Take Action Now

Sign up for Action Alerts

Find a RESULTS chapter near you

The Public Option and Health Reform

The Importance of the Public Option in Health Care Reform

Congress is moving closer to a final health care reform package with all committees of jurisdiction passing their versions. The Senate and the House are now working to merge the various reform packages so that they can bring on bill to the floor for debate and a vote. All the current health reform proposals provide an exchange which offers enrollees a choice of private health insurance plans. The services provided, cost sharing and regulation would standardize the choices so as to make it easier for consumers. This would focus competition around the price of coverage and minimize the health insurance industries’ ability to vary benefits according to the health of the enrollee. Many believe this could only work if a public option, like the one provided in the House bill, were included in such an exchange. A public option would operate as a federally financed insurance program akin to Medicare which currently provides coverage for all senior citizens. Both the public option and the exchange would include subsidies according to income for those who needed it most.

Medicare has been a successfully run public health insurance program for the past 44 years, and studies have shown that individuals enrolled in Medicare are more satisfied and have few complaints than those enrolled in job-based, or private, health insurance plans. In fact, Medicare recipients have more often described their care as excellent or very good. While the rising cost of Medicare is an issue, and it is not yet a perfected health provider, it is an extremely successful public plan which provides excellent care to millions of American seniors.

A high-quality, affordable public option would lower overall health care spending in this country because private insurers would be forced to compete with each other, as well as a new public plan. Families USA outlines four ways in which a public option would create a more competitive, and more affordable, health insurance market: first, the public option would be responsive to the president, congress, and the voters, not shareholders. Thus, a public option would not need to turn a profit. Next, the public option has minimal overhead costs. Studies show that Medicare, an existing, successful public option for seniors, has administrative costs of between 2 and 6 percent. Most private plans have administrative costs of more than 18 percent. Third, a public option is free to spend the bulk of its premium revenues on patient care. While some states regulate the percentage of revenue that must be spent directly on patient care, many do not. Even in regulated states, some private insurers spend as little as 60 percent of their total revenue on actual patient care. Finally, a public plan can negotiate for lower priced medical care, including cheaper prescription drugs and payments to medical providers. The VA is a successful example of a government run health care system that has negotiated significantly lower prices on prescription drugs on behalf of American veterans. In addition, a public plan can negotiate pay for quality performance, rather than the quantity of health care provided to an individual.

RESULTS has focused on the needs of underserved communities during the health reform debate by pushing for expansion of access through Medicaid and coverage through Community Health Centers. Even the most generous expansions of Medicaid in health care reform proposals expand care only to everyone at 133 percent of the poverty level and below. As we know, the current federal poverty line significantly underestimates real poverty in the US. Millions of Americans live cannot afford the skyrocketing cost of health care premiums and we support efforts to include strong subsidies and protections from cost-sharing for moderate-income families. RESULTS campaign is health care for all, and as such we believe that an expansion of Medicaid is crucial; however, it will not cover all the Americans who need an affordable and quality alternative to private insurance.

Recently we have heard a great deal of misleading rhetoric from opponents of the public option. They continually talk about “rationing” care, and government bureaucrats standing in between you and your doctor. Unfortunately, these scare tactics seem to be working on certain segments of the population. No one wants to hear that they are going to be told they cannot receive care because it is not cost-effective or deal with an individual whose primary responsibility is to keep you from receiving a doctor’s care. However, this is the reality for millions of Americans with private insurance. Insurance companies have paid their own bureaucrats to prevent you from expensive medical care because that is how they make their profits. The opponents’ logic is flawed if they believe your health will be better protected by a private insurer whose profit motives require that they deny as much care as possible as opposed to a government sponsored public plan where the primary motive is to care for the American public. With private health insurance premiums rising each year at an alarming rate, more and more average, hard working Americans struggle to maintain adequate coverage. According to Families USA, the average job-based health insurance premium has more than doubled over the last decade. Not only do these increases continue to support record profits even during the current recession, much of the money collected from premiums goes toward marketing and administration that would not be necessary for a public plan.

The Public Option and the Future of a National Health Program (“Single Payer”)

RESULTS continues to support the long-term goal of a single payer health care system like the one proposed in H.R.676 and S.703. We believe that a public option is the most realistic and politically feasible option that has been proposed in the current health care reform debate to move us toward a single payer system. Many opponents of the public option have expressed concerns over the ability for private insurers to successfully compete with a public option that does not have to produce profits for shareholders. This may be the best rationale for a public option. If the private sector cannot compete with a public plan as far as cost-effectiveness and quality go, then perhaps it does not satisfy the strict market-based criteria called for conservatives. If private plans fail to compete, then they are not the best option for providing health care to America’s citizens.

In July, the House Education and Labor Committee amended the America’s Affordable Health Choices Act to include a provision which would allow single payer systems to be implemented by the states. RESULTS supports this particular amendment, as well as any incremental change that would move our country toward an affordable government financed health care system for all Americans. We believe that a nationwide public plan could reach far more people who need health care most and provide a significant precedent for a single payer system. A public option will lay the groundwork for a Medicare for all type system by proving that quality of care and affordability are better provided by the government than private insurance bureaucrats.