In my last post, I talked about how health care is not a free market. In this post, I get into the “public option” in the health care reform debate: the government health insurance plan that will exist alongside current private insurance products, giving people another option when getting insurance. It is no exaggeration to say that the success of any health care reform depends on the existence of a public option; without one, there will be no reform.
The public option seems to be one of the most controversial parts of the health reform plan in Congress, with most Republicans, and even some Democrats (mainly the conservative Blue Dogs) saying that they do not like the idea of a public option. This unpopularity in Congress, however, does not reflect the feelings of the rest of the country: polls show that an overwhelming majority of people support a public option. So why is Congress so afraid of it?
I think we all know the answer to that question: money. The U.S. spends dramatically more on health care than other countries, and yet we have worse outcomes compared to just about every other industrialized country. To most people, this represents waste and inefficiencies in health care delivery. However, to those people who make a living administering private health insurance plans, or ordering up all those worthless tests and procedures, or providing all those worthless MRI scans, this isn’t waste, it’s their bread and butter. Anything that purports to reduce health care spending means that they will be getting less income. Of course insurance companies will fight this tooth and nail, and they are doing just that, lobbying Congress and sloshing around money like there’s no tomorrow.
What might happen with a public option? The way I see it, there are three possible outcomes. The first possibility is that a public option exists, but it so expensive and so crappy that nobody chooses to use it. In this scenario, insurance companies wouldn’t lose customers at all; in fact, since health care reform would probably have some mechanism to force people to purchase insurance, private insurers would gain customers. The fact that private insurers are so against the public option shows that they don’t think this is a very likely outcome.
The second possibility is that the public option exists at a price and service level comparable to private insurance. Surely, private insurance companies would not like this: Target certainly doesn’t enjoy it when Walmart moves in down the street. However, there are myriad examples of multiple companies co-existing in the market; there are even examples of private businesses successfully competing with public enterprises. Private insurance may not like a public option comparable to their wares, but they would live. More importantly, the competition would benefit consumers and make it more likely that insurance companies would have to treat their customers like actual customers (instead of treating this like garbage). We’d all benefit, even if the profits of the private insurers suffered a bit.
The third possibility, and the one that insurers are scared of, is that a public option would provide better service at a significant price discount. Again, this would be great for consumers, and it would also provide indisputable proof that there is a great deal of waste and inefficiency in private health insurance. It would also put most private insurers out of business. Many people who have ever dealt with private insurers would only be too happy to see this happen; the only losers here are the private insurers. Which is exactly why they are fighting it.
Without a public option, what reform would there be? As already mentioned, health care legislation would probably require the purchase of coverage, and since there would be no public option, the only source for coverage would be private insurers, the same as now. Also, the same as now, insurers would be free to rescind coverage, refuse to pay for treatment, and generally abuse patients. There would be no more competition between private insurers than there is now. Private insurers would have more customers, however, and thus even more money to lobby Congress, since everybody would be mandated to have coverage. Does this sound like a better system?
Having a public option is just the first step in reforming our health care system. A few weeks ago I read a fascinating story in The New Yorker about our health care system, and why it is so expensive. It’s a long read, but well worth it. In short, in order to cut down on wasteful and inefficient care, our health care system needs some dramatic changes. Switching health care providers to salaries with bonuses for good health outcomes from paying them a fee-for-service, conducting studies comparing the efficacy of competing treatments, coming up with standards of care so doctors don’t need to be so defensive….these are all major, major changes that we need to see in our health care system. A public option can go a long way using both carrots and sticks to force these kinds of reforms; does anybody think that private insurers will be able to affect this change?
As other countries have shown us, public health insurance is no panacea. It has its own problems, and it will require constant vigilance. But public options do work, and any health care “reform” without a public option will only succeed in putting more money into the pockets of private insurers, without leading to the changes we need to see in our health care system. We can’t afford our health care system as it is; anything that delays needed reforms will only create a bigger crisis.