Health reform fact check: Socialized medicine
By Cindy House 
| August 12, 2009 | 9:01 AM
This is the third in a series of fact checks examining allegations that have been made on both sides of the aisle about the health care reform plan heading through Congress. Read the complete text of the America’s Affordable Health Choices Act of 2009 here.
THE ALLEGATION: The bill’s creation of a public health insurance plan is a Trojan horse for socialized medicine.
WHAT THE BILL SAYS: Sec. 221 of the bill outlines the creation of a public health insurance option that would be available alongside private plans in an insurance exchange. It would have to meet the same standards that private plans do in order to be considered “qualified.”
The stated goal of the public health insurance option is to ensure “choice, competition, and stability of affordable, high quality coverage throughout the United States.” The public option will compete directly with private insurance plans in that it will offer a tiered system of basic, enhanced and premium plans with benefits and premiums increasing accordingly as you go up the tiers.
In general, under the public option, rates for health care providers will be similar to what Medicare provides and will be 5 percent higher for the first three years of the program as an incentive for providers to accept the public plan.
The premium that consumers would pay under the public option is expected to be about 10 percent lower than comparable private insurance plans, according to the Congressional Budget Office.
The CBO did not offer a specific estimate of how many people would end up enrolled in the public health insurance option. The Lewin Group — a health policy consulting firm that is part of a wholly owned subsidiary of health insurance company UnitedHealth Group — says that more than 100 million people would be in the public plan by year 3 of the program. The CBO says that the number of enrollees would be “substantially smaller” and that a more specific estimate would involve too many variables that are unknown at this time.
THE VERDICT: In the broadest sense of the term, socialized medicine can refer to any government-run and government-funded health program. Using that definition, the U.S. already has socialized medicine through Medicare and Medicaid. The public health insurance option would be similar to those programs.
A narrower definition of socialized medicine outlines a single-payer system in which everyone in America would be covered by the same plan with the same benefits, paid for by the government (meaning taxpayers). The public health insurance option outlined in the reform bill would not match this definition of socialized medicine. For one, a variety of private health insurance options would also be available for employers and consumers. Second, the public plan — and comparable private plans — would have benefit tiers. People who could afford to pay for premium-tier coverage could do so, whereas basic-tier coverage would be a lower-cost alternative.
Common sense would indicate that employers would gravitate toward the lower-cost public insurance option for their employees. But it is hard to know how private insurers will respond — they may lower their premiums so they don’t lose business. Also, the administrator of the insurance exchange may not even allow larger companies to participate in the public option.
Because none of these factors is known, it is unclear how many employers would opt to enroll their employees in the public health insurance option, so it is equally unclear whether the public plan would become the dominant one among Americans.
FACT CHECK 1: Euthanasia of the elderly
FACT CHECK 2: Keeping your insurance
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