Comment & Debate
The United States has been struggling to reform its health care system for decades. A “public insurance option” stands out as one of the most significant and hotly debated ideas for reform. The proposal would create a hybrid public-private insurance system, in which public health insurance is made available along-side and as an alternative to existing private insurance. One of the main intentions of the “public option” is to offer affordable health insurance to over 47 million uninsured Americans, or “individuals without access to group coverage through their workplace or current public programs.” In addition, as president Obama argued in a letter to Sen. Edward Kennedy (D-Mass.) and Sen. Max Baucus (D-Mont.), public insurance would offer “the choice of a public health insurance option operating alongside private plans. This will give [citizens] a better range of choices, make the health care market more competitive, and keep insurance companies honest.” The public insurance option is modeled after Medicare and would be available to Americans younger than 65. The proposal has aroused almost unprecedented public debate, receiving passionate support from most Democrats and heated opposed by the majority of Republicans The debate has revolved around multiple questions: Does a public health insurance option offer an important alternative choice to citizens and patients? Would it be helpful in competing against private insurers, subsequently causing them to provide more competitive and honest pricing and services? Or, would a publicly-funded option unfairly and non-competitively drive private insurance companies out of business? Can a public option be more effective than private ones? Can it cut-costs and supply superior health care? Or, would it result in exorbitantly expensive “socialized medicine” and ineffective government bureaucracy? Would this be any worse (or possibly even better) than the private insurance bureaucracy that already exists? Does the profit-interest have a proper place in health insurance? Should it be checked by a “public option”? Have similar “public options” around the world – hybrids of private and public systems – proven successful? Overall, is a public health insurance option in the United States a good idea?
“public plan choice gives Americans the opportunity to choose for themselves how they value the strengths and weaknesses of a public, Medicare-like plan and competing private health plans.”
“we will give Americans better choices for health insurance. An important foundation of our legislation is the following principle: If you like the coverage you have now, you keep it. But if you don’t have health insurance or don’t like the insurance you have, our bill will give you new, more affordable options.”
“Sure, some people are satisfied with their current health insurance. But the millions of Americans who are tired of increasing costs and decreasing benefits should have the chance to opt into a program that will offer affordable, quality care, says Health Care for America Now’s Richard Kirsch.”
“Now nobody is proposing that Americans be forced to get their insurance from the government. The ‘public option,’ if it materializes, will be just that — an option Americans can choose. And the reason for providing this option was clearly laid out in Mr. Obama’s letter: It will give Americans ‘a better range of choices, make the health care market more competitive, and keep the insurance companies honest.'”
“there is considerable variation in health insurance products sold, and consumers have great difficulty in making price and quality comparisons. This is especially true in the private nongroup insurance market, but is increasingly true in commercial group insurance as well. […] The products offered by sellers in insurance and hospital markets are complex and difficult to understand and evaluate. It is almost impossible to compare prices of either insurance products or services provided by hospitals and other health providers.” [The status quo, therefore, offers little “reasoned choice”. Simple public insurance would make it easier on consumers.
“Opponents of a public option say it will deny Americans the right to choose their own doctors. It’s true that some doctors and dentists will choose not to participate in a government-run plan. But many private insurance plans already restrict your choice of doctors by refusing to pay for treatment provided ‘out of network.'”
“Advocates say a government-run insurance program is needed to provide competition for private health insurance. But 1,300 companies sell health insurance plans. That’s competition [and choice] enough. The results of robust private competition to provide the Medicare drug benefit underscore this. When it was approved, the Congressional Budget Office estimated it would cost $74 billion a year by 2008. Nearly 100 providers deliver the drug benefit, competing on better benefits, more choices, and lower prices. So the actual cost was $44 billion in 2008 — nearly 41% less than predicted. No government plan was needed to guarantee competition’s benefits.”
The American Medical Association and Senate Finance Committee: “The introduction of a new public plan threatens to restrict patient choice by driving out private insurers, which currently provide coverage for nearly 70 percent of Americans.”
