Current Health Reform Proposals: No Government Takeover of American Health Care

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Abstract

This paper debunks claims that proposed health reforms represent a government takeover of health care. We show, among other findings, that pending legislation would: (1) retain the nation's largely private medical care system, in which more than 90 percent of doctors are in private practice and 84 percent of all hospital admissions are to private facilities; (2) avoid government interference in the practice of medicine, instead simply extending existing public responsibilities to fund coverage for low-income Americans and regulate insurance; and (3) cover only 12 million people through a public option, based on Congressional Budget Office projections.

Summary

Current national health reform proposals would not cause "a government takeover of health care." Pending legislation would leave in place the country's largely private medical care system, in which more than 90 percent of doctors are in private practice and 84 percent of all hospital admissions are to private facilities.

Reform proposals would not give the federal government new authority to intervene in private health care decisions. Rather, legislation would mainly extend two current responsibilities of the public sector: to fund health coverage for low-income, uninsured Americans and to regulate health insurance so that it meets consumers' needs. In fact, reform proposals would substantially increase health plan choices for many people, including workers covered by small firms. While 73.2 percent of these employees are offered just one plan today, pending legislation would let them choose from among multiple, diverse health plans available in a new health insurance exchange.

Some predict that including a public plan in such an exchange would cause private health insurance to unravel, ultimately "removing the medical sector from the free enterprise system." However, under the original version of the House Tri-Committee proposal, the Congressional Budget Office (CBO) estimates that, by 2019, 12 million people—just 4.3 percent of Americans under age 65—will be in the public option. Private insurance will cover 191 million people, according to CBO, or nearly 16 times the number in the public plan. Further, it is the consumer who chooses whether to enroll in public or private coverage offered through the exchange—a key detail sometimes obscured by arguments against reform. Finally, even if the public plan fully replicates Medicare's basic structure, it will simply pay private health care providers for furnishing covered services. Using this approach, Medicare has achieved high levels of beneficiary satisfaction, wait times below average levels under private insurance, and a choice of physician that equals or exceeds that available through private coverage. Former Senate Majority Leader Bill Frist (R-TN) recently acknowledged that Medicare is not socialized medicine; the same would be true of a public plan based on Medicare.

Many claims about government-run health care are based on hypothesized future scenarios that go far beyond current proposals. Such speculation can easily prove unfounded, as illustrated by confident predictions in the early 1960s that enacting Medicare would eventually lead to the conversion of American medicine into a socialized system for all residents.

With the debate over national health reform heading into a critical, perhaps determinative phase, reliable and objective analysis needs to focus on the details of current proposals and their likely results. Based on this standard, it is clearly mistaken to claim that proposed health reforms would lead to a government takeover of American medicine.

Introduction

At this critical juncture of the national health care reform debate, decisionmakers and their constituents need clear and objective information about the content and implications of the proposed changes. This is not easy, given the emotional arguments now being made on all sides as well as the subject's complexity.

This paper focuses on one central claim in the debate—namely, that proposed reforms would represent "a government takeover of health care" that promotes a "socialized medicine agenda," with "bureaucrats making the health care decisions that should stay with doctors, patients, and their loved ones." In examining these assertions, we do not mean to suggest that any one side in the debate has a monopoly on unfounded claims. For example, proponents of reform now attack the insurance industry's role in the national debate, even though the industry has agreed (assuming that reform legislation fits certain parameters) to end preexisting condition exclusions and similar practices. Some reform advocates likewise suggest that increased preventive care automatically lowers overall health care spending, despite much evidence to the contrary.

In addition, it is clear that supporters of the current reform bills face legitimate questions. How many low-income uninsured will use Medicaid and new subsidies to obtain coverage, given the proposals' individual mandates and enrollment systems? Are the subsidies large enough to mandate enrollment or will many people need to be exempt due to affordability concerns? Are the proposals to slow the growth in health care costs adequate? Are there risks to moving low-income children from current public programs into private insurance? Will slower growth of some Medicare payment rates create access problems for beneficiaries?

We do not attempt to address the full range of such questions or to analyze the advantages and disadvantages of proposed reforms' many facets. Instead, this paper builds on a previous exploration of what is meant by "socialized medicine" and assesses what seems to be emerging as the primary public argument against reform.

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