In the Senate, there is growing interest in the idea of a state “opt-out” of the federal public plan, a government –run health plan that would “compete” against private health plans. This latest Senate ploy creates the illusion of an “option” rather than making any fundamental changes to the controversial proposal. While it is difficult to understand its true impact until legislative language is available, taxpayers who will bear the cost burdens of a new government health care entitlement should keep a few points in mind:
1. States could only op-out of the public plan, not of the entire bill.
This is only an “opt-out” of one section of the massive health care proposal. There are literally hundreds of provisions that the states may find unacceptable, like the costly Medicaid expansion. That, for example, would add millions of new people onto the Medicaid rolls, and aggravate the “crowd out” of private health coverage and guarantee higher taxpayer burdens for one of the nation’s most poorly performing welfare programs.
2. A state opt-out does not eliminate the public plan.
The federal government would likely require any state wishing to opt-out to still meet federal conditions. It could come, for example, as an explicit requirement that a state set up a public plan “option” that mirrors the federal public plan or as a public plan masquerading as a “co-op” that is in effect controlled, funded and accountable to the government. For those who wish to see a genuinely competitive insurance market, with all plans competing on a truly level playing field, a public plan requirement is a dangerous proposition whether administered at the federal level or the state level.
3. Experience shows that a federal public plan would likely be the easiest option for state officials.
With the typical bureaucratic red tape and administrative complexity accompanying a state opt-out, states would likely discourage states from opting-out. Moreover, the federal strings that follow would likely strangle states ability to administer an option that does not closely follow the federal public plan model.
Crushing State Innovation.
The massive bills in the House and Senate- with individual and employer mandates, federal control over health insurance benefits, new boards and commissions micromanaging what taxpayers get or don’t get, new fees, taxes and insurance costs- is a challenge to the citizens of the states. Bright and innovative state officials would prefer to embark on their own reforms, but these bills would crush creativity, innovation and experimentation under the weight of federal control and conformity.
A true state “opt out” would allow states to opt-out of the entire health care proposal in exchange for making measurable progress in improving cost, quality and access to care for its citizens. Any other opt-out is just another shell game that is intended to appear as a concession but in reality provides a pretext for greater federal control and blocks much needed structural changes.