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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 will be a Qualified Health Benefit Plan competing with similar private insurance plans in an internet based exchange or market place, enabling citizens and small businesses to purchase health insurance meeting the minimum federal standard. Persons covered by other employer schemes or by state insurance plans such as Medicare will not eligible to obtain coverage from the exchange and therefore cannot obtain this form of federal health insurance. The federal government's health insurance plan will be financed entirely by premiums without subsidy from the Federal government. 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 public option in H.R. 3962 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

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 a single payer system would be the most efficient and cheapest solution and a public insurance option would 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 Cincinnatimarker, 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."

Democratic Representative Sheila Jackson-Lee, who represents the 18th congressional district in Houstonmarker, has said, "Surveys show that nearly three out of four voters want a public health insurance plan." She also has 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... because their voices have been drowned out by insurance company propaganda and disruptive tea-baggers at health reform town hall meetings."

President Obama elaborated on his reasons for a public plan in his seminal September 9th address to the Joint Session of Congress:

Alternative plans

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

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 stated that Medicare was "part of the social fabric of America", but he went on to say that "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. Republican House Minority Whip Eric Cantor has argued that a public plan would compete unfairly with private insurers and drive many of them out of business.

John Murphy, an independent candidate for Congress from the 16th District of Pennsylvania in 2006 and 2008, has called the current public option plan "a de facto bailout of the healthcare insurance companies" pointing out that "Here we have a health care bill (H.R. 3962) which will not only drive up insurance costs but will not even permit the government to negotiate with pharmaceutical companies, thereby driving up pharmaceutical costs as well! The Congressional Budget Office (CBO) estimates that only 2% of Americans (6 million) will be able to participate in this plan while 33% of Americans will remain either uninsured or underinsured."

Both before and after passage in the House, significant controversy surrounded the Stupak–Pitts Amendment, added to the bill to prohibit coverage of abortions – with limited exceptions – in the public option or in any of the health insurance exchange's private plans sold to customers receiving federal subsidies. In mid-November, it was reported that 40 House Democrats have said they will not support a final bill containing the Amendment's provisions.

Marcia Angell, M. D., Senior Lecturer in the Department of Social Medicine at Harvard Medical Schoolmarker and former Editor-in-Chief of the New England Journal of Medicine, has written "...older under-65's will be more likely to go without insurance, even if they have to pay fines. That's OK with the industry, since these would be among their sickest customers. (Shouldn't age be considered a pre-existing condition?) Insurers also won't have to cover those younger people most likely to get sick, because they will tend to use the public option (which is not an "option" at all, but a program projected to cover only 6 million uninsured Americans (2%)). So instead of the public option providing competition for the insurance industry, as originally envisioned, it's been turned into a dumping ground for a small number of people whom private insurers would rather not have to cover anyway." She lists five recommendations for modification of this bill, including "#1: Drop the Medicare eligibility age from 65 to 55."

Public opinion

A poll from November 10 and 11 by Angus Reid Public Opinion found that 52% of Americans supported a public plan. Their research had a 3.1% margin of error.

Between October 28 and November 13, 2009, Democratic Senator Dick Durbin's campaign organization polled Americans 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. A full national option had the most support, with a 8.56 average, while no public option was least favored, with a 1.10 average.

On October 27th, journalist Ray Suarez of The News Hour with Jim Lehrer 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.

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 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.

A July survey by Quinnipiac Universitymarker 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 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 Medicinemarker 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 their own legislation. Medicare and Medicaid have similar provisions.

See also



References

  1. Why We Need a Public Health-Care Plan Robert Reich The Wall Street Journal
  2. e.g. House Bill H.R.3962 Section 322 (b)2(B) "AMORTIZATION OF START-UP FUNDING- The Secretary shall provide for the repayment of the startup funding provided under subparagraph (A) to the Treasury in an amortized manner over the 10-year period beginning with Y1". The Senate HLP Committee bill contains a similar clause in § 3106 "A Health Benefit Plan Start-up Fund will be created to provide loans for initial operations, which the plan will be required to pay back no later than 10 years after the payment is made."
  3. Obama, Congress easing debate on public option - Beaver County Times
  4. http://www.youtube.com/watch?v=Wy5-OzyfyvA
  5. Mary Susan Littlepage, "House Leaders Refuse To Reconsider Kucinich's Single-Payer Amendment", Truthout.org, 11/04/09.
  6. Are health care co-ops the answer for reforming the system? - Kansas City Star
  7. Robert Reich's recent references to health insurance cooperatives
  8. Paul Krugman Baucus and the Threshold NYT Sept. 17, 2009
  9. Waxman to Weiner: Pelosi Will Allow Single-Payer Full House Vote - Youtube
  10. Remarks by the President to a joint session of Congress on health care
  11. Obama on single payer health insurance - Youtube
  12. Grassley praises ´Medicare as part of the "social fabric" of America but also criticizes it as a "predator"
  13. Molly Hooper, "Cantor: Public option poll 'skewed'", Blog Briefing Room, 10/21/09
  14. JOHN A. MURPHY "Can Lieberman Save Single Payer? (Why Progressives Should Back a Filibuster of the Health Care Bill)" CounterPunch November 9, 2009
  15. Alec MacGillis, "Health-care reform and abortion coverage: Questions and answers", Washington Post, November 14, 2009.
  16. Marcia Angell, M. D., "Is the House Health Care Bill Better than Nothing?" Huffington Post November 9, 2009.
  17. http://blog.seattlepi.com/seattlepolitics/archives/185853.asp
  18. Dick Durbin Public Option Poll Results GetActive Software, Inc., 16-Nov-2009
  19. http://www.pbs.org/newshour/bb/health/july-dec09/health_10-27.html
  20. http://www.investors.com/NewsAndAnalysis/Article.aspx?id=506199
  21. IBD/TIPP doctors poll is not trustworthy
  22. Salomeh Keyhani, M.D., M.P.H., and Alex Federman, M.D., M.P.H. "Doctors on Coverage — Physicians’ Views on a New Public Insurance Option and Medicare Expansion" NEJM • September 14th, 2009.
  23. Keith L. Martin "Public option choice highlights Senate Democrats’ $848B health bill" Insurance & Financial Advisor, November 19, 2009


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