The End
of Private Health Insurance

Will private insurers survive health care reform?

The Wall Street Journal thinks Obama’s health care plan will doom insurers

by Jeb Foster

If Obama's health care plan succeeds as it's currently envisioned, Americans will have the option to buy a government-issued insurance policy. Wall Street Journal editorialists suspect that this change will cause the extinction of the private health care market -- and they rather cynically believe that that's the point:

This public option will supposedly 'compete' with private alternatives. As President Obama likes to put it, those who are happy with the insurance they have now can keep it -- and if they happen to prefer the government offering, well, gee whiz, that's the free market at work. The reality is far different. Not only will the new program become the default coverage for the uninsured, but Democrats intend to game the system to precipitate -- or if need be, coerce -- an exodus to government from private insurance. Soon enough, that will be the only 'option' left.

The Wall Street Journal predicts that a government-run health insurance system will seek to cut costs by lowering payments to health care providers (doctors and hospitals). The inevitable result, they say, is that doctors and hospitals will charge holders of private insurance more to make up the difference. Private insurance will then become increasingly expensive and decreasingly desirable, until one day it's gone and we've got a single-payer system.  

And that would be a bad thing, according to the Journal's editorial staff. But what about the other 300 million Americans? What do they think? Are they ready for a single-payer system, a la Canada?

Let's look at some numbers.

According to an April 2009 Kaiser Foundation poll, Americans think fixing the current health care system is a critical mission, even when looked at among other pressing concerns, such as the economy. In fact, 62 percent said that it was "more important than ever to take on health care reform now."

Additionally, Americans are increasingly comfortable with the government expanding coverage to more people. In a Kaiser poll from September 2008, large majorities expressed support for expanding Medicaid, the State Children's Health Insurance Program (SCHIP) and Medicare.

Here's another thing that might rankle Wall Street Journal editorialists: most Americans -- a whopping 72 percent -- trust President Obama to make good decisions on health care. Meanwhile, a scanty 38 percent trust Republicans in Congress -- whose views typically align with the conservative Wall Street Journal editorial page -- to recommend the right thing for health care reform. Only lobbyists for insurers and pharmaceutical companies earn less trust from the public.

So does this mean private insurance companies will follow the path of dinosaurs and fanny packs -- to extinction? Probably not anytime soon. Here are a few statistics from a separate April 2009 Kaiser report that will buoy insurers: 87 percent of those who have health insurance rate their coverage as "excellent" or "good." Also, it seems that while people desire reform on a general level, many also fear that changes will leave them worse off personally. In fact, only 39 percent of respondents felt that health care reform would lower their medical costs. A mere 29 percent said that reform would improve the quality of their own care. (It is this kind of paradox that makes the health care debate so fascinating and so vexing.)

So insurers can breathe easy -- for now. Inertia and fear of change are powerful forces working in their favor.