How Republicans could quell fears over their health care bill

by Emrys Westacott

In early May the US House of Representatives passed (by one vote) a health care plan that is supposed to replace Obamacare. Supporters of the plan claim that it will lead to better coverage at lower cost for everyone. Unknown In the words of Paul Ryan, it will be "a better system that embraces competition and choice and actually lowers costs for patients and taxpayers." Naturally, not everyone agrees. Many fear that the plan will mean higher premiums and out-of-pocket expenses to people who are older, have pre-existing conditions, or are currently protected by Medicaid. This is why there is little chance that the plan will be approved by the senate in its present form.

At a town meeting I attended in Hinsdale, NY, Republican Congressman Tom Reed spent an hour trying to reassure skeptical constituents that these fears were unjustified. His basic argument, echoing that of House Speaker Paul Ryan, was that a market-based system which encourages competition among insurance companies will drive down costs and improve coverage.

Here, then, is the central conflict at the heart of the debate over the Republican health care plan. It is a matter of faith versus fear. On the one hand, there is the faith that competitive market forces will deliver the goods we want better than any other system. On the other hand there is the fear that the market, especially when freed from government constraints (such as the one prohibiting discrimination against people with preexisting conditions), will leave some people out in the cold.

Free markets can be very efficient economic mechanisms: just look at the astonishing array of cheap consumer goods now available. But they are also heartless, perfectly indifferent to the outcomes they produce and the sufferings of those they fail to serve. Government programs can be bureaucratic and inefficient; but they are (ideally) motivated by a concern for people's welfare. Promoting well-being and alleviating suffering is their entire purpose.

Fundamental conflicts in outlook are hard to resolve. But this clash between faith in and fear of the free market in health insurance has a fairly simple resolution. Its common name is the "public option."

Conservatives will immediately resist. That's not a resolution, they'll say. That's simply the first giant step towards national health care–a.k.a. socialized medicine–the very opposite of a free market. But wait! If they really believe what they say, they should have nothing to worry about.

Suppose the Senate, in modifying the health care bill handed to it by the House, inserts a public option along the following lines. The federal government offers to anyone who wants it a basic health insurance policy at a premium fairly close to the lowest rates now on offer, and providing all the benefits that most people consider essential such as coverage of pre-existing conditions, pregnancy, mental health, etc.. (A variation, that should be more acceptable to those with a deep-seated distrust of the federal government, would be to require each state to offer such a policy.)

If Paul Ryan and Tom Reed are correct, they have no reason to worry that this public option will interfere with the Republican plan. For if they are correct, the unshackled market forces they favor will lead to lower premiums and better coverage than people currently have available to them. This is what they insist will happen. This is the magic of the market. And if they are right, the public option, which would be no better than what is available now, will soon be left in the dust. Why would anyone bother with it if cheaper, better policies are available elsewhere?

Introducing a public option of this sort should immediately assuage the fears of those who worry that the Republican plan will lead to unaffordable premiums or inadequate coverage. The Republicans would then find it much easier to go ahead and implement their plan. And that plan can be viewed as an experiment. If the results are as Reed and Ryan predict, great! We all end up with lower costs and better care, just as they say we will. If the results are not as predicted, then the public option is the safety net strung beneath the experiment to make sure that no-one gets hurt.

This is what the Democrats in the Senate should push for: a basic public option guaranteeing that no-one will be totally screwed by the Republican proposal. If the free marketeers like Ryan and Reed really believe their own predictions, it is a safety net that will quickly fall into disuse since competition will produce superior options that health insurance consumers will prefer.

Of course, if they are unwilling to consider this idea, it is reasonable to ask why. Possibly their trust in the market is not a rational belief held open-mindedly, but an article of faith held dogmatically regardless of whether or not it is justified by experience. Or worse, maybe they don't really believe their own claims. Maybe those claims hide the real purpose of the plan, which is to lower the taxes currently paid by the rich that help provide adequate coverage to those who are less well off.