By: Special Contributor Governor Michael O. Leavitt

and Jeffrey H. Anderson

President Obama supports the idea of a “public option” for health insurance.  The language of competition and choice cleverly conceals the objective.  But the President’s “public option” is a gateway leading to 118 million Americans losing the option of private choice.  It is a strategy for government-run health care.  It is a Trojan horse.

The story of the Trojan horse is familiar.  After years of fruitlessly trying to enter the city of Troy, the Greeks boarded their ships and pretended to sail away.  They left behind a huge wooden horse, which the Trojans claimed as a symbol of their victory and dragged into their mighty fortress.  But the horse was full of Greek soldiers, who waited until midnight and then opened the gates for their invading army.

Advocates for government-run health care are similarly pretending to sail away from “Medicare for all” or “universal coverage,” leaving before us the notion of a “public option.”  Simply stated, if people don’t have private health insurance or don’t like the plan they have, they could select a government-run plan similar to Medicare.  The “public option” is presented as a means to promote competition and choice but would prove fatal to both.

With a “public option” in place, employers would bolt.  How many employers would continue to provide health insurance if the government were willing to take their place?  Under a widespread “public option” with Medicare-like reimbursement rates, the Lewin Group estimates that 118 million Americans would lose their private health insurance.  If you add them to the 80 million Americans already insured by Medicare or Medicaid, no private insurance system would be able to survive, and the United States would have a government-run system like Medicare.

Why would this be bad?  Advocates of government-run health care suffer under the illusion that Medicare operates more efficiently than the private sector.  It’s true that Medicare issues checks more efficiently than anyone else.  It should, as it issues a billion a year.  But the efficiency of a health-care system isn’t measured by the volume of checks it issues, but the value it generates.  Medicare’s uncoordinated, quality-indifferent, more-more-more structure is moving it rapidly toward bankruptcy, and taking our nation with it.   

Americans’ 43 years of experience with Medicare and Medicaid provide a jaw-dropping tale of under-projected expense and extraordinary costliness.  Within two years of Medicare’s creation in 1965, the Johnson administration and the House Ways and Means Committee each projected that, in 1990, Medicare would cost $12 billion.  In 1990, Medicare’s actual cost was $111 billion — nine times the original estimate.  In fact, Medicare now costs more than half of what it cost to fund the entire federal government in 1965, even after accounting for inflation. 

Medicare’s and Medicaid’s skyrocketing price-tags are generally kept hidden from view.  So even a simple cost-to-cost comparison is illuminating:  Since 1970, the cost of these flagship government-run health-care programs has risen more than two-and-a-half times as much as the cost of all other health care in the United States, the vast majority of which is run by the private sector.  Since 1970, Medicare’s per-beneficiary cost — even without counting the prescription drug benefit — has risen 50 percent more than our overall per-capita national health expenditures aside from Medicare and Medicaid, rising 8 percent more in this decade alone. 

The picture gets worse going forward.  Medicare’s budget is projected to double within ten years, topping $1 trillion annually.  The number of workers per beneficiary will soon drop from almost four to just over two and a half.  The Medicare hospital trust fund, which funds the largest part of Medicare, is projected to become insolvent by 2016 — three years earlier than last year’s projection.  Yet the Obama administration wants to add new federal health-care spending at a projected — not actual — 10-year cost of $1,300,000,000,000?  This is like treating chronic obesity with a perpetual regimen of double calories.

Inevitably, government-run systems cut costs by cutting access to services, many of the best doctors simply refuse to take government insurance, and a two-tiered system emerges:  The rich pay for the care they want out of their own pockets, and everyone else just waits in line. 

There is another answer.  The government needs to promote value — to empower consumers to pursue the highest-quality care at the lowest-possible prices.  Strong government action is needed to organize an efficient market where consumers can choose insurance plans and medical practitioners who offer the best value.  What is not needed is to replace the private market with a government-run system in which only the truly rich have a choice.

Every American should have access to health insurance that he or she can afford.  Government must take strong action to make that possible.  However, President Obama’s “public option” is designed to become most Americans’ only option.  Our only hope is to keep this Trojan horse safely outside our gates.

Michael O. Leavitt was Secretary of the U.S. Department of Health and Human Services from 2005-09.  Jeffrey H. Anderson was a professor of Political Science at the U.S. Air Force Academy.