Public health insurance option

A public health insurance option (public insurance option or public option for short) is a proposed health insurance plan that would be offered by the U.S. federal government. In Affordable Health Care for America Act (H.R. 3962), and its predecessor H.R. 3200, it falls under the category of a Qualified Health Benefit Plan. The federal government would create a health insurance plan financed entirely by premiums, to provide citizens not covered by employer or other state insurance plans an option for health insurance that would compete with private insurers. There are no subsidies set aside exclusively for a public health insurance plan in any of the bills currently before Congress. The plans stated in the Senate HLP Committee and H.R. 3962, the two that contain clauses establishing a public insurance option, require the repayment of "seed money" to the Treasury over a ten year period.

President Barack Obama promoted the idea while running for election. Since becoming President, Obama has downplayed the need for a public health insurance option including calling it a "sliver" of health care reform, but has still not given up pursuing the idea. Congressional Democrats have tended to support this idea, stating that it would drive down premiums and provide choice where few options exist. Congressional Republicans have tended to oppose the idea, stating that it would cause the private health insurance industry to collapse. Since the Qualified Health Benefit Plan would initially keep rates for services between Medicare and most private insurers, private insurers have complained that this will result in cost-shifting to them.

Rationale

See also: Health care reform debate in the United States

Supporters of a public plan, such as Washington Post columnist E.J. Dionne, argue that many places in the United States have monopolies in which one company, or a small set of companies, control the local market for health insurance. A government run plan would thus create new competition. Dionne has labeled a public option a "monopoly-buster". He has also stated those opposed to a government plan know public opinion is against them and are resisting it by trying to move discourse towards abstract and demagogic ground. He has referred to Sen. Grassley's calling government a "predator" (see below) as a "most revealing" example of this.

Nobel Laureate economist and New York Times columnist Paul Krugman has stated that local insurance monopolies exist in many of the smaller states represented by "balking" Democrats, and that those who oppose the idea of a public insurance plan on the grounds of defending private competition are in practice just defending lucrative local monopolies. He also stated that traditional ideas of beneficial market competition do not apply to the insurance industry given that insurers mainly compete by risk selection. He wrote, "The most successful companies are those that do the best job of denying coverage to those who need it most." Krugman also said in 2007 that whilst a single payer system would be the most efficient and cheapest solution, a public insurance option could get the country towards single payer as through competition it would drive the private insurers out of business.

According to economist and former US Secretary of Labor, Robert Reich, only a "big, national, public option" can force insurance companies to cooperate, share information, and reduce costs. Scattered, localized, "insurance cooperatives" are too small to do that and are "designed to fail" by the moneyed forces opposing Democratic health care reform.

In a public rally in Cincinnati, on September 7, 2009, President Barack Obama said: "I continue to believe that a public option within the basket of insurance choices would help improve quality and bring down costs."

Rep. Sheila Jackson-Lee, who represents the 18th congressional district in Houston, said, "Surveys show that nearly three out of four voters want a public health insurance plan." She also said that 73 percent of doctors and 1,000 state legislators favor health reform legislation with a public option. The American people want a strong public option heard in Congress, Lee said, because their voices "have been drowned out by insurance company propaganda and disruptive tea-baggers at health reform town hall meetings."

Alternative plans

See also: Single-payer health care § Proposals for a single-payer system in the United States

An alternative that has been proposed is to pump federal money into various private non-profit health insurance cooperatives (co-ops) to get them to become large and established enough to provide cost savings and into setting up transparent health insurance exchanges that would host them among health insurers. These co-ops would likely be statewide. Howard Dean and other Democrats have been critical of abandoning a public option in favor of co-ops, questioning whether the co-ops would have enough negotiating power to compete with private health insurers. Prominent economists such as Robert Reich and 2008 Nobel Economics Laureate Paul Krugman have also questioned co-ops ability to become large enough to reduce health care costs significantly and thus support the public option instead.

Those desiring reform beyond the public health insurance option have argued for a single-payer system, which is planned to be brought for a vote. A single-payer system has been claimed by some as politically difficult, and Barack Obama has come out against it, stating in a joint session of Congress, "...it makes more sense to build on what works and fix what doesn't, rather than try to build an entirely new system from scratch." Obama had expressed that he is a proponent of a single payer universal health care program during an AFL-CIO conference in 2003.

Instead of creating a network of statewide public plans, Senator Olympia Snowe has proposed a "trigger" in which a plan would be put into place at some point in the future in states that do not have more than a certain number of private insurance competitors. Senator Tom Carper has proposed an "opt-in" system in which state governments choose for themselves whether or not to institute a public plan. Senator Chuck Schumer has proposed an "opt-out" system in which state governments would initially be part of the network but could choose to avoid offering a public plan.

