Real reform needs a public option
The pundits were nearly universal in their predictions just weeks ago that the public option for health care reform was dead. The pundits were wrong. The public option has always been in the House version of the bill and now is back in the Senate version.
The public option today may not have 60 votes in the Senate, but it is far from dead, and that’s good news for anyone who wants to see genuine reform and expansion of health care coverage to the largest number of Americans.
The health insurance industry and its allies in Congress have stepped up their campaign and show no willingness to compromise. What they propose as reform is essentially business as usual.
Failure to act now on meaningful reform, with a Democratic president and majorities in both the House and Senate, could forestall needed change for at least another generation. Business as usual is a prescription for disaster, and even reform opponents know it.
American health care is great – if you can afford it. Otherwise, you are at the mercy of a health insurance company that more than likely enjoys a virtual monopoly in your state, can charge what it wants, can knock you off its rolls for pre-existing conditions, and can otherwise dictate the rules.
Without a public option to keep the health insurance industry honest, as the president says, we will continue to see crushing financial burdens on businesses and consumers that will endanger future economic growth.
Health insurance companies won’t go out of business if the federal government role in health care is expanded. They will continue to do what they have always done – skim the cream off the top, taking the most desirable clients (those who pay premiums but do not need services) and leave the rest for the public option.
The claims of public option opponents that the government has no business in health care are laughable. At the current rate of growth, Medicare and Medicaid, federally managed programs, will account for 50 percent of all national health spending.
While doctors and hospitals are not particularly fond of Medicare and Medicaid reimbursement rates, study after study has shown that Medicare and Medicaid are far more efficient than private-sector management when measured by “cost of administration.”
No wonder private insurance companies are so fond of the current system. It guarantees that government will provide health insurance for those who use it most – low-income families (Medicaid) and senior citizens (Medicare) – leaving the healthiest portion of the population to pay the ever-increasing premiums for the most restrictive services.
These practices have broken the fundamental concept of insurance – shared risk. Insurance works best when the risk is spread across the largest population. Insurance companies should expect to lose money servicing some clients because of the profit they make on others.
But that’s not how it works. The insurance industry wants to make a profit on every customer – be it a business or an individual. If in one year the insurer pays out more in claims for a client than it collected in premiums, it will raise the rates the next year to make up the difference or drive the client away.
A small business with 200 to 300 employees only needs three or four of them to get really sick to see its premiums rise 30 percent from one year to the next. If that business already pays $1 million in premiums, coming up with that extra $300,000 is no easy task.
The math of health insurance, when shared by such small groups, will never add up. The public option will spread the risk, expand coverage, provide real competition to the private insurers and put the nation on track to finding a sustainable model for health care finance.
