The ‘Public Option’ Will Lead to A Single-Payer National Government-Run Health Care System

Now that the dog days of summer have finally passed, along with the contentious town hall meetings, the nation awaits with bated breath to see if the Obama health care reform package will actually become law or not of this great land of ours.

We have been searching and asking and researching for an answer to one of the most vexing questions of the whole debate and we think we might have now finally found it: “How would the so-called 8% ‘penalty’ be applied to businesses that don’t provide health insurance coverage to their workers?”

And as always, the answer will probably have the unintended (or perhaps fully intended?) consequences that every piece of federal legislation always produces.

The question is typically posed as a ‘glass half-empty’ proposition meaning that those ‘terrible’ companies that don’t provide health coverage will be ‘penalized’ for not doing so. No discussion about whether that business owner is struggling to make ends meet just so those people might have a job. So far, so good in the eyes of the eyes of the reformers who support the ‘public option’. (Don’t be fooled by the ‘co-op’ name some are trying to ‘compromise’ down to….the co-op is nothing more than a ‘public option’ with a different name)

But what happens when the companies that are now paying for the health care coverage for their workers get wind of the fact that they can pay the 8% ‘penalty’ and save millions of dollars per year if they drop their entire health plans? Then what?

Think about it seriously: You own a company and employ hundreds, thousands or hundreds of thousands of workers. You might be incurring current health care fringe benefit costs of anywhere from 10%-17% of payroll costs over and above what you pay out in salaries each year.

Some of the reason is because that is what American business has done since WWII when wage-and-price controls on wartime salaries forced businesspeople to figure out other ways to attract quality workers to work in their factories.

Some of the reason is to provide a competitive package today to keep workers and attract new good ones. That is just the way it is nowadays, it seems.

But what happens when these executives start seeing marginal competitors drop their existing health care plans and tell their workers that they will have to go to the ‘public option’ plans because they want to cut down on expenses, like in the current nasty recession, (or ‘recent unpleasantness’ as some refined Southerners might say). These companies might be able to lop off 15% of payroll costs by dropping their employer-paid health care plans and replace it with ‘only’ the 8% of payroll ‘penalty.’

There is no federal requirement that you have to ‘continue’ offering the same health care plans as you have in the past. Some people are just happy to have a job, much less a job with extravagant “Cadillac’ health care benefits like the ones enjoyed by the Detroit automakers that every taxpayer just got through propping up with $35 billion in ‘bailout’ money before they filed for bankruptcy.

You do the math. You don’t have to be a graduate of an Ivy League MBA program to realize that paying a ‘penalty’ of 8% of payroll is a darn-sight better than paying 15% of payroll for a current health care plan. In many American corporations, that might be the difference between turning a profit and incurring a loss for the year. And it most certainly would mean millions of dollars of savings for American business across-the-board.

We don’t mind American business making a profit. If business owners stop making profits, they fold up shop, shut down all the jobs for you and me and retire to the Caribbean.

But what happens if this 'public option' passes and American business drops health coverage like a hot potato? The American taxpayer and your children and grandchildren will be left holding the bag once again to pay for all of this new ‘public option’ health care.

Is that really what we want to do to them…again?