Careless NHS kills again

By Mark Steyn

Here's one of those anecdotal horror stories from Scotland's National Health Service that we are enjoined by American "reformers" to pay no heed to. From The Daily Record: "A mum suffering chest pains died in front of her young son hours after being sent home from hospital and told to take painkillers. Debra Beavers, 39, phoned NHS 24 twice in two days before getting a hospital appointment. But a doctor gave what her family described as a cursory examination lasting 11 minutes, before advising her to buy over-the-counter medicine Ibuprofen... Seven hours later, the mum-of-two collapsed and died from a heart attack in front of her 13-year-old boy."

It's one of those stories that has all the conventions of the genre: The perfunctory medical examination; the angry relatives; the government innovation intended to pass off an obstructive bureaucracy as a streamlined high-tech fast-track ("NHS 24" is some sort of 1-800 helpline). Indeed, in the end, it's all about the bureaucracy: The 1-800 guys don't think you're worth letting past the health-care rope line. So you call again, and ask again, and they say okay, we'll find you someone, but he can only spare 11 minutes of his busy time. And, while you're being carried out by the handles, the bureaucracy insists that all went swimmingly:

"NHS 24 executive nurse director Eunice Muir said: "We can confirm Ms Beavers contacted NHS 24 and that her onward referral was managed safely and appropriately."

Phew! Thank goodness for that. In The Wall Street Journal, our old friend Theodore Dalrymple writes: In the last few years, I have had the opportunity to compare the human and veterinary health services of Great Britain, and on the whole it is better to be a dog.

As a British dog, you get to choose (through an intermediary, I admit) your veterinarian. If you don’t like him, you can pick up your leash and go elsewhere, that very day if necessary. Any vet will see you straight away, there is no delay in such investigations as you may need, and treatment is immediate. There are no waiting lists for dogs, no operations postponed because something more important has come up, no appalling stories of dogs being made to wait for years because other dogs—or hamsters—come first.

The conditions in which you receive your treatment are much more pleasant than British humans have to endure. For one thing, there is no bureaucracy to be negotiated with the skill of a white-water canoeist; above all, the atmosphere is different. There is no tension, no feeling that one more patient will bring the whole system to the point of collapse, and all the staff go off with nervous breakdowns. In the waiting rooms, a perfect calm reigns; the patients’ relatives are not on the verge of hysteria, and do not suspect that the system is cheating their loved one, for economic reasons, of the treatment which he needs.

That's because, in their respective health systems, Fido is a valued client, and poor Debra Beavers wasn't.

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In socialist Britain, dogs get better healthcare than people

By THEODORE DALRYMPLE

In the last few years, I have had the opportunity to compare the human and veterinary health services of Great Britain, and on the whole it is better to be a dog. As a British dog, you get to choose (through an intermediary, I admit) your veterinarian. If you don’t like him, you can pick up your leash and go elsewhere, that very day if necessary. Any vet will see you straight away, there is no delay in such investigations as you may need, and treatment is immediate. There are no waiting lists for dogs, no operations postponed because something more important has come up, no appalling stories of dogs being made to wait for years because other dogs—or hamsters—come first.

The conditions in which you receive your treatment are much more pleasant than British humans have to endure. For one thing, there is no bureaucracy to be negotiated with the skill of a white-water canoeist; above all, the atmosphere is different. There is no tension, no feeling that one more patient will bring the whole system to the point of collapse, and all the staff go off with nervous breakdowns. In the waiting rooms, a perfect calm reigns; the patients’ relatives are not on the verge of hysteria, and do not suspect that the system is cheating their loved one, for economic reasons, of the treatment which he needs. The relatives are united by their concern for the welfare of each other’s loved one. They are not terrified that someone is getting more out of the system than they.

