inevitable collision between government-run health care and the iceberg of budgetary disaster.

White House budget director Peter Orszag recently opined that "the deficit impact of every other fiscal policy variable" is "swamped" by the deficit threat posed by Medicare and Medicaid. President Obama's solution? A massive new Medicare-like program!

Medicare may not pay much to doctors, but taxpayers pay plenty to Medicare. As my recent Pacific Research Institute study shows, since 1970, Medicare's costs have risen 34% more, per patient, than the combined costs of all health care in America apart from Medicare and Medicaid.

Medicare's costs have risen $2,511 more per patient. Across nearly four decades, government-run health care has been far more expensive than privately run care.

It comes down to a simple comparison and an obvious verdict: Privately run care offers choice and is cheaper. Government-run care denies choice and is more expensive.

But the particular losers under Obama-Care would be the middle class. The uninsured poor would largely benefit, although they might benefit even more — while hurting others far less — from fixing the unfairness in the tax code and giving them the health care tax break that millions of insured Americans already enjoy.

The truly rich would be largely unaffected, as they never really needed private insurance anyway. They would continue to pay for the care they want, because they can.

Middle-class Americans wouldn't enjoy that freedom. They would lose their employer-provided insurance and be left with only the government-run "option." And, under a government monopoly, they would get rationed care.

And every April 15, they would get a higher tax bill for their troubles, which just might make them feel sick enough to get back in line.

Anderson is a senior fellow in health care studies at the Pacific Research Institute and was the senior speechwriter for Secretary Mike Leavitt at the U.S. Department of Health and Human Services.