When I am home from work, I have the dubious pleasure to listen all day to cable news. Because the stories start to repeat, I find myself having exhausted MSNBC and CNN and forced to turn to Fox News.
Today you could hear the Republican talking point on every news channel. A Republican Congressman (always white and male; they have to limit crazy Michelle's appearances) saying that a business owner from his district called him to tell him that if the "Democrat" health care bill passed he would drop his health insurance for his employees. The constituent said that health insurance cost 15% of payroll now and the penalty for dropping insurance for his employees in the Democrat bill was only 8% of payroll.
All news channels carried the same message, but the Congressman on Fox could speak more slowly (in his Southern drawl).
After the fold for what we never heard .....
You might have thought that a Democratic Congressman, staffer or commentator would be there to answer that talking point. Yet all day I heard not one.
I kept waiting for someone (anyone) to say: "You know that the owner could drop health insurance for employees today and save 15% of payroll, not just 7% (15%-8%) under health care reform."
Business owners provide health insurance for their employees when its necessary to compete for the workforce the business needs. When health care passes, a business will still need to compete for workers. Unless the alternative insurance is viewed as competitive to that offered by similar businesses, a business owner would find it harder to justify dropping the insurance when the cost savings would be only 7% of payroll not 15%. The different rates may not be that different if the 15% insurance cost is tax deductible and the 8% payroll tax is not.
If the business owner was able to drop the current health plan in favor of a public option plan at a lower cost, because the plans were comparable every one benefits. The business owner could use the extra money to hire more workers less afraid that health insurance costs would bear no relationship to inflation or increased payroll. The owner might be able to expand the business or simply spend more. All activity that is better for the economy than the distortions caused by soaring medical costs.
The public option might be less expensive for any number of reasons. First, the public option is likely to include more young people as those without insurance are required to buy it. Second, the public option may be of a size to negotiate better deals with care providers and drug companies. Third, the public option will benefit from investing in the automation of medical records. Fourth, the public option will not have a profit motive. Finally, the public option is likely to emphasize well-care. If the public option costs less for these reasons, it will drive similar changes in private health insurance.
If the public option costs less because of rationing of medical care or limits on doctors or hospitals, businesses will not switch to that option even if continuing their health insurance costs more. They would simply be uncompetitive in seeking employees. The only way to force Americans to accept rationing or limits on medical care choices is to adopt a single payer system and give them no other choice. There is currently no chance of that happening.
If the public option costs less because of public subsidies not available to other health insurance plans, none of these benefits from a public option will result. Government subsidies take away the incentive to cost cuts through efficiencies, automation and well-care. Government subsidies will need to be financed through additional taxes. Those taxes are likely to fall on all employers who would need to save money by jettisoning the more costly private plans. Once businesses start to drop health insurance to force their employees on a public plan, the result will be a cascade toward the destruction of private insurance as the companies would have a shrinking pool of employees to insure.
If the public option is self-financed and subject to the same rules as private insurers, the public option will reduce costs throughout the health care system. A public option would be scored as reducing the cost of health care reform while no public option or one funded by government subsidies will drive up the cost of health care reform. If Congress acts rationally (a stretch based on today's viewing), a public option will be no more an option.