The latter is the fear that also haunts Americans, at least those Americans who think of justice as equality in actual, tangible benefits. That is the ideological driving force of health-care reform in America. Without manifest and undeniable inequalities, the whole question would generate no passion, only dull technical proposals and counterproposals, reported sporadically on the inside pages of newspapers. I have never seen an article on the way veterinary services are arranged in Britain: it is simply not a question.

Nevertheless, there is one drawback to the superior care British dogs receive by comparison with that of British humans: they have to pay for it, there and then. By contrast, British humans receive health care that is free at the point of delivery. Of course, some dogs have had the foresight to take out insurance, but others have to pay out of their savings. Nevertheless, the iron principle holds: cash on delivery.

But what, I hear social philosophers and the shade of the late John Rawls cry, of British dogs that have no savings and cannot afford insurance? What happens to them? Are not British streets littered with canines expiring from preventable and treatable diseases, as American streets are said by Europeans to be littered with the corpses of the uninsured?

Strangely, no. This is not because there are no poor dogs; there are many. The fact is, however, that there is a charitable system of veterinary services, free at the point of delivery, for poor dogs, run by the People’s Dispensary for Sick Animals, the PDSA. This is the dog’s safety net.

Honesty compels me to admit that the atmosphere in the PDSA rather resembles that in the National Health Service for British humans, and no dog would go there if he had the choice to go elsewhere. He has to wait and accept what he’s given; the attendants may be nice, or they may also be nasty, he has to take pot luck; and the other dogs who go there tend to be of a different type or breed, often of the fighting variety whose jaws once closed on, say, a human calf cannot be prised open except by decapitation. There is no denying that the PDSA is not as pleasant as private veterinary services; but even the most ferocious opponents of the National Health Service have not alleged that it fails to be better than nothing.

What is the solution to the problem of some dogs receiving so much better, or at least more pleasant, care than others? Is it not a great injustice that, through no fault of their own, some dogs are treated in Spartan conditions while others, no better or more talented than they, are pampered with all the comforts that commerce can afford?

One solution to the problem of the injustice in the treatment of dogs would be for the government to set up an equalizing fund from which money would be dispensed, when necessary, to sick dogs, purely on the basis of need rather than by their ability to pay, though contributions to the fund would be assessed strictly on ability to pay.

Of course, from the point of view of social justice as equality, it wouldn’t really matter whether the treatment meted out to dogs was good or bad, so long as it was equal. And, oddly enough, one of the things about the British National Health Service for human beings that has persuaded the British over its 60 years of existence that it is socially just is the difficulty and unpleasantness it throws in the way of patients, rich and poor alike: for equality has the connotation not only of justice, but of hardship and suffering. And, as everyone knows, it is easier to spread hardship equally than to disseminate blessings equally.

I hope I shall not be accused of undue asperity towards human nature when I suggest that the comparative efficiency and pleasantness of services for dogs by comparison with those for humans has something, indeed a great deal, to do with the exchange of money. This is not to say that it is only the commercial aspect of veterinary practice that makes it satisfactory: most vets genuinely like dogs at least as much as most doctors like people, and moreover they have a pride in professional standards that is independent of any monetary gain they might secure by maintaining them. But the fact that the money they receive might go elsewhere if they fail to satisfy surely gives a fillip to their resolve to satisfy.

And I mean no disrespect to the proper function of government when I say that government control, especially when highly centralized, can sap the will even of highly motivated people to do their best. No one, therefore, would seriously expect the condition of dogs in Britain to improve if the government took over veterinary care, and laid down what treatment dogs could and could not receive.

It might be objected, however, that Man, pace Professor Singer, is not a dog, and that therefore the veterinary analogy is not strictly a correct or relevant one. Health economics, after all, is an important and very complex science, if a somewhat dull one, indeed the most dismal branch of the dismal science. Who opens the pages of the New England Journal of Medicine to read, with a song in his heart, papers with titles such as ‘Collective Accountability for Medical Care—Toward Bundled Medicare Payments,’ or ‘Universal Coverage One Head at a Time—the Risks and Benefits of Individual Insurance Mandates’? On the whole, I’d as soon settle down to read the 110,000 pages of Medicare rules.

