Health Care Reform - The Public Option

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The contention over health insurance reform is sharpening its focus on the Democrats' proposal of a government sponsored health insurance program that would compete with private insurance.

Competitive Option or Trojan Horse?

The White House and a majority of Congressional Democrats say that a public health care plan would give consumers a more competitive option, especially for those who are shut out of private insurance because of a pre-existing condition or for those who simply cannot afford private care. Republicans say the public health care option is a Trojan horse with built-in measures that will inevitably dismantle private insurance while increasing costs and reducing choices.

Though the drive for a single-payer health care plan, where the government would act as the one and only clearing house for all health care coverage, is all but buried, many Democrats are determined to include a government run public health care option as part of the larger package. Many Republicans would rather see the whole medical system released to the forces of the open market.

Both sides of Congress understand and agree that health care costs, and overall health care spending, have risen more sharply than any other major sector of the economy, and far faster than inflationary trends in general. These costs are stifling the growth of businesses across the country and leaving families with inadequate or no health care coverage at all.

An estimated 45.7 million people in the United States, including 8 million children, have no health insurance at all. When these uninsured consumers require medical attention, they often use the emergency room doctors and nurses as their primary care physicians, and those paying for private insurance inevitably cover those costs.

So What Is this Public Option?

According to proponents of the public plan, it has two main purposes. One is to promote cost savings in the insurance industry and to bring lower costs to the consumer, creating greater competition in the insurance market. The other purpose, advocates of the plan say, is to offer people a choice that doesn't exist today. Because private insurers are driven to make a profit, they compete to avoid enrolling and caring for the roughly one percent of people who account for as much as one quarter of all health care spending. Because a public plan doesn't need to make a profit, such an option would be open to anyone.

Critics of a public health care option say that such a system could run in one of two ways, and that both ways are unacceptable. In one version, the government runs a public plan in a way that would drive prices down, forcing the rest of the insurance market to completely restructure how it does business, possibly forcing the end of private insurance. The public option would then be the only option, a single-payer system. Another version is one run by the government but with similar pricing and rules as existing private insurers. Critics worry that if this plan is the same as all of the other plans, would it really reduce costs? Opponents also suggest that Congress is unlikely going to allow this option to participate in the market as an equal player, and would tilt the field to their plan's advantage.

Is the Public Option like Medicare?

This public plan has been compared to the Medicare program that is now available for Americans over the age of 65. Supporters of the plan point out that Medicare has the largest provider network in the country, and that most doctors and hospitals participate with Medicare. People have a wider choice and greater access with Medicare than any other private insurer. The Medicare model is only one of many possibilities. The architecture of a public option is far from designed. It could possibly be an extension of Medicare, only use Medicare's payment system, or be completely separate from Medicare.

If Medicare is the model for the public system, critics say, the government would pay doctors and hospitals less. Medicare pays doctors 80 percent of what an insurance company pays. Doctors and hospitals might question participating in the plan, which in turn might prompt legislators to prevent doctors from opting out. Also, opponents argue, if employers are offered a less expensive option, they will naturally take advantage of it, moving employees out of plans they might like into a cheaper plan.

Insurance companies are worried about any public option, however it's structured, because it will have inherent efficiencies. It would be one system that works for everybody, and will not need to make a profit. To again use Medicare as the model, the administrative costs of Medicare are about two percent of the whole program, far less than any private insurance company. Employer sponsored plans have administrative costs totaling as much as ten percent, and for individually purchased plans, administrative costs can be as much as 40 percent of premiums.

The overwhelming problem with the Medicare model is that it is an under-funded entitlement program accruing massive amounts of debt. Challengers contend that if costs for a public plan are kept artificially low, because such a plan could rack up never ending debt, there is virtually no way for private insurers to compete.

What Do People Want?

Estimates and polling from various sources produce a range possible outcomes were a government run health program to be offered, but most demonstrate that a majority of Americans want a public option and would likely migrate to it.

The Congressional Budget Office (CBO) estimates that 23 million Americans would leave employer-based and other plans for a public option. The Lewin Group predicts that if the public plan were open to everyone, approximately 60 to 70 percent of those covered by private insurance would leave their current coverage for the public plan. Proponents of the public plan strongly question the likelihood of these results.

Polls find that about 70 percent of Americans support a public option, with about 50 percent of those polled saying that the government would do a better job of providing coverage than private insurers. Roughly 30 percent of Americans say that providing health insurance is not the government's responsibility.

It's important to consider all of the data, however. People want health care reform to be sure. Most polled believe it's good for the country, but are not sure if it's good for themselves. Most people are somewhat willing to pay more taxes, but are worried that changes to the health care system would negatively impact their coverage and options.

Will a government run health plan survive the deal making on Capitol Hill? It depends on who answers. The president strongly backs a public option, but is open to other possibilities. The White House and Congress want broad bipartisan support, and some suggest that they won't get it if any public plan is a part of health reform bill. Advocates point to the CBO's estimate of a possible two hundred billion dollar savings a public plan would bring, and that a majority of Americans want it.

The debate is heating up. The country will likely see if a government run health care option survives by the end of summer.

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