Editorials

Politicians pushing for more government control of health care pay no attention to the dismal record of other such efforts as recently seen in billion-dollar U.S. Postal Service losses and the financial plight of Fannie Mae and Freddie Mac federal housing operations.

There are many other problems to talk about in reviewing experiences of increased government control of just about anything.

Such efforts usually come with highly optimistic forecasts of success, and a fresh example is a proposal to create a national health care "market" through a congressionally designated "national health insurance exchange." The idea calls for a government health plan to compete directly with private health plans.

This arrangement, supporters say, would give Americans not enrolled in employment-based health insurance coverage, or those with insecure coverage, a chance to get stable, affordable health insurance that would have a guaranteed set of government standardized benefits (such as Medicare or a version of Medicare) calibrated for a younger population.

Proposals of this kind usually are accompanied by an employer mandate requiring employers not offering private coverage to pay a tax, observed Robert E. Moffit, a Heritage Foundation health care policy expert. The tax would, in turn, help finance coverage in the competing public program.

Some compare this plan to the Federal Employees Health Benefits Program, a unique consumer-driven plan covering federal workers and retirees, which often is mentioned as a "model" setup. But there is a huge difference.

The United States Office of Personnel Management, the agency administering the program, does not field an "OPM Health Plan" to compete with the hundreds of private health plans around the country, Moffit noted. In the FEHB, competing health plans offer a variety of different benefit packages, from managed care offerings to health savings accounts plans. Also, the private health plans, not the taxpayers, assume the financial risks.

But the proposal for a national health insurance exchange with the government as a direct competitor is very different. Government not only would set the rules for competition, it also would enter the competition as a player.

"Incentives governing the government plan and its powerful board of directors -- presumably Congress -- would not only be economic but also political," said Moffit. "As a result, the role of consumers personally choosing value for their dollars would be dramatically diminished."

Prospects for a "fair" competition in this system are remote, at best. Private health plans would compete for consumers' dollars bearing financial risks and absorbing financial losses. The public plan, however, would be subsidized with taxpayers assuming the risks and liabilities.

If the Medicare program itself served as the government competitor in the "national health insurance exchange," whatever liabilities incurred by the new part of Medicare would be added to current long-term debt of the program, now at $36 trillion. If an entirely separate program is established, "Congress would have to discover some way to spare taxpayers yet another huge addition to their entitlement bills," said Moffit.

Government micro-management is another hazard of this approach. And "it is easy to imagine" Congress imposing health care price controls on the private as well as the public sector.

People should look critically at claims of proponents of government competition in a "national health insurance exchange" that it would enhance personal choice and health plan competition.

A much more likely result is a system imposing federal control over virtually every aspect of private health insurance.

Any approach failing to keep private health plans' business operations free from government regulation and control is the wrong prescription for health care choice or competition.

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