“This public option will supposedly ‘compete’ with private alternatives. As President Obama likes to put it, those who are happy with the insurance they have now can keep it — and if they happen to prefer the government offering, well, gee whiz, that’s the free market at work. The reality is far different. Not only will the new program become the default coverage for the uninsured, but Democrats intend to game the system to precipitate — or if need be, coerce — an exodus to government from private insurance. Soon enough, that will be the only ‘option’ left.”
“The best result of creating a parallel public insurance scheme is that the United States would end up with an explicit two-tier medical system in which privately insured Americans have better access to better medical care. Such two-tier health care systems already exist in countries with national health care schemes such as the United Kingdom and Germany. In the United Kingdom, more and more Britons are opting for private health insurance instead of remaining with that country’s National Health Service. Privately insured Americans would get higher quality health care, but because the market for medical innovation would be smaller, everybody will get worse care than they would otherwise have received had most health care not been nationalized.”
Republicans argued in a June 2009 letter to President Obama: “[Public insurance] would be a federal government takeover of our healthcare system, taking decisions out of the hands of doctors and patients and placing them in the hands of a Washington bureaucracy.”
President Barack Obama said in March of 2009: “[Public insurance] gives consumers more choices, and it helps keep the private sector honest, because there’s some competition out there.”
“The arguments around the public plan too often ignore what we believe is the central reason for including a public plan as a component of reform: that health insurance markets today, by and large, are simply not competitive. And as such, these markets are not providing the benefits one would expect from competition, including efficient operations and consequent control over health care costs.”
Critics of a public insurance option often argue simultaneously that a government-run insurance option is far worse, and less efficient than private insurance. Yet, they then argue that a private insurance company cannot compete with a government program. This is contradictory. If private insurers believe their product is superior, they should not be worried about a public option.
Insuring that over 40 million Americans have health insurance is much more important than the ideological notion of “fair competition”. This is not to concede that a public plan is unfair, but rather to say that the whole debate over a “level playing field” misses the point that this is primarily an issue about insuring millions of uninsured individuals, by whatever means possible. These individuals need health insurance more than the health care industry needs a level playing field to continue its high profits.
“[one argument against the public option] is that the public plan will always be favored—that there is no way that Congress would let the public plan fail and would find ways to tilt the playing field in its favor, providing it with advantages not afforded private plans. However, experience with the Medicare program does not support this concern. Indications from the Medicare Advantage experience suggest that, if anything, private plans would most likely be favored over a public plan. For example, Medicare Advantage plans are paid percent more than Medicare fee-for-service in 2009 for the average beneficiary, clear evidence that traditional Medicare has not always been favored (MedPAC 2009).”
Probably the best evidence of this is found abroad in places such as France, where both public and private health insurance options exist in a hybrid system. This system is rated the best health care in the world, and the private health insurance industry there is doing very well, and filling an important premium market beyond basic government insurance.
“public and private plans can learn from each other as they exploit their strengths and remedy their weaknesses. Expanded coverage of prescription drugs by Medicare HMOs, for example, demonstrated the feasibility of drug coverage for the elderly and helped to increase political pressure for drug coverage for all people with Medicare. The development of performance measures for Medicare private plans provided a template for projects testing comparable measures under the public Medicare plan. Similarly, innovations in coordinating care for elders with chronic illness in private plans have provided a useful foundation for care-coordination demonstrations in the public Medicare plan.”
“[A public option] does crack the door open for expanding the number of Americans who get their health insurance through the government. And this is what terrifies the insurance companies and conservatives. Their fear is that it will actually work. If the program operates well, more and more people will make the rational decision to choose it over private insurance (what we’re supposed to do in a market, after all) and the insurance companies will lose customers.”
“Advocates say a government-run insurance program is needed to provide competition for private health insurance. But 1,300 companies sell health insurance plans. That’s competition enough. The results of robust private competition to provide the Medicare drug benefit underscore this. When it was approved, the Congressional Budget Office estimated it would cost $74 billion a year by 2008. Nearly 100 providers deliver the drug benefit, competing on better benefits, more choices, and lower prices. So the actual cost was $44 billion in 2008 — nearly 41% less than predicted. No government plan was needed to guarantee competition’s benefits.”
