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The Government Health Care Option: A Really Bad Idea

July 15, 2009
Chris Garlasco, Owner & Managing Partner - Founders Insurance Group

Chris Garlasco, Owner & Managing Partner - Founders Insurance Group

Strongly opposing Washington’s intent on having a government option to compete with the private health insurance industry doesn’t mean that I do not recognize our current challenges. Nor do I propose the status quo as a viable option either. Most importantly, it doesn’t mean that I am not concerned about the uninsured or the cost of coverage. It is my position that this particular solution is not a solution at all, but rather a temporary band aid that will only serve to deepen America’s challenges on health care coverage.

First let me restate that I think that competition in health care is a great idea. Competition in health care insurance already is fierce. Health insurance prices are already controlled by the market forces of competition and are a reflection of health care costs. There are other ways to help to get those that want insurance coverage. This isn’t one of them.

There are two big problems with this idea:

First, it doesn’t address the root cause of high health care costs, thus it will not address the underlying problem. I have heard politicians state otherwise. To the untrained insurance ear, it sounds good. To those of us that understand how these numbers work, it’s not sustainable.

Secondly, the market forces that are keeping premiums from even going higher than they are today will be destroyed by artificial government rates. Private companies will be pricing the cost of coverage based on their actual loss experience using mathematical principles that are regulated. The government will simply operate at a loss. This will force companies held to government regulation out of business. It won’t happen right away, but it won’t take very long. Once this happens, the government will either have to sharply raise taxes, further cut payments to doctors, and cut coverage as it cannot operate at a loss forever. The end result will be a system that is even more expensive to the average American.

In addition, the average American with private coverage today will see a decrease in coverage. The underlying problem will not have changed. It will be just another form of welfare. The idea that taxing Americans making over $200,000 can support this plan over the long run is not sustainable. Not only will it help to crush several hundred thousand “Sub Chapter S” small business’ but as Geoff Colvin, Senior Editor at Large for CNNMoney.com stated in a April 2008 article, America now has the smallest number of Americans in its history paying the bulk of the taxes. This could be the proverbial straw. Read Mr. Colvin’s Article – The tax debate we need to have at http://money.cnn.com/2008/03/31/news/economy/tax_debate.fortune/index.htm. Yesterday another article on CNNMoney.com, this time by Senior Writer Jeanne Sahadi discussed this very topic of making the wealthy pay for everything. http://money.cnn.com/2009/07/14/news/economy/health_care_reform/index.htm. I’m not alone in this opinion.

I know that there are some of you out there that are reading this think that insurance company profits are what are causing the high cost of coverage. I encourage you to do some research on this and encourage you to comment. If you have been to a hospital for care lately, take a look at your itemized bill. Time is running out. There are many examples to support my opinion, starting with Medicare, which is running out of money, cutting payments to doctors and has large gaps in coverage. If you think that I am trying to scare you, I am. As a person that has spent over twenty years understanding how insurance actually works, it scares the heck out of me. Simply winning an election does not make one an expert in the world of insurance.

Chris Garlasco

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