Impact on private insurers: The first impact is the just-discussed fact that those who offer private insurance plans will be subject to additional federal regulations. Some of these might be good (e.g., disallowing exclusion due to a “pre-existing condition” or cutting off coverage when you get too sick) and some will border on the ridiculous (see above re maternity benefits for childless, single men). Regardless, insurance companies will be doing a lot of adjustments and reassessments of their costs and risks. Some will decide to get out of health care completely.
What about competition? Proponents of the proposed health care overhaul contend that it will provide a “public health insurance option that would compete with private insurers within the Health Insurance Exchange – giving consumers more choices, keeping insurance companies honest and increasing competition.” The first question is whether or not private insurers need more competition. There are currently 1300+ such companies in the U.S., but it is state regulatory legislation (allowed by Congress under the interstate commerce clause, somehow) that prevents them from all competing in every state. At least one state has purportedly allowed only 6 private insurers to cater to its residents. There are examples where one or two big insurers dominate 80% or so of a state’s market. So, there is definitely a problem here, but adding another, government-run bureaucracy into the mix is not the answer. The better solution is to change the law(s) to allow every insurance company to compete in every state. If this does not happen, and the overhaul is enacted, then the “public option” immediately has the unfair, competitive advantage of being the only insurer available in every state.
Furthermore, it is very likely that a majority of businesses will drop health insurance from their employee benefits, because the new, federally-imposed fine for doing so (8% of payroll) will be less than the cost of purchasing coverage that complies with the new standards and minimums. One estimate by the non-partisan Lewin Group is that up to 119 million employees will end up in the “public plan”. State and federal workers will likely be the first to get kicked into the “public plan” – except for our leaders in Congress, the White House, or SCOTUS, of course –, along with union members, because health care is such a huge expense for governments and unions. (This is because the employees in question have been given such great benefits for decades, and there are so many of them, both active and retired.)
This means that, in order to retain or win back those employees (and pensioners) as customers, the private insurers will have to compete against a “public option” that has the full weight and purchasing power of the federal government behind it and, if we are realistic, will be subsidized with taxpayer money. It will be able to set its own reimbursement rates, as Medicare and Medicaid currently do. As I recall, government entities do not pay taxes, either. Finally, there is some question as to whether people will be able to file suit against the “public plan”/government. In a private insurance system, if you do not like the way a matter is handled or you are a victim of wrongful denial of insurance, you can either switch insurance companies or sue. In a government-run, single-payer system, neither option is available. And that is exactly what this will eventually lead to, even if it starts out as a “co-op”.
Bottom line here is that, in their less guarded moments, the Democratic leadership have admitted they are pushing for a single-payer system (see “Trojan Horse” article here), because they want to drive private insurers out of business and have the American people totally dependent on the federal government for their health care. (Socialism, here we come.) Of course, some private plans may indeed be able to survive under these conditions by offering better coverage and better access to providers, but not for long, if the Left has its way. Either way you look at it, this will result in a lot of ruined businesses and unemployed insurance professionals.
< to be continued… >