Summary
There is a nice, warm glow about a "public option" in health care, but what is it? What benefits will it have? How much will it pay providers? Who will actually run it? What is the evidence that any of the goals set for a public plan can actually be met? These and other questions need answers before Congress should be asked to vote on a "public" option. The bottom line is that currently health insurance and health plans are state regulated, private entities. A "public" option is different.
Analysis
1. Will it be a "public" program or just another government activity administered by the private sector? Most government health programs are run by private contractors.
2. Will providers be paid at the levels of private health insurance by "public plans" or at a low government rates? Medicare, Medicaid, and other government programs pay low rates forcing private payors to pay more through cost shifting.
3. What will be the covered services of "public" plans? Health plans and health insurers are covered by state laws mandating a wide variety of benefits? Will the public plan be allowed to opt out of those mandated benefits and thus offer more flexible benefits than the private sector?
4. How will "public plans" handle the complex tasks of actually running a business? Many private plans have gone out of business because they were unable to generate sufficient revenue to cover expenses. Would a "public" plan be able to attract sufficient expertise?
5. Will "public" plans be able to develop provider contracts and networks? The ability to deliver cost effective services at reasonable rates is key to an operating health plan.
The American people are being told that traditional insurance and health plans need a "public" option to keep the for profit sector "honest." And yet, more than half the under 65 uninsured population actually have coverage from non profit entities including coops. There appears to be almost no difference in premiums, benefits, and administration between for profits and non profits so how will a "public" option be an improvement?The evidence is that rising premiums are caused by better technology and pharmaceuticals coupled with an increasing desire by baby boomers for preventive services and an aging population with heavy medical needs. Compounding cost issues are the number of health people "opting out" of health insurance leaving payment of premiums to a smaller number of sicker people who utilize services. Risk spreading is decreasing. In this environment, it is unclear how a "public" plan would fit and what it would accomplish.
