Defund ObamaCare’s Public Option

Posted: Feb 25, 2011 12:01 AM
Defund ObamaCare’s Public Option

During the health care reform debate, the American people soundly rejected the Democrats’ desire for a government-run “public option” health plan and forced them to exclude it from ObamaCare. However, be sure to beware, as it still didn’t deter these leftists from including a sly alternative in the law that could rapidly transform into an effective public option.

The law requires the Office of Personnel and Management (OPM), the agency that runs the federal civil service, to sponsor at least two national health insurance plans to be offered on the new exchanges that start in 2014. Within the exchanges, the OPM sponsored health plans will be competing against private plans for customers.

As history has demonstrated, competition with the government is a misnomer, and this case is no different. The government-sponsored plans have two main advantages: special rules and taxpayer subsidization.

One of the special exemptions is that OPM is able to freely negotiate with insurers their plans’ medical loss ratio, or the percentage of premiums spent on actual health care, while all other exchange plans have to abide by a hard ratio dictated by Health and Human Services Secretary Kathleen Sebelius.

Several insurers have already left the health care marketplace, citing this requirement as a significant burden, and expect many more to do so in the years to come.

Another exemption is the automatic certification OPM plans receive to operate on the exchange, while private plans must receive certification from Secretary Sebelius, thereby subjecting them to her demands. This distinction is likely to be particularly important relating to future premium increases.

Not only has ObamaCare failed to reduce health care costs as promised, but premiums have skyrocketed in the last year, with one insurer after another blaming the law for a good chunk of their hikes. Even non-profits such as Blue Shield of California have had to raise premiums as high as 59%.

In response, Sebelius threatened insurers this last year, writing to them that "there will be zero tolerance for this type of misinformation and unjustified rate increases”. Her enforcement mechanism for this bold statement is the power to deny certification to those whose premiums deems unacceptably high.

While insurers struggle to turn a profit and keep their premiums at an acceptable level to Sebelius, OPM not only is free of this concern, but can force taxpayers to subsidize their plans to lower premiums.

As Robert Moffit at The Heritage Foundation has pointed out, Section 1334 of ObamaCare appropriates “such sums as may be necessary to carry out this section” for OPM, potentially subjecting taxpayers to unlimited subsidization.

Therefore, don’t be surprised if the government-sponsored plans dominate the “free-market” exchange and crowd out the private plans that operate at a great disadvantage. Thus, for leftists the OPM plans guarantee the same end as the public option, more government and less private industry.

If for some reason this end is not achieved or at least not at a fast enough rate for Sebelius, the non-partisan Congressional Research Service has confirmed that she can force it to happen by deciding to only allow OPM plans to operate on the exchange.

Although more government-run health care is certainly unwelcome, it wouldn’t be as much of a concern if it was only for those presently uncovered. But given that ObamaCare is designed to throw Americans off their private, mostly employer-based, coverage and onto the exchange with greater government dictation, the OPM plans are a substantial concern.

The good news is that Congress can stop this effective public option by simply de-funding it. Specifically, they can decide that the “sums as may be necessary” are zero and refuse to appropriate any funds to the Office of Personnel and Management to implement Section 1334 of ObamaCare.

All Americans that originally opposed a robust public option should demand that their representatives take this course of action.