Perils a Public Option
Consequences of Cannibalizing Private Health Insurance
Approximately two-thirds of Americans, according to Kaiser Family Foundation (KFF) polling, favor enacting government-run health insurance – aka: a public option.
There's even data that a majority of Americans favor Medicare for All, a single-payer system for which the supply of billionaires to tax will quickly evaporate - but that's a subject for another day.
A public option for health insurance - from the perspective of private insurers - is like competing with the coach's son for playing time on the football or basketball team, which is probably the most generous comparison.
Should government-run health care insurance occur, private insurance will be taking a back seat, many believe, or relegated to insuring those with high utilization rates of medical services – pumping up premiums.
“If I offer a government option next to a private plan and that government option is based on lower rates, certain people within my population will move over and, typically, the people who move out of a health plan first are those who are healthier,” Brian Marcott, the president/CEO of the National Business Group on Health (NBGH), remarked at a January press briefing.
“If you’re losing healthy people from your population, then your rates are going up for everybody else,” Marcott added. “There’s a risk there; we’re not sure what would happen because we’ve never seen this scenario.”
Back in the Spotlight
The public option was debated heavily prior to the enactment of the Affordable Care Act (ACA) in 2010, which shifted it to the back burner. Perhaps disappointment with, or some dismantling of the ACA, coupled with presidential politics, generate what private insurers see as a clear and present danger.
“Government insurance options mainly erode or ‘crowd out’ private insurance, rather than provide coverage to the uninsured,” stated Scott W. Atlas, MD, fellow at Stanford University’s Hoover Institution, writing in the Wall Street Journal in July 2019.
“Its inevitable consequence is the death of affordable private insurance,” claimed Dr. Atlas, who also authored Restoring Qualify Health Care: A Six-Point Plan for Comprehensive Reform at Lower Cost (Hoover Institution Press).
The first reform Dr. Atlas suggests in his book is to “expand affordable private insurance.” In a Youtube video posted in December 2018, Dr. Atlas listed his ideas for healthcare reform, “creating conditions long proven to bring down prices while improving quality.”
You can watch the video below for the doctor’s elaboration upon three main points:
- Incentivize consumers
- Increase supply of care
- Stimulate competition
Current Government-Run Insurance
This goes beyond Medicare and the Veterans' Administration. The