Mission Accomplished?

If the House bill survives in anything like its present form, the U.S. government will soon be in the business of decreeing health care prices. That’s what the whole debate over the “public option” has been about from the start: price control.

That’s a dangerously premature victory celebration the Democrats enjoyed last night.

Not only does the Senate loom ahead, but so does the encounter with reality.

If the House bill survives in anything like its present form, the U.S. government will soon be in the business of decreeing health care prices. That’s what the whole debate over the “public option” has been about from the start: price control.

The Democratic hope has been that if the government enters the insurance business, the government will gain the power to set prices. No more market competition: health prices will be set by order from above.

The bill powerfully incentivizes smaller employees to withdraw their own health coverage and push their employees into the government plan.

Small employers can now escape the obligation to provide health care for their employees by paying an 8% payroll tax. Many small employers will seize that offer. Their employees will have to go shopping for themselves in a very complicated and confusing marketplace. Many will opt for the seeming security of the government-run plan. Over time, the public option will grow, setting private insurance on the road to extinction – or at best to a tightly regulated new role as the health equivalent of public utilities. The big decisions will be made in Washington; the insurers will comply.

At any rate, that’s the House leadership’s hope: not a single payer, exactly, but a single administrator.

To anyone familiar with the history of administered prices, it might seem that this approach must invite a quality squeeze – just the way the chocolate bars shrank in size in the 1970s when the government tried to control their price.

Democrats assume that the health care system contains so much fat and waste that they can impose price restraints – and that providers will find ways to adjust while protecting patients.

But that’s a hope, not a plan.  To borrow a phrase, Democrats replied to the Republicans “mission accomplished.”

Now the hope meets reality. What comes next won’t be pretty.