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Kelly Sloan

Kelly Sloan

You will perhaps have noticed that the liberals' perpetual quest for government-provided health care has regained considerable steam over the last year or so, to the point where most of the Democratic presidential contenders are espousing some form of “Medicare-for-all” as a substitute for a workable health care plan.

Other options floated about are a little less ostentatiously scorched-earth than that favored by Sanders, Warren, et al, but steer the issue toward the same cliff.

Consider, for instance, HB 1004. This was a bill passed by the Colorado legislature last session which directs the department of health care policy and financing and the division of insurance to cook up between them a proposal for a state option for health care coverage.

You may recall 10 years ago when a similar “public option” was initially part of what came to be known as The Affordable Care Act (“Obamacare” in the vernacular), ultimately rejected by the same sort of adult voices in the room which now try on the verge of desperation to counsel today’s Democrats against embracing Medicare-for-all.

Ten years later and the cold laws of economics haven’t changed; a public option remains just as bad an idea now as it was then.

What, then, is the purpose of a public option? Let’s allow that the intentions of the bill sponsors were something less than overtly statist, and concede that they wished to accomplish just what they put in the bill’s preamble — bring in more competition and thereby be able to offer cheaper health insurance to those Coloradans, mostly in underserved rural areas, who pay too much for the limited options they now have.

The entire point of a public option, we conclude, is to be cheaper than private insurance. It has no function otherwise.

Here’s where an analysis of the economics throws a dose of cold water on the plan. The same factors which exert upward pressure on medical costs in the private sector will act no differently on the government plan. In other words, the cost of medical care remains the same regardless who is providing the insurance; all the state can do is artificially lower its point-of-service price — i.e. premiums — through tax-funded subsidization.

The artificially lower premiums will have two effects; a) increase demand for medical care, increasing pressure on an already over-stretched supply, driving costs up; and b) displace private insurance providers who lack the ability to respond by subsidizing their own premiums with tax dollars.

The state plan remains subject to the same cost pressures as the private insurers it has just driven out of the market, but of course the state cannot simply go out of business. Public funding will be unable to keep up with the increasing demand, and the state will be left only with the option of reducing payments to providers and curtailing access to higher cost services. The folks charged with putting this plan together know this. During one of the whistle-stop stakeholder meetings selling the idea, Kim Bimestefer, Gov. Polis' director of the Department of Health Care Policy, informed the audience that "if you look at some of the opportunities that we can all look to, we have in some areas way too much access," referring specifically to cancer and cardiac treatments.

Like other government-run health care options, this one exacerbates the principal factor driving the cost of healthcare — over-utilization. This is the fatal dilemma that all publicly-based health programs run up against, whether fully government-run like Great Britain’s, or single-payer mechanisms like Canada’s — where lengthy wait times to see a doctor or specialist or to receive a common procedure run from weeks to years, and have become part of the accepted culture.

The health care issue is particularly complicated in that it does not conform readily to the usual free market solutions, owing to the value we as a society place on human life (well, after birth at least), which has confederated us around the idea that no one ought to be allowed to die because they cannot afford treatment.

So the issue in the U.S. is not one of access — we have access to health care, the best in the world. The question is how it is to be paid for. The commonly offered statist solutions provide myopic remedies which only aggravate the underlying problems. The public option may not drive us over the cliff as quickly as Medicare-for-all or single payer; but it steers us towards it, and it will be just as steep when we arrive.

Kelly Sloan is a political and public affairs consultant and a recovering journalist based in Denver. He also serves as executive director of the Freedom to Drive Coalition.

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