Why you won't be able to keep your private insurance under Obamacare

David Gratzer writes in US News explains why it is totally deceptive for Obama to argue that no one who likes his health care plan will have to give it up if the Democrats succeed with offer their version of a public option.

Here's the problem. The model for the public plan, Medicare, isn't an insurance, it's a federal program. As such, the public plan option would overwhelm even the best private insurers, thanks to the unfair advantage of federal status. How? Let me count the ways.

Private insurers must comply with state regulations — like what services and procedures must be covered — where Medicare coverage doesn ' t. Such regulations, according to the Council for Affordable Health Insurance, push up the cost of a policy by 20 to 50 percent. As well, private insurers are taxed by state governments; Medicare isn't.

Properly funded insurance plans must capitalize future costs; in contrast, a public plan option can simply tax or borrow enough to cover costs from one year to the next (think Fannie Mae).

A Medicare-style plan will set prices with providers, not negotiate them.

The last point is probably the most significant. By paying providers less, a government option would have a major and immediate advantage over its private rivals: It could charge artificially lower premiums and provide a magnet for enrollment. In April, the Lewin Group released an analysis concluding that about 120 million Americans would shift from private plans to the public option. Lewin's John Sheils doesn't mince words: "The private industry might just fizzle out altogether."

We can't ignore consequences. Obama likes to pretend that there will be no effects from the public option and, if there is no law getting rid of private insurance then he can honestly say that everyone will be able to keep their plans. However, this is totally dishonest because he is disregarding the effects of his plan.

Fast forward 10 years and the "affordable" public plan will have captured a huge market share. President Obama will be in Illinois drafting his memoirs, but Congress will face stark choices as the plan's costs inevitably spike. The challenges will be eerily similar to the decisions made every day by legislators in countries with government-run healthcare systems. A public plan option will lead to government-dominated healthcare, then government-rationed healthcare.

By then it will be too late.

Speaking of dishonesty in Obama's sales pitch, he likes to pretend that the alternative to adopting the Democratic plan is doing nothing. However, there are alternatives that Republicans are pushing. Bobby Jindal has a column in the WSJ today where he lays out seven principles that Republicans support in reforming health care. The difference is that Republicans don't see a need to totally remake the whole system with a government-provided option in order to address the problems that we have with how health care is provided in America. Here are two of his proposals that should be relatively easy to pass.

•Pooling for small businesses, the self-employed, and others. All consumers should have equal opportunity to buy the lowest-cost, highest-quality insurance available. Individuals should benefit from the economies of scale currently available to those working for large employers. They should be free to purchase their health coverage without tax penalty through their employer, church, union, etc.

•Refundable tax credits. Low-income working Americans without health insurance should get help in buying private coverage through a refundable tax credit. This is preferable to building a separate, government-run health-care plan.

Gratzer brings up a couple of other ideas that Republicans have been supporting.

First, Congress should make it easier for people to buy insurance. For a family attempting to get coverage, state regulations drive up the cost. In regulation-heavy New York, as an example, a family of four would pay $12,000 a year for coverage; in Wisconsin, a similar policy would be just $3,000. Why not allow people to buy policies across state lines? Not only would this save money, but it would help insure millions of uninsured—roughly 12 million, according to an analysis by University of Minnesota's Stephen Parente and Roger Feldman....

Third, Congress should address the tax code's discrimination against the self-employed. Today, people who get their health insurance from the workplace get huge tax advantages; the self employed don't. Congress should level the playing field, making health insurance more affordable for the fastest growing segment of our workforce.

So, let's scrap this huge, expensive plan that the Democrats have been trying to slip through in an incredible rush. Congress could try to actually work in a post-partisan fashion to work on true reform that won't destroy private insurance and will lead to a total government takeover of the system.

By the way, the fact that Jindal is weighing in on a topic that he has particular expertise in order to enter the national debate is very savvy and indicates his interest in keeping his name out there for a future run at national politics. This is how a sitting governor can build up a national profile and demonstrate his facility with national issues.