From his past public comments, it is clear that President Obama wants any original health care legislation to include a public option, reasoning that consumer choice and economic competition will benefit. According to Harvard economics professor N. Gregory Mankiw’s piece in the New York Times, a public option will have quite the opposite attain. Consumer choice and competition are typically achieved without a public choice. For example, a government option was not needed to create choice and competition among grocery stores, gas stations, or auto insurance providers.

Robert Reich, on the other hand, argued in the Wall Street Journal that a public option will act like any other not-for-profit health care concept, so there is no need to “coddle” the for-profit plans. However, Reich is a former Secretary of Labor in the Clinton administration, and I find it difficult to trust anyone in that place who wasn’t smart enough to call for an end to the federal Davis-Bacon prevailing wage law.

As such, there is no way that a government option will act as a private nonprofit health care plan. Mankiw stated, “The public plan would have to stand on its own financially, as private plans do, covering all expenses with premiums from those who signed up for it.” In other words, it wouldn’t have access to taxpayer dollars. Even if this was the case (which it likely will not), the notion will mild have the ‘Fannie Mae/Freddie Mac benefit’. Mankiw describes this issue:

“Fannie Mae and Freddie Mac, the mortgage giants created by federal law, were once private companies. Yet many investors believed — correctly, as it turned out — that the federal government would stand behind Fannie’s and Freddie’s debts, and this perception gave these companies access to cheap credit.”

The mere expectation of taxpayer support will give any public option an unfair advantage against private health care plans. These taxpayer subsidies will prevent the unprejudiced competition Obama and other supporting politicians claim they desire. In other words, because mandating a single-payer system is not politically possible in this country, “…a public option that uses taxpayer funds to tilt the playing field may be an gorgeous second best,” stated Mankiw. Reich either overlooks or ignores this aspect.

Reich points to the success of Medicare and Medicaid at limiting administrative costs. However, in a Wall Street Journal rebuttal, AEI’s John Calfee stated that Medicare actually outsources many of its administrative services to private sector providers. Additionally, we shouldn’t be looking to Medicare and Medicaid as examples. They are a enormous reason as to why our country’s health care finances are in shambles.

As for economies of scale, Calfee notes:

“Aetna currently serves about 18 million subscribers, UnitedHealth Care serves between 25 million and 30 million, and WellPoint more than 35 million. That is more than is served by the health-care monopoly of Canada (population 33.6 million), and more than the entire health-care systems of most European nations. Once a belief reaches a few million subscribers, there may not be a lot of economies of scale left that can enable public plans to provide lower prices [emphasis added].”

A government-sponsored public health care option will primarily control costs through monopsony power. According to Mankiw:

“A dominant government insurer, however, could potentially keep costs down by squeezing the suppliers of health care. This cost control works not by fostering honest competition but by thwarting it….a monopsony — a buyer without competitors — can chop the price it pays below the competitive level by reducing the quantity it demands [emphasis added].”

Calfee adds that other nations’ governments do lower prices through “monopsony, not superior skill [emphasis added].” Reich responds to such criticism by asking if a monopsony in health care is such a bad thing. Besides, Reich asserts, “no one has to choose it.” This is a complete lie. The Congressional Budget Office (CBO) has already stated that a public option would force approximately 10 million people from their unusual, private insurance providers to the public “option”. They will not have a choice.

Of the most uncertain effects of a public option in health care, monopsony power will reduce the number of doctors, health care professionals, and perhaps most importantly, research and development (R&D).

The United States accounts for approximately one-half of the worldwide profits that make continued medical R&D economically feasible. According to Calfee:

“When other nations construct their health-care systems, they ignore the impact of their pricing policies on R&D incentives. As the dominant R&D funding wellhead, [the United States does] not have that option [emphasis added].”

Since Reich and others want to look to Medicare as an example, we shall. Medicare takes a “destructive arrive” to cost reduction by squeezing health care providers until too many refuse to accept Medicare patients. The government doesn’t even attempt to set appropriate reimbursement levels to cover R&D costs.

There are a lot of people that think that welfare recipients are lazy, do not want to work and are taking advantage of the system, however that is not the case. Some people are receiving assistance from the government because they cannot work due to disabilities, an illness, old age, or having to take care of a sick or disabled person. If they have children they can’t afford the babysitter when they work. To obtain assistance with babysitting the person has to be put on a waiting list. The waiting period is usually two years. For a person to obtain welfare they must be extremely poor and explain to the government that they actually need assistance. The application for welfare and food stamps is very long and detailed and it asks for the name, address, telephone number of the person requesting assistance. It also asks for utility bills, birth certificates of the parents and children and death corticated or divorce papers if applicable. The documents must be submitted with the application so the government can request child support from the courts for the person taking care of the children. The information requested is very personal and if the documents are not provided the assistance will not be forthcoming. In addition, an investigator comes to the residence to confirm the information provided. The investigator can ask the neighbors for information. The amount of assistance given is not sufficient for the basics such as food, rent, and utilities.

Food stamps that are given are not sufficient for a family to have nutritious meals. The family has to attempt to find food banks to supplement the food purchased with food stamps. Medical assistance for the poor is not good because many doctors do not accept Medical, Medicaid or Medicare; so the poor have problems obtaining appropriate health and dental care. Housing for the dreadful is difficult to gather and there is always a waiting list. The little money that is given to a family on welfare is not sufficient to remove new clothes for the children. The family has to go to thrift shops and second hand stores for clothes and shoes. All necessary items for the position are usually purchased from thrift shops, and garage sales. Very rarely can a family on welfare purchase new items. Previously families could purchase items at department stores on layaway but now it is rare the store that has layaways. Sometimes if the family qualifies the parents can obtain assistance with utilities.