While it is true that the private insurance industry does have some anti-competitive monopolies, conglomerations, and State boundary issues, this does not mean that a more competitive environment cannot be created. This can and should be done, but it is unnecessary to inject into the equation a public insurer.
“A public program won’t compete in a way that any normal business would recognize. As an entitlement, Congress’s creation will enjoy potentially unlimited access to the Treasury, without incurring the risks or hedging against losses that private carriers do.”
“government-run health insurance would crater the private insurance market, forcing most Americans onto the government plan. The Lewin Group estimates 70% of people with private insurance — 120 million Americans — will quickly lose what they now get from private companies and be forced onto the government-run rolls as businesses decide it is more cost-effective for them to drop coverage. They’d be happy to shift some of the expense — and all of the administration headaches — to Washington. And once the private insurance market has been dismantled it will be gone.”
“Which raises the question: Would the existence of a dominant government provider of health insurance be good or bad? […] A dominant government insurer […] could potentially keep costs down by squeezing the suppliers of health care. This cost control works not by fostering honest competition but by thwarting it. […] If the government has a dominant role in buying the services of doctors and other health care providers, it can force prices down. Once the government is virtually the only game in town, health care providers will have little choice but to take whatever they can get. It is no wonder that the American Medical Association opposes the public option.”
“It’s simply impossible to believe the claims by Sen. Charles Schumer (D-N.Y.) and others that Congress really will do nothing to disrupt the level playing field by favoring the public plan. With Congress as both umpire and a team manager, one thing is clear: it will favor its own team. The result is the public plan will unfairly crowd out private coverage.”
“A public option health care agency proposed by many Democrats, and an important part of President Barack Obama’s health reform plan, needs a mission statement. It must simply read: ‘Provide voluntary health insurance for the uninsured. Leave no one behind.’ […] This is a high ground statement — moral, honorable and American. It is not socialism to care and provide for an American minority, the uninsured. It’s simply the right thing to do. Just as Americans don’t turn people away from hospital emergency rooms, Americans don’t leave people behind when it comes to health care insurance.”
“Sure, some people are satisfied with their current health insurance. But the millions of Americans who are tired of increasing costs and decreasing benefits should have the chance to opt into a program that will offer affordable, quality care, says Health Care for America Now’s Richard Kirsch.”
2009 Statement by the American Nurses Association: “A public health insurance plan would expand choices and help protect against potential economic calamity for individuals or families who are not satisfied with their current health coverage, have difficulty paying for their health care, or cannot find affordable coverage.”
“In a recent analysis, Lewin estimates that enrollment in the public option will reach 131 million people if it is open to everyone and pays Medicare rates. Fully 119 million people will shift out of — or lose — private coverage. Everything depends on the payment levels that Congress adopts, as well as the size of the eligible pool. But even if a public option available to all takes the highly improbable step of paying at some midpoint between private and Medicare rates, nearly 68 million people will still be crowded out of private insurance.”
“[With public insurance] there would actually be big changes for many already insured people. Faced with a low-cost public option, many employers would simply close down their existing plan and push their employees into the public plan. Remember that Wal-Mart encouraged eligible employees to sign up for Medicaid, until states and unions thwarted them. All serious analysts agree that many Americans would find themselves dumped into the public plan.” Because a public plan would have limited insurance, the public plan may not be able to cover all these people dumped by their employers. In the end, therefore, a public plan may leave more people without insurance, employer-provided or otherwise. Or, it may just entirely negate itself by simply transferring insured individuals from private plans to a public one, leaving little room for the remaining uninsured.
Health care is not a right. It is, therefore, not “necessary” for the government to provide universal health care. A public plan, subsequently, is not a “necessity”, in-so-far as it may offer universal coverage.
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