A few simple facts seem established, however, even in this contentious field. The United States spends a greater proportion of its gross domestic product on health care than any other advanced nation, yet the results, as measured by the health of the population overall, are mediocre. Even within the United States, there is no correlation between the amount spent on health care per capita and the actual health of the population upon which it is spent.

The explanation usually given for this is that physicians have perverse incentives: they are paid by service or procedure rather than by results. As Bernard Shaw said, if you pay a man to cut off your leg, he will.

But the same is true in France, which not only spends a lesser proportion of its GDP on health care than the U.S. but has better results, as measured by life expectancy, and is in the unusual situation of allaying most of its citizens’ anxieties about health care. However, the French government is not so happy: chronically in deficit, the health-care system can be sustained only by continued government borrowing, which is already at a dangerously high level. The French government is in the situation, uncomfortable for that of any democracy, of having to reform, and even destroy, a system that everyone likes.

Across the Channel, there is very little that can be said in favor of a health system which is the most ideologically egalitarian in the western world. It supposedly allots health care independently of the ability to pay, and solely on the basis of clinical need; but not only are differences in the health of the rich and poor in Britain among the greatest in the western world, they are as great as they were in 1948, when health care was de facto nationalized precisely to bring about equalization. There are parts of Glasgow that have almost Russian levels of premature male death. Britain’s hospitals have vastly higher rates of methicillin-resistant Staphylococcus aureus (a measurement of the cleanliness of hospitals) than those of any other European country; and survival rates from cancer and cardiovascular disease are the lowest in the western world, and lower even than among the worst-off Americans.

Even here, though, there is a slight paradox. About three quarters of people die of cardiovascular diseases and cancer, and therefore seriously inferior rates of survival ought to affect life expectancy overall. And yet Britons do not have a lower life expectancy than all other Europeans; their life expectancy is very slightly higher than that of Americans, and higher than that of Danes, for example, who might be expected to have a very superior health-care system. Certainly, I would much rather be ill in Denmark than in Britain, whatever the life expectancy statistics.

Perhaps this suggests that there is less at stake in the way health-care systems are organized and funded, at least as far as life expectancy is concerned (not an unimportant measure, after all), than is sometimes supposed. Or perhaps it suggests that the relationship of the health-care system to the actual health of people in societies numbering many millions is so complex that it is difficult to identify factors with any degree of certainty.

In the New England Journal of Medicine for July 3, 2008, we read the bald statement that ‘Medicare’s projected spending growth is unsustainable.’ But in the same journal on Jan. 24, 2008, under the title ‘The Amazing Noncollapsing U.S. Health Care System’ we had read that ‘For roughly 40 years, health care professionals, policy-makers, politicians, and the public have concurred that the system is careening towards collapse because it is indefensible and unsustainable, a study in crisis and chaos. This forecast appeared soon after Medicare and Medicaid were enacted and have never retreated. Such disquieting continuity amid changes raises an intriguing question: If the consensus was so incontestable, why has the system not already collapsed?’

The fact that collapse has not occurred in 40 years does not, of course, mean that it will not collapse tomorrow. The fact that a projection is not a prediction works in all directions: prolonged survival does not mean eternal survival, any more than a growth in the proportion of GDP devoted to health care means that, eventually, the entire GDP must be spent on health care.

Therefore I, who have no solution to my own health-care problems, let alone those of the United States, say only, beware of health-care economists bearing statistics that prove the inevitability of their own solutions. I mistrust the fact that, while those people who work for commercial companies (rightly) have to declare their interests in writing in medical journals, those who work for governmental agencies do not do so: as if government agencies had not interests of their own, and worked only for the common good.

