Why We Need a Public Option
Saturday, August 1, 2009 at 10:51PM Any health care reform that aims for universal coverage has to include a publicly funded insurance plan -- the so-called public option.
Since Medicare and Medicaid were enacted in 1965, the majority of Americans have been insured through private health care plans, most often through their employers. However, private plans have never insured all Americans, and in the last 30 years, the percentage of Americans they have covered have been slowly slipping. In the 1970s, an all-time high of 80% of Americans were on private insurance plans. Today, that number has fallen to 65%.
Private insurance companies have dropped 15% of the population for a reason. They don't want them. Insurers have spent the last 30 years carefully combing through their client base and eliminating the most costly patients. After all that work, their profit margins are way up. In the 70s, insurers paid out about 95% of premiums for claims; that number stands at 80% today. That extra 15% means billions in profits for them. They won’t give up that money.
So, why are insurance companies fighting the public option, if they have no intention of covering the uninsured? Industry lobbyists say it is because they will not be able to compete against the deep pockets of government, that the public option will undercut their prices and drive them out of business. The government, they argue, can afford to operate at a loss, while they cannot. But this is clearly nonsense -- all current proposals require employers to insure their employees or pay a tax for not doing so. Businesses, as allergic to taxes as they are, are not likely to dump the plans they have. The government will have to tax non-participating businesses enough to finance a public option, so the tax penalty will not be cheap.
Private insurers also know that the government is not in a position to rapidly absorb 65% of the health care market. The federal government is big, but even it cannot swallow 10% of GDP in the near term if it were to drive private companies out of business. As long as insurers do their jobs, and satisfy their customers, they should be safe. And they have a 20% profit margin to work with.
What insurance companies are fighting for is to be the public option. They are willing to insure the uninsured population, but they want the government to pay them to do it. Their plan is to get the government to subsidize premiums so they can offer insurance to the 45 million uninsured without having to cut prices — or profits. They don’t really care if the plan succeeds in covering everyone, just as long as they get money to offer more policies without any premium reductions.
While I would like to see the uninsured on the same private plans most employed citizens enjoy, experience suggests that handing money bags to private companies is poor public health policy. Massive cash giveaways will not guarantee quality care, and more importantly, will do nothing to control costs.
The easiest way to extend a public option to the uninsured is to expand Medicare to cover them. Not Medicaid; Medicaid is the ugly stepchild of healthcare policy. It is woefully and chronically under funded, paying physicians so poorly that 50% of doctors have closed their practices to new Medicaid patients. Medicare, on the other hand, is a healthy and productive program for one simple reason. Elderly people vote. They keep politicians intimidated and have aggressively protected their interests each time anyone has suggested taking a knife to Medicare benefits. If the uninsured end up in the same boat with the elderly, ironically the poor would end up allied with one of the most powerful constituencies in U.S. politics.
My biggest fear for the public option is that it will become a cash giveway for private insurance, but my second biggest fear is that it becomes a neglected government program that is underfunded and poorly run. Then, after a few years, conservatives will move to kill the program they consciously hobbled from the start.
We need a public option. But it has to be the right public option, or this whole reform business will fail in a colossal way.
Public Option in Healthcare Reform 
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Reader Comments (5)
We have the 37th worst quality of healthcare in the developed world. Conservative estimates are that over 120,000 of you dies each year in America from treatable illness that people in other developed countries don't die from. Rich, middle class, and poor a like. Insured and uninsured. Men, women, children, and babies. This is what being 37th in quality of healthcare means.
I know that many of you are angry and frustrated that REPUBLICANS! In congress are dragging their feet and trying to block TRUE healthcare reform. What republicans want is just a taxpayer bailout of the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT health insurance industry, and the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT healthcare industry. A trillion dollar taxpayer funded private health insurance bailout is all you really get without a robust government-run public option available on day one. Co-OP's ARE NOT A SUBSTITUTE FOR A GOVERNMENT-RUN PUBLIC OPTION. They are a fraud being pushed by the GREED DRIVEN PRIVATE FOR PROFIT health insurance industry that is KILLING YOU!