The ones that suffer the most are the children as they are not given the proper nutrients at home to fabricate strong and healthy bodies. By the time they enter school they are lacking in basic vitamins and minerals and sometimes come to the attention of school personnel. School personnel usually remark the parents that they can obtain free breakfast and lunch at school upon qualifying. Many children launch developing dreadful self like when they realize they are poor others do not . Sometimes the result of poor nutrition makes a child sickly and this leads to learning problems in school. This is all due to poverty which exists in the United States of American even though it is a wealthy nation. The welfare system does not allow people to take advantage of it and when a person commits fraud to accept welfare they are usually caught as neighbors and strangers will complain to the proper authorities.

When a family is on welfare and receiving food stamps people discriminate against them. The family does not have what the majority of people have and this leads to problems within the nucleus of the family. The grown ups fight over money and the children suffer unnecessarily. Being on welfare many times provides the impetus for the family to educate and motivate their children so their children will grow up with goals to better themselves and not depend on the government for substance.

The United States, like other countries provide both private and public health insurance, but there is far more private than public healthcare. It is the only industrialized country that does not have publicly mandated government-funded coverage for all citizens (apart from South Africa). At the same time however, healthcare expenditures in the US total over 15% of the GDP, which is greater than any other developed country.

Most people in the US obtain insurance through their employer or on their own. Unfortunately almost 17% of the population are uninsured and have to pay upfront which leads to delay in medical care, missed tests, treatments and follow-up. Almost 20% of the uninsured population is able to afford insurance, almost 25% are eligible for public coverage, and the rest (56%) need financial assistance (8.9% of the US population).

Private Health Insurance:

There are over 1000 private health insurance companies and most offer a fee-for-service insurance plan (with higher premiums) and at usually more than one type of managed care view (health care delivery system with restrictions on provide choice and referrals, and with lower premiums, eg HMO, PPO, and POS). Some insurance plans cover medications while others do not. Cost-sharing (co-pays and deductibles) is also variable. 60% of the population get insurance from employers, while just above 9% acquire their own.

Of the many insurance providers, Blue Cross/Blue Shield is a nonprofit carrier that is regulated by insurance agencies in each state. It is an insurance provider for 30 %-50% of working people in the US. Blue Cross caters to hospital costs, while Blue Shield pays for medical tests.

Government-funded Insurance:

Almost 30% of the population is covered by public health care, much lower than other developed nations.

Medicare is provided by the Federal government (through social security) and is for those >65 yo regardless of income and people of any age with chronic disabilities or debilitating illnesses. It covers inpatient hospital costs, home health care, nursing home care for up to 3 months post-hospitalization, hospice care, dialysis, physical therapy, laboratory tests, outpatient care, physician bills, ambulance service and medical equipment. Note that the latter 7 services listed are optional and have a 20% copayment and at least a $100 deductible.

Medicaid is managed by both the federal and area governments. Eligible people include those with very low income (indigent) except childless adults, with 1/3 of the medicaid budget allocated to nursing home care for indigent elderly people. It also provides for inpatient and outpatient hospital costs, physician bills, home health care, hospice care, laboratory tests, dialysis, medication and very importantly long-term nursing care that is not funded by medicare.

In addition, the Department of Veteran Affairs directly provides health care to injured U.S. military veterans and current servicemen and women through a nationwide network of government hospitals (non-injured veterans are often not covered). It baiscally offers extremely affordable and sometimes free care to veterans

Other public systems include S-CHIP: The State Children’s Insurance Program (S-CHIP) covers children whose familes make too much income to qualify for Medicaid but have too little to engage private health insurance.

Although many states have discussed an overhaul of the US health system, only a few states have really attempted to provide universal health care coverage, eg Minnesota and Massachusetts (Massachusetts 2006 Health Reform Statute). Other US states (in particular New Jersey) help to cover many people (but not all) by reimbursing hospitals and other health-care providers using what is generally characterized as a charity care scheme.

Charity and Free Clinic facilities:

These centers offer healthcare for free or for a small fee and generally limited to those with lower income and no health insurance, including those not eligible for Medicaid and Medicare. They primarily treat acute, non-emergency conditions and some primary care for prevention and chronic conditions. There are a few that have pharmacies and dental services.

The staff are usually volunteer healthcare professionals and the facilities rely heavily on private donations, foundations, the United Way, and local governments. There have been some student-run clinics (eg Stanford’s Arbor Clinic, and San Jose’s Pacific Free clinic) that provide for the underserved community and help provide training for medical students.
The Bureau of Primary Health Care is a location that a will help you find a clinic for medical care, even if you are lacking medical insurance or money.

CA: Berkeley Free Clinic, Haight-Ashbury free clinic (SF), Los Angeles free clinichttp://www.rotacare.org/ (SF Bay Area), Free Clinic of Simi Valley
VA: Harrisonburg Rockingham Free Clinic, NY: Free clinics in New York city, NYC: EHHOP – Free Clinic in El Barrio, New York City,
OR: North By Northeast Community Health Center

References

Fadem, B. High Yield Behavioural Science (2001). Lippincott Williams and Wilkins.

http://www.amsa.org/uhc/HealthCareSystemOverview.pdf

http://www.healthaffairs.org/RWJ/Dubay2.pdf

http://www.census.gov/hhes/www/hlthins/usernote/usernote3-21rev.html

http://usliberals.about.com/od/healthcare/i/MassHealthIns.htm

http://www.va.gov/healtheligibility/eligibility/epg_all.asp

http://dll.umaine.edu/ble/U.S.%20HCweb.pdf

http://www.huppi.com/kangaroo/L-healthcare.htm

http://en.wikipedia.org/wiki/Health_care_in_the_United_States

http://en.wikipedia.org/wiki/Free_clinic
For extra resources