President Calls for Government-Owned Healthcare Company

Obama said a Washington option would give consumers more choice and keep the private sector 'honest.'

WASHINGTON (CNSNews.com) - President Barack Obama reaffirmed his desire for the government to create and run a national health insurance company in a letter he sent to Sens. Edward Kennedy (D-Mass.) and Max Baucus (D-Mont.), leaders of the Democrats' efforts to transform the nation's healthcare system from a largely private one into one dominated by Washington.

A leading conservative critic described the plan as little more than a massive Medicare system, complete with all the problems and multi-trillion-dollar debt of the current Medicare program.

The letter, sent Wednesday, outlined Obama's vision for healthcare reform, conferring to the two Senate leaders the outlines of the bill he would like to see and providing a reminder of which details are not open to compromise as Democrats seek Republican support.

In the letter, Obama called for a healthcare bill that includes a public option - the phrase used by the administration and congressional Democrats when discussing a government-run healthcare entity. Obama said a Washington option would give consumers more choice and keep the private sector "honest."

Sen. Ted Kennedy (D-Mass.) "I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans," Obama wrote. "This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest."

Obama's federal plan would essentially operate like a massive version of Medicare, the government-run plan for seniors which cost 3.2 percent of the country's Gross Domestic Product (GDP) in 2008 and which will become insolvent for the first time this year.

Medicare faces $34 trillion in unfunded liabilities - the cost of services seniors are eligible for in the future but for which the government does not have the money.

According to the 2009 annual report from the Medicare Trustees, the program will require a 134 percent increase in the payroll tax paid by every working American to remain solvent.

The federal plan has been described as "Medicare-like" by the Senate Finance Committee, which Baucus chairs, and would be run by a new government agency within the Department of Health and Human Services (HHS), according to an outline of the plan published by the committee.

"This proposal would establish a 'Medicare-like' public health insurance option," Baucus' proposal says.

Sen. Max Baucus (D-Mont.) (AP Photo) The plan would have government-established price controls, known as "rating rules," which restrict the price of insurance policies according to the risk of the person buying the insurance.

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Essentially, the government will say how much insurance will cost for a particular type of person dependent upon whom that person is, how old they are, and how healthy they are.

"Rating rules restrict the variation in price of insurance policies according to the risk of the person or group seeking coverage," the Senate plan explains.

The public plan would also automatically incorporate all of the government's reform initiatives, such as electronic health records and the controversial "comparative effectiveness" policies that some critics have described as a back-door form of rationing.

"The public option would incorporate any medical delivery system reforms adopted from the overall reform effort," the Senate plan states.

The most significant component of a federal healthcare entity is that, according to the plan outlined by the Senate Finance Committee, it would not have to be solvent. This means that unlike every other private plan, the federal plan could operate at a loss and still remain in business.

"The public option would not have solvency requirements," the committee's proposal states.

These components mean a government-run insurance entity will be a "Trojan Horse" for a single-payer, socialized medical system, according to Robert Moffitt, director of the Center for Health Policy Studies at the conservative Heritage Foundation.

Moffitt told CNSNews.com that the idea that a government plan would compete fairly with private plans was "absurd."

"The public plan is basically a stalking horse for a single-payer healthcare system," he said. "It's a Trojan Horse. A public plan will be a wholly-owned subsidiary of the United States Congress.

"We're going to have a [federal] plan - competing with other private plans - that has no solvency requirements," said Moffitt. "How could you possibly have a level playing field when you say that one plan is to be absolved from all solvency requirements? It's absurd, it's absurd! That's not equal treatment."

Moffitt said the plan would be run by Congress, just as Medicare is, and that a public plan would have all of Medicare's problems.

"Congress can say that they don't want to run it - the fact is Congress does run it," said Moffitt. "Congress runs Medicare. They don't like to admit it. The truth of the matter is that every problem in Medicare is directly attributable to them. What we're going to do is get another version of that."

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