The Hidden "Benefits" of the Public Option [Update]

The NCPA posted a quick overview of Cato’s study of some of the unsavory, yet completely predictable, outcomes of a public option in the health insurance marketplace. They include:

  • Massachusetts’ expenditures on its health care initiative have been discounted by 50 percent, thanks to matching funds from the federal government, which has encouraged a rapid increase in state expenditures.
  • Growing burdens on businesses have meant that an increasing number are choosing to steer their employees into the state-subsidized system rather than provide health insurance themselves; in addition some will hesitate to expand beyond 10 employees when faced with the cost of providing health insurance or state penalties.
  • Consumers of health insurance over certain income ranges have strong incentives to earn less money in order to qualify for more generous subsidies.

So, as expected, government has manipulated the funding structure to make it look less costly than it is, businesses are dumping employees to the public system, and businesses and individuals have diminished incentives to grow and succeed. No surprises there. There is one big surprise built into the system for many residents of the Bay State, though.

A good friend of mine in Massachusetts recently received a a nice bill from the family dentist, with a note that my friend’s insurer declined to pay, stating the policy had been cancelled. When my friend followed up with his employer, he was told that the company had stopped paying premiums due to shrinking revenues resulting from the weak economy. Consequently, not only does my friend now have to go shopping for his own insurance, he is liable for fines payable to the Commonwealth for the time he and his family were uninsured.

Looks like the only real benefit from the a public option will be the free salt you’ll get for your wounds.

[Update] According to one Congressmen, the gimmicks to hide the cost have already begun–and they don’t even have a actual bill yet.