The one kind of reform that America should avoid is one that is imposed uniformly upon the whole country, with a vast central bureaucracy. No nation in the world is more fortunate than America in its suitability for testing various possible solutions. The federal government should concern itself very little in health care arrangements, and leave it almost entirely to the states. I don’t want to provoke a new war of secession but surely this is a matter of states’ rights. All judgment, said Doctor Johnson, is comparative; and while comparisons of systems as complex as those of health care are never definitive or indisputable, it is possible to make reasonable global judgments: that the French system is better than the British or Dutch, for example. Only dictators insist they know all the answers in advance of experience. Let 100—or, in the case of the U.S., 50—flowers bloom.

Selfishly, no doubt, I continue to measure the health-care system where I live by what I want for myself and those about me. And what I want, at least for that part of my time that I spend in England, is to be a dog. I also want, wherever I am, the Americans to go on paying for the great majority of the world’s progress in medical research and technological innovation by the preposterous expense of their system: for it is a truth universally acknowledged that American clinical research has long reigned supreme, so overall, the American health-care system must have been doing something right. The rest of the world soon adopts the progress, without the pain of having had to pay for it.

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Government Medicine Kills: The U.K. and Canada prove it

By Deroy Murdock

Imagine that your two best friends are British and Canadian tobacco addicts. The Brit battles lung cancer. The Canadian endures emphysema and wheezes as he walks around with clanging oxygen canisters. You probably would not think: “Maybe I should pick up smoking.”

The fact that America is even considering government medicine is equally wacky. The state guides health care for our two closest allies: Great Britain and Canada. Like us, these are prosperous, industrial, Anglophone democracies. Nevertheless, compared to America, they suffer higher death rates for diseases, their patients experience severe pain, and they ration medical services.

Look what you’re missing in the U.K.:

Breast cancer kills 25 percent of its American victims. In Great Britain, the Vatican of single-payer medicine, breast cancer extinguishes 46 percent of its targets.

Prostate cancer is fatal to 19 percent of its American patients. The National Center for Policy Analysis reports that it kills 57 percent of Britons it strikes.

Organization for Economic Cooperation and Development data show that the U.K.’s 2005 heart-attack fatality rate was 19.5 percent higher than America’s. This may correspond to angioplasties, which were only 21.3 percent as common there as here.

The U.K.’s National Institute of Health and Clinical Excellence (NICE) just announced plans to cut its 60,000 annual steroid injections for severe back-pain sufferers to just 3,000. This should save the government 33 million pounds (about $55 million). “The consequences of the NICE decision will be devastating for thousands of patients,” Dr. Jonathan Richardson of Bradford Hospitals Trust told London’s Daily Telegraph. “It will mean more people on opiates, which are addictive, and kill 2,000 a year. It will mean more people having spinal surgery, which is incredibly risky, and has a 50 per cent failure rate.”

“Seriously ill patients are being kept in ambulances outside hospitals for hours so NHS trusts do not miss Government targets,” Daniel Martin wrote last year in London’s Daily Mail. “Thousands of people a year are having to wait outside accident and emergency departments because trusts will not let them in until they can treat them within four hours, in line with a Labour [party] pledge. The hold-ups mean ambulances are not available to answer fresh 911 calls. Doctors warned last night that the practice of ‘patient-stacking’ was putting patients’ health at risk.”

Things don’t look much better up north, under Canadian socialized medicine.

Canada has one-third fewer doctors per capita than the OECD average. “The doctor shortage is a direct result of government rationing, since provinces intervened to restrict class sizes in major Canadian medical schools in the 1990s,” Dr. David Gratzer, a Canadian physician and Manhattan Institute scholar, told the U.S. House Ways & Means Committee on June 24. Some towns address the doctor dearth with lotteries in which citizens compete for rare medical appointments.

“In 2008, the average Canadian waited 17.3 weeks from the time his general practitioner referred him to a specialist until he actually received treatment,” Pacific Research Institute president Sally Pipes, a Canadian native, wrote in the July 2 Investor’s Business Daily. “That’s 86 percent longer than the wait in 1993, when the [Fraser] Institute first started quantifying the problem.”

Such sloth includes a median 9.7-week wait for an MRI exam, 31.7 weeks to see a neurosurgeon, and 36.7 weeks — nearly nine months — to visit an orthopedic surgeon.

Thus, Canadian supreme court justice Marie Deschamps wrote in her 2005 majority opinion in Chaoulli v. Quebec, “This case shows that delays in the public health care system are widespread, and that, in some cases, patients die as a result of waiting lists for public health care.”

Obamacare proponents might argue that their health reforms are neither British nor Canadian, but just modest adjustments to America’s system. This is false. The public option — for which Democrats lust — would fuel an elephantine $1.5 trillion overhaul of this life-and-death industry. Having Uncle Sam in the room while negotiating drug prices and hospital reimbursement rates will be like sitting beside Warren Buffett at an art auction. Guess who goes home with the goodies?

A public option is just the opening bid for eventual nationalization of American medicine. As House Banking Committee chairman Barney Frank (D., Mass.) told SinglepayerAction.Org on July 27: “The best way we’re going to get single payer, the only way, is to have a public option to demonstrate its strength and its power.”

Barack Obama seconds that emotion.

“I don’t think we’re going to be able to eliminate employer coverage immediately,” Obama told a March 24, 2007 Service Employees International Union health-care forum. “There’s going to be potentially some transition process. I can envision [single payer] a decade out or 15 years out or 20 years out.” As he told the AFL-CIO in 2003: “I happen to be a proponent of single-payer, universal health-care coverage. . . . That’s what I’d like to see.”

And why a public option just for medicine? Wouldn’t government clothing stores be best suited to furnish the garments Americans need to survive each winter? And why not a public option for restaurants? Shouldn’t Americans have universal access to fine dining?

All kidding aside, government medicine has proved an excruciating disaster in the U.K. and Canada. Our allies’ experiences with this dreadful idea should horrify rather than inspire everyday Americans, not to mention seemingly blind Democratic politicians.

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Seniors Left Behind?

One of the most controversial issues of the current health care reform debate is the concept of health care rationing—allocating medical care according to predetermined criteria that dictate how much and what kind of care a given patient will receive under a government-run system. Setting aside the comparative merits of various reform proposals on the table in Congress, Americans—particularly the elderly—should be wary of any plan that would limit access to health care based on the arbitrary and discriminatory criteria of age.

As many have pointed out in the course of the ongoing national discussion on health care, America's population is aging rapidly, placing a growing strain on entitlement programs like Medicare and Social Security. Health care costs continue to rise, and America's younger population cannot long foot the bill for elderly retirees and their significant health care requirements. This conundrum (caused not by taxpayers but by decades of gross government mismanagement of taxpayer dollars) seems to have bred an underlying antipathy towards seniors, the undisputed "resource hogs" of public health care. This feeling of resentment is exacerbated by an increasingly utilitarian view of human life that sees no value in prolonging one's twilight years, especially on the public dime.

This situation makes proposals for "comparative effectiveness" research seem like a pretty good idea. Who, after all, wants to waste their taxpayer dollars on treatment for old folks who are going to die soon anyway? Wouldn’t it be better to allocate the bulk of our health care resources towards more productive members of society while reducing the spectrum of costly options available to seniors and the terminally ill among us?

But do Americans really want government bureaucrats dictating access to care based on their perception of one’s worth to society? This question goes to the heart of the problem with rationing: a stranger far from the scene decides who gets care and who doesn't. The person making these decisions knows neither the patient nor the healthcare provider, yet he or she is charged with the responsibility of allocating scarce resources among a demanding population rather than providing the best possible care.

