Most people are familiar with how life insurance works. Accountants and executives devise contracts and using statistics, they bet you live, at least until they break even. And if they can improve on your chances of living longer than average, they do even better – for example, choosing people who don’t smoke or aren’t otherwise risky.
However, now please consider “healthcare insurance”, something that doesn’t seem like real insurance at all to me. It comes in a bewildering variety of forms. Wikipedia has an article on it for anyone interested. It’s complex, but its many forms have one thing in common: there is little meaningful competition among themselves, nor in the industry they serve. The “insurers” are administrative middle-men that, for a lucrative price, pass along costs from suppliers to businesses, costs are that are so out of control and accelerating that coverage costs an American more than double what a Canadian pays.
In trying to research this subject, which is at the very core of the national debt problem, I made an embarrassing discovery. Having opined at length on healthcare, I had reluctantly come to the conclusion that a single-payer system like Canada’s or those in Scandinavia was the only viable way out of our dilemma, but I overlooked an obvious alternative. My only excuse is that the debate on it occurred before I began to blog, and research, on the subject. My bad.
So, what is the alternative? It is the Public Option, something I had assumed was the same thing as a single-payer system. It isn’t.
The public health insurance option is a proposed government-run health insurance agency which competes with other health insurance companies. It is not the same as Publicly-funded health care. Called the public insurance option or public option, for short, it was a proposed health insurance plan that could be offered by the federal government.
And, the article adds,
The federal government’s health insurance plan would have been financed entirely by premiums without subsidy from the Federal government.
One supporter of the Public Option labeled it a “monopoly buster”, referring to the so-called medical “insurance” industry. This view was reinforced by noted economist, Nobel Laureate, and New York Times columnist Paul Krugman , who 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.
Why were some Democrats (and all Republicans) balking? They weren’t listening to doctors – there was evidence that “73 percent of doctors and some 1,000 state legislators favored the PO. But, what about the people in control of the industry? (Dare I call them part of the 1%?) They were dead set against it. Robert Reich explained it in 2009 when it was being debated as part of the ACA in a Wall Street Journal article (emphasis added):
Which is precisely why the public option has become such a lightening rod. The American Medical Association is dead-set against it, Big Pharma rejects it out of hand, and the biggest insurance companies won’t consider it. No other issue in the current health-care debate is as fiercely opposed by the medical establishment and their lobbies now swarming over Capitol Hill. Of course, they don’t want it. A public option would squeeze their profits and force them to undertake major reforms. That’s the whole point.
Now, on the face of it, it might seem that the Public Option has an unfair advantage over private insurance, but Reich points out that the concept mandates that it has to pay for itself. He adds,
As a practical matter, the choice people make between private plans and a public one is likely to function as a check on both. Such competition will encourage private plans to do better — offering more value at less cost. At the same time, it will encourage the public plan to be as flexible as possible. In this way, private and public plans will offer one another benchmarks of what’s possible and desirable.
With the current deadlock in Congress and the election now only a year away, I realize that there’s no chance of getting the Public Option back again, but I bring it up now hoping to provide context for the political debates. The debt crisis can not be solved without solving the healthcare problem, so talking about tax reform as the solution for the debt crisis, while admirable, is a deflection from reality, and that goes double if the “reform” is regressive. I hope healthcare comes up as a topic, and if you read the links in this post you will be better informed on what it will take to solve it that I’ve been up to now.
The GOP bashes ObamaCare regularly for not solving the cost problem, and they’re right. But what they aren’t telling you is why it doesn’t.