Out of Control Policy Blog

"The Public Option is Dead. Long Live the Public Option."

It's funny. But the death of the public option in the new health care "deal" that Sen. Harry Reid has brokered with centrist and leftist Democrats has produced no triumphant chest-thumping among opponents of the public option. Why? Because what they are getting in exchange is arguably far worse.

As Tunku Vardarajan explains in The Daily Beast, Democrats are now trying to get universal coverage by expanding eligibility for Medicare - a program that is already facing unfunded liabilities to the tune of $35 trillion - from 65-year-olds to 55-year-olds. "This incremental Medicare approach would raise government-sponsored health insurance from about 60 percent (Medicare, Medicaid, veterans, and government employees) to 70 percent or more," writes Vardarajan. "So Republicans, libertarians, and others, beware: Much more than the camel's nose in now under the tent."

Actually, the camel might be getting into the tent rump first. But here is the money quote explaining why the public option might indeed have been the lesser of the two evils:

"Once you add the expansion of Medicaid to the expanded scope of Medicare-with Medicaid eligibility thrown open to everyone below at least 150 percent (and maybe 200 percent) of the poverty level-you are emphatically on a flight path to Canada. Broader subsidies, in fact, apply up to four times the level of poverty, which is $96,000 for a family of four in 2016 and supposedly only flow to those without job-based coverage. That sets up a two-tier system where people with employer-sponsored insurance benefit from one subsidy via the tax exclusion and see lower wages, while people outside ESI would see 70 percent or 80 percent of their insurance costs paid for by taxpayers nationwide, far above the benefit from the exclusion."

When this two-tier system becomes unsustainable, what you'll get is the public option and then single-payer or single-payer directly. What Harry Reckless Reid's compromise really proves is that there is no fixing his health care monstrosity. Nothing good can come out of it. If we have any hope of avoiding socialized medicine in this country, Reid's bill has to be defeated wholly, entirely and in toto.

Whole thing here.

P.S. Addendum via Sally Pipes of Pacific Research Institute regarding Medicare's unfunded liabilities that will cheer you right up!

Already, the program is deep in debt. Medicare Part A, which pays for hospital care, is $36.4 trillion in the hole, according to the latest report from the Medicare Trustees. Medicare Part B, which covers doctor visits, has an unfunded liability of $37 trillion. The trustees have also concluded that the funding source for Part A - the Medicare Hospital Trust Fund - will be insolvent by 2017.

Expanding Medicare to an even greater swath of the population would drown the federal budget in even more red ink.

Shikha Dalmia is Senior Analyst


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