Robert Reich’s column in the Wall Street Journal yesterday, "Why We Need a Public Health-Care Plan," misses important facts in its arguments for implementing a “public option” in health insurance and addressing the arguments against it.

Reich makes three major assertions in an attempt to dissuade us from listening to critics of keeping the government out of the health insurance business.

First, he argues that a public option would be large enough that competing with such an insurer would force the private sector to lower costs. Reich does not wonder why Wal-Mart doesn’t need a public competitor to keep its prices low. Were he to do so, he might notice that Wal-Mart is not forced by legislation to provide all of its customers with expensive products the way that insurance is. On top of this, hospitals are already forced to offload the costs of public competitors by increasing rates for the privately insured, increasing costs — and premiums — further.

Private insurers aren’t worried that they’re going to have to lower their rates — they’re worried they’re going to have to raise them until they can’t compete. Who can blame them? If government has succeeded only in increasing the costs of private insurance in the past, why should anyone believe it’s going to lower their costs now?

Reich also rejects the notion that a public option might receive government subsidies and that the fact that it doesn’t need to post a profit will give it an unfair advantage. While the government’s plan does, indeed, say that any public option would be self-sustaining, it would merely add a public insurance option to a long list of government-backed programs that were never supposed to receive government funding. Amtrak, Fannie Mae and Freddy Mac come to mind.

It’s not the fact that a public option won’t have to post a profit that worries those who are skeptical of the plan, but rather the fact that no matter how unsustainable its practices might be, it won’t go out of business. Private insurers will have to close their doors, unable to compete with an insurer that doesn’t even have to keep its books in the black. If this happened, the public option would become the only option for American health care.

Finally, Reich says that the government will use a central database of patient information to keep costs low. Given their track record on safeguarding private information, perhaps it’s patients, not insurers, who have the most cause to worry. Besides which, no one wants their insurer to deny them what they and their doctor might believe is necessary coverage because there is a database classifying the procedure as “too expensive” or “frivolous medical spending.” This plan for health care reform may actually reduce the monetary cost of health care, but only by paying with a higher human cost.

Given these facts, does the Congressional Budget Office overstate the costs of proposed health care reforms as Reich claims? It’s doubtful — Americans should be worried about what this will cost, just like they should be worried about the fact that some reforms can produce more harm than good.

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