[Welcome Wizbang readers!]
If anyone is uncertain how a public insurance plan option will actually "compete" with private insurers, all one needs to do is look at how Medicare "competes" with private Medicare Advantage plans.
Seniors have a choice to enroll in "original Medicare" or any Medicare Advantage plan available in their area. Medicare Advantage plans are available in most parts of the U.S.
Clearly, these private Medicare Advantage plans are competing with Medicare for membership. So – how’s that been going?
As of March 2009, Kaiser Family Foundation estimated total Medicare Advantage enrollment was about 10 million seniors. That’s 22% of the total Medicare-eligible population of 45 million – about one out of five. Wait, there’s more: since 2003, the enrollment in Medicare Advantage plans has doubled. Sounds like the private companies are doing a great job competing with Medicare, right? Wait, there's more.
President Obama announced before his Inauguration his intention to eliminate Medicare Advantage plans. Obama said:
"We’ve got to eliminate programs that don’t work, and I’ll give you an example . . . We are spending a lot of money subsidizing the insurance companies around something called Medicare Advantage, a program that gives them subsidies to accept Medicare recipients but doesn’t necessarily make people on Medicare healthier."
But is it true that Medicare Advantage plans "don’t work"? No. It's not true. If they didn’t work 10 MILLION people would not have voluntarily enrolled. If they didn’t work the enrollment would not have DOUBLED in the past 5 years. Medicare Advantage plans work just fine.
Well then, is it true that the government "subsidizes" private Medicare Advantage policies? No. It's not true. It pays premiums to the insurance companies that it would otherwise have paid to itself. That is not a "subsidy".
Well, then, what is really going on?
Here it is: the private plans are beating Medicare fair and square, and the new administration doesn't like that one bit. Why? Because it shows that a single-payer plan might not be needed, and might not be such a good idea anyway. So Obama decided to change the rules – NOT to make Medicare more competitive – but to eliminate its competition. And that is EXACTLY how the government can be expected to act to protect its public health insurance option against private companies.