Criticism

See also: Health care reform debate in the United States

Michael F. Cannon, a senior fellow of the CATO Institute, has argued that the federal government can hide inefficiencies in its administration and draw away consumers from private insurance even if the government offers an inferior product. Cannon referred to a study by the Congressional Budget Office that found that profits account for less than 3% of private health insurance premiums, and he commented that the lack of a profit motive reduces incentives to eliminate wasteful administrative costs. The chief executive of Aetna, Ron Williams, has stated on the News Hour with Jim Lehrer that a public option creates a situation where "you have in essence a player in the industry who is a participant in the market, but also is a regulator and a referee in the game". He said, "we think that those two roles really don't work well."

Senator Charles Grassley, an opponent of the public insurance option, was asked for his opinion of Medicare, a much more government controlled entity than the public insurance plan. Grassley conceded that Medicare was "part of the social fabric of America", but he went on "I think there is a lot wrong with it". Later in the same exchange he said “the government is not a fair competitor. It's a predator” which E. J. Dionne sees as deliberate misdirection on Grassley's part (in Rationale above).

Dr. Robert E. Moffit of the Heritage Foundation has argued that a public plan in competition in private plans would likely be used as a "dumping ground" for families and individuals with higher than average health risks. This, in his view, would lead to costs that business should pay passed onto the taxpayer.

Opinions

Further information: Public opinion on health care reform in the United States

Between October 28 and November 13, 2009, Americans were asked by Dick Durbin's campaign organization to rank their support for various forms of the "public option" currently under consideration by Congress for inclusion in the final health care reform bill. The 83,954 respondents assigned rankings of 0 to 10 with the following medial estimates.

Type	Median	Average
50-State	10	8.56
Opt-Out	5	4.52
Opt-In	1	2.31
Trigger	0	1.14
None	0	1.10

On October 27th, journalist Ray Suarez of PBS stated that "Public opinion researchers say the tide has been shifting over the last several weeks, and now is not spectacularly, but solidly in favor of a public option."

A Pew Research Center report published in October 8 stated that 55% of Americans favor a government health insurance plan to compete with private plans. The results were very similar to their polling from July, which found 52% support. A USA Today/Gallup survey described by a USA Today article on October 27 found that 50% of Americans supported a government plan proposal and 46% do not.

A July survey by Quinnipiac University found that 28% of Americans would like to purchase a public plan while 53% would prefer to have a private plan. It also stated that 69% would support its creation in the first place.

A Rasmussen Reports poll taken on August 17-18 stated that 57% of Americans support a public option. A NBC News/Wall Street Journal poll, conducted August 15-17, found that 47% of Americans opposed the idea of a public option and 43% expressed support.

In a poll in which the data were gathered on August 19, 2009 Survey USA estimated that the majority of Americans (77%) feel that it is either "Quite Important" or "Extremely Important" to "give people a choice of both a public plan administered by the federal government and a private plan for their health insurance." When asked to choose between three statements about a "public health plan administered by the federal government", a 46% plurality chose "... patients might not always have access to their choice of doctors and the government would lower costs by limiting medical treatment options and decisions that should be made instead by patients and doctors."

A survey published on July 17, 2009 by Rasmussen Reports found that 50% of Americans opposed and 35% supported the creation of a government health insurance company. The survey presented the option as “the health care reform plan proposed by President Obama and congressional Democrats.”

Physicians

A survey designed and conducted by Drs. Salomeh Keyhani and Alex Federman of Mount Sinai School of Medicine done over the summer of 2009, surveying a random sample of more than 2,000 physicians, found that most medical doctors, at 73%, support a public option. An IBD/TIPP poll of 1,376 physicians showed that 45% of doctors "would consider leaving or taking early retirement" if Congress passes the health care plan wanted by the White House and Democrats. This poll also found that 65% of physicians oppose the White House and Democratic version of health reform. Statistician and polling expert Nate Silver has criticized that IBD/TIPP poll for what he calls its unusual methodology and bias and for the fact that it was incomplete when published as responses were still coming in.

A survey reported by the New England Journal of Medicine in September, based on a random sample of 6,000 physicians from the American Medical Association, stated that "...it seems clear that the majority of U.S. physicians support using both public and private insurance options to expand coverage."

Reid bill

The new Senate plan establishes a government-run health insurance program that it says will compete with private insurers, but allows states to opt-out of the public option through through their own legislation. Medicare and Medicaid have similar provisions.

See also

• Health care compared
• Health care reform in the United States
• Publicly-funded health care
• SustiNet

External links

• Health Care for America NOW! An advocacy group that supports a public health insurance option.