YOU CANT HAVE AN INSURANCE MANDATE WITHOUT A ROBUST PUBLIC OPTION. MANDATING PRIVATE FOR PROFIT HEALTH INSURANCE AS YOUR ONLY CHOICE WOULD BE A DISASTER AND UNETHICAL, CORRUPT, AND MORALLY REPUGNANT. AND PROBABLY UNCONSTITUTIONAL AS WELL.
These industries have been slaughtering you and your loved ones like cattle for decades for profit. Including members of congress and their families. These REPUBLICANS are FOOLS!
Republicans and their traitorous allies have been trying to make it look like it's President Obama's fault for the delays, and foot dragging. But I think you all know better than that. President Obama inherited one of the worst government catastrophes in American history from these REPUBLICANS! And President Obama has done a brilliant job of turning things around, and working his heart out for all of us.
But Republicans think you are just a bunch of stupid, idiot, cash cows with short memories. Just like they did under the Bush administration when they helped Bush and Cheney rape America and the rest of the World.
But you don't have to put up with that. And this is what you can do. The Republicans below will be up for reelection on November 2, 2010. Just a little over 13 months from now. And many of you will be able to vote early. So pick some names and tell their voters that their representatives (by name) are obstructing TRUE healthcare reform. And are sellouts to the insurance and medical lobbyist.
Ask them to contact their representatives and tell them that they are going to work to throw them out of office on November 2, 2010, if not before by impeachment, or recall elections. Doing this will give you something more to do to make things better in America. And it will make you feel better too.
There are many resources on the internet that can help you find people to call and contact. For example, many social networking sites can be searched by state, city, or University. Be inventive and creative. I can think of many ways to do this. But be nice. These are your neighbors. And most will want to help.
I know there are a few democrats that have been trying to obstruct TRUE healthcare reform too. But the main problem is the Bush Republicans. Removing them is the best thing tactically to do. On the other hand. If you can easily replace a democrat obstructionist with a supportive democrat, DO IT!
You have been AMAZING!!! my people. Don't loose heart. You knew it wasn't going to be easy saving the World. :-)
God Bless You
jacksmith — Working Class
I REST MY CASE (http://krugman.blogs.nytimes.com/2009/07/25/why-markets-cant-cure-healthcare/)
Republican Senators up for re-election in 2010.
* Richard Shelby of Alabama
* Lisa Murkowski of Alaska
* John McCain of Arizona
* Mel Martinez of Florida
* Johnny Isakson of Georgia
* Mike Crapo of Idaho
* Chuck Grassley of Iowa
* Sam Brownback of Kansas
* Jim Bunning of Kentucky
* David Vitter of Louisiana
* Kit Bond of Missouri
* Judd Gregg of New Hampshire
* Richard Burr of North Carolina
* George Voinovich of Ohio
* Tom Coburn of Oklahoma
* Jim DeMint of South Carolina
* John Thune of South Dakota
* Kay Bailey Hutchison of Texas
* Bob Bennett of Utah
Let me say it again, I am for the public option, but I do worry that it may ultimately reduce choice (right now, we have too many people with no valid choices). If we included both the public option and co-opts, I think we might have stumbled upon a three tiered system that allows the health care consumer sensible, graded options (public, co-opts, or private insurance) that allow more flexibility and competition in the system, while at the same time, forcing true cost control at the lower end. At the higher end, insurance can still take proffits, if they convince the health care consumer that their options are worth the extra cost (and of course, if they can afford it).
The problem I see is that pundits in this country don't seem to like ambiguity very much. I am afraid a "try both" option would be tagged as wishy-washy, which is too bad because I think people who experiment are bolder than people who sit back and judge.
I like the idea of the coop, from a doctor's prospective, if patients band together to form large buying groups it could make reimbursement easier. The coop may contract with several health care companies, but the doctor might be able to bill the coop one simple bill, rather than the mess multiple payors presents.
As for the anonymous comment about Charity Hospital. Charity was the EXACT OPPOSITE of the currently proposed model. With Charity, the government owned the hospital and employed all the staff. The reason Charity was so bad was because the hospital was government run.
What we are talking about here is a public insurance. The government would pay all the insurance bills, but would have nothing to do with the running of hospitals. That's why it is better than the Charity system. Hospitals would continue to deliver services and bill just as they always have. The government would only handle the financial part, and my experience with Medicare leads me to believe they can do this job competently.