Small Biz Health Care Daily: The Public Option Via the States

It took only two days for the Senate Finance Committee to resurrect the “public option,” that is, to inject a government run plan into its health care reform bill. It came via an amendment from U.S. Senator Maria Cantwell (D-WA) that would hand over federal taxpayer dollars to the states, and allow them run plans.

All of the Republicans on the committee, and Democrat Blanche Lincoln (AR) voted against the measure. Good for them.

Cantwell was quoted by The Hill saying, “This proposal is about giving federal dollars to the states and putting them in the driver’s seat.” And later: “We are putting someone in charge, finally, of negotiating rates.”

A key problem with a federal plan is that government has very few, if any, incentives to spend taxpayer dollars wisely. At the state level, what little incentive might exist to spend with care is completely obliterated when it turns out to be free money from Washington. After all, lawmakers in the states do not have to raise taxes or debate other spending programs. Instead, it’s federal money dropped from the sky. That does not breed responsibility and prudence – rather, just the opposite.

This is a plan to put no one in charge. It takes a very bad idea, and makes it even worse.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council