That's because any plan in which a government run plan competes with private plans eventually winds up being one in which the government run plan takes over. That's because the government need not worry about such "trivial things like profit. The government has the advantage of unlimited borrowing, unlimited access to the money printing press, and the ability to tax the citizenry.
Here is how Senator Roy Blunt viewed the fear.
"I'm concerned that if the government steps in, it will eventually push out the private health care plans millions of Americans enjoy today," Republican Rep. Roy Blunt said in the Republican weekly radio address.
Blunt, who will play a leading role in the debate, warned: "This could cause your employer to simply stop offering coverage, hoping the government will pick up the slack."
The proposal he referred to would, for the first time, offer government-sponsored coverage to middle-class families, as an alternative to private health plans. By some estimates, it could reduce premiums by 20 percent or more -- making it much more affordable to cover the estimated 48 million people who don't have health coverage.
Here is how Charles Krauthammer describes the deception.
1) Obama wants to be to universal health care what Lyndon Johnson was to Medicare. Obama has publicly abandoned his once-stated preference for a single-payer system as in Canada and Britain. But that is for practical reasons. In America, you can't get there from here directly.
Instead, Obama will create the middle step that will lead ultimately and inevitably to single-payer. The way to do it is to establish a reformed system that retains a private health-insurance sector but offers a new government-run plan (based on benefits open to members of Congress) so relatively attractive that people voluntarily move out of the private sector, thereby starving it. The ultimate result is a system of fully socialized medicine. This will probably not happen until long after Obama leaves office. But he will be rightly recognized as its father.
President Obama wants the government to "compete" with two models. The first model is the one that provides health insurance to the legislators themselves. The second model is Medicare and Medicaid. Think about what that means. The plan that Congress gets loses money. It is the Rolls Royce of health insurance and that's because legislators take care of themselves. Furthermore, the government can handle losing money in covering 500 some people. If everyone if offered this same plan though, it will mean serious losses. Of course, that's no problem since the President has already proclaimed that we wil pay for it by raising taxes on the wealthy. What it does mean though is that the government will have a plan that the private market won't compete with. Soon, everyone will want what the legislators currently have. Soon all private plans will be out of business.
The second model is the Medicare/Medicaid. Well, there is a reason why both of those are bankrupting the country. That's because they aren't profitable. So, how does a private plan compete with a plan that isn't profitable? It doesn't. The government can continue to fund an unprofitable plan indefinitely while the private market will run out of money eventually.
This sort of slick marketing has devious intentions. As Krauthammer points out, we can't go from free market to single payer overnight. Instead, we offer a "moderate" plan in which the government competes with the private market. Of course, this is no competition. It is rigged to eventually drive the private market out, and soon enough we have single payer government run health care.