Instead of allowing the market to dictate cost and availability, the buck will stop with the government. Instead of allowing doctors to work dynamically with their patients to tailor a health care approach best suited to the individual in question, the government will use its regulatory power to force physicians into applying narrow "quality of life" criteria when evaluating treatment options for society's elderly citizens. This utilitarian approach to life and death is already affecting seniors in North America, in places like Canada (no surprise there), Texas, and Wisconsin.

A health care system that bases its fiscal solvency on rationing undermines the fundamental American values of self-determination and choice. This nation has always been known as a land of opportunity and innovation. For hundreds of years, people have traveled from all over the globe at risk to life and limb just for a chance to build their own dreams here in America. This includes the opportunity to live a full and free life, even into one's golden years of retirement and senior citizenship. But what criteria will America's elderly citizens have to meet in order to retain access to the best health care if our leaders institute a Brave New World of "comparative effectiveness" in health care? Age? Productivity? Societal "usefulness?" Level of sentience?

The elderly often don't score well along these lines, and once American society becomes comfortable with the idea that certain members may be deemed less worthy than others in the eyes of the government, we have rendered the heart and soul of our Constitution meaningless. Once we decide that the elderly are expendable, not worth their share of society's resources and attention, we are setting a dangerous precedent that opens the door for government bureaucrats to assign other vulnerable members of the human community to the same second-class status.

The idea that senior citizens are less deserving of the best medical care our system has to offer smacks of gross ignorance and ingratitude. Among the ranks of America's elderly are countless American heroes—veterans of numerous wars, entrepreneurs, farmers, businessmen, teachers, scientists... men and women who have worked hard and paid taxes their whole lives. Our society wouldn't be what it is today without their contributions, and they deserve just and equitable treatment as they live out their final years.

As the August recess commences and our leaders head home for some straight talk with their constituents at Rotary Clubs, community centers, and town halls, hopefully they will recognize that America's seniors are vital members of our nation's communities and integral to our democratic way of life. If Uncle Sam is determined to assume the mantle of responsibility for health care in America, the elderly should not automatically be relegated to the back of the bus.

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Proposed Health Insurance Fine Puts Small Businesses In A Fix

Like just about every other sector of the economy, small business has been trying to get a fix on a moving target: the Democratic Congress' notion of how to pay for the health insurance it wants all Americans to have. The House version would require any employer with a payroll of at least $500,000 a year to provide health insurance or pay a penalty. The penalty would start at 2% of payroll and increase with payroll size. The maximum penalty would be 8% of payroll for firms whose annual outlay for wages and salaries is $750,000 or more.

Experts say even that maximum penalty of 8% of payroll could be such a good deal for employers that they'd rather pay it than buy health insurance for their workers. That would put those workers into a government-run plan. In fact, paying the penalty will be far cheaper than buying coverage, according to data compiled by Sageworks, a data analysis firm focused on small business. As a percentage of profits, the penalty would cost most small businesses half what they'd pay for health insurance premiums, Sageworks found. For companies not yet offering employee health benefits, the penalty would be the likely choice over insurance premiums, says Brian Hamilton, Sageworks' CEO.

Looking at a retail business with a $750,000 payroll, Sageworks calculates the 8% penalty would cost 32.9% of profits. Insurance premiums would cost 53.31% of profits. For a construction firm, the penalty would equal 32.2% of profits, while insurance premiums would cost 62.7%. A manufacturing firm in the same bracket would spend 35.6% of profits on the penalty and 73.5% on insurance premiums, Sageworks calculates. "In the short run, many small businesses will pay more money," Hamilton said.

If the payroll exceeds $500,000, paying the penalty will be a new, added cost of doing business. Small businesses spend 60 cents to 80 cents of every revenue dollar on salaries, Hamilton says. The uninsured penalty will add up to 8% of the payroll cost. That could dampen new hiring. Even if a company wants to add workers because its business is growing, it might not be worth it if doing so pushes the payroll to the next level, where a higher health benefit penalty would apply.

For that and other reasons, making health insurance decisions won't be easy. The legislation would force small businesses to make complex decisions based on what may be arbitrary or vague criteria. That's because the government will set the standard for what constitutes an acceptable level of health insurance. The small-business owner who has already been providing benefits will have to figure out if the firm's insurance plan meets the government standard, says Bill Rys, tax counsel for the National Federation of Independent Business.

The proposed legislation would penalize an employer whose health plan doesn't fit the government's idea of qualified coverage. Upgrading to a better plan would be more expensive. The owner must decide if he can afford it, or whether to pay the penalty and provide no health benefits.

Small-business owners already have enough difficulty shopping for insurance, Rys says. There's nothing in the draft legislation to suggest that insurance will become easier to purchase, or less costly. "My hunch is that what will be mandated will be more expensive than what insurers are currently offering," Rys said. Employers also will be expected to offer family benefits. Most small businesses now offer benefits for the worker alone.

A proposed tax credit for small businesses that do provide health benefits might help with the cost burden, Rys says. But the deliberations thus far base the credit on the average wage per employee. That opens up questions of regional differences in business, labor and living costs. It raises another question, Rys says. If a small-business owner wants to hire someone at a higher pay scale, he'll have to consider how that will affect the tax credit he would get for providing health benefits to his whole work force. It might be a disincentive for the employer to give workers raises.

Still, if the new plan can decrease health care coverage costs for small business, it might be a winner, Hamilton says. But he voices doubt that it will reduce costs.

Michael Cannon, director of health policy studies at the Cato Institute, says the penalties might be smaller than health insurance premiums. But that doesn't mean employers can cut labor costs by dropping coverage and paying the fines. The level of overall compensation is dictated by supply and demand in the labor market. Suppose supply and demand results in a market-clearing wage of $50,000 a year. If a company's workers want employer-sponsored insurance — which costs $10,000 per worker — then the firm will provide it and reduce cash wages to $40,000 a year, Cannon says.

Then suppose the government imposes a $5,000 per-worker penalty on companies that don't provide coverage. The firm could drop its coverage and pay the penalty, saving $5,000. But it would have to increase cash wages by $5,000 to bring its total compensation package up to the market-clearing level of $50,000 a year. "Otherwise, the firm's workers will flee to firms that offer higher compensation packages," Cannon said. The Obama administration figures the final reforms will offer enough incentives to convince small businesses to buy insurance in a more competitive market.

All the plans under consideration offer tax credits for small businesses that buy insurance for employees. They also propose an insurance exchange where small businesses would find more price competition among insurance vendors. Where there isn't enough competition to bring down prices, the publicly run insurance company the administration proposes will provide it, said Christina Romer, head of the Council of Economic Advisers.

Meanwhile, small businesses face competitive pressures of their own — specifically, competing for workers with larger businesses that offer health benefits. "Small-business owners want to provide health insurance," Romer said, during a July 29 Webcast. In Massachusetts, a mandated plan includes a $295-per-worker annual penalty paid by employers that don't offer health benefits. The number of small-business employers that do offer insurance rose from 88% to 92% from 2007 to 2008, says Shanna Shulman, director of policy and research at the Blue Cross and Blue Shield of Massachusetts Foundation.

For managed care companies, the risk of small businesses canceling policies has already been felt, says Jason Gurda, health insurance analyst with Leerink Swann. "They've had that pressure for a couple of years." Among large managed care firms, WellPoint (WLP) and Coventry Health Care (CVH) tend to have more policies covering small businesses. If more small businesses opt out of insurance, the damage could be offset by uninsured individuals seeking coverage in the private market, Gurda says.

Small businesses will opt out of private insurance and into pay-to-play if doing so is cheaper and employees are not harmed, says Les Funtleyder, health sector analyst with Miller Tabak. "People dumped on the public option will mean a revenue loss to insurers," he said. But he added that if the exchange works, those individuals would buy coverage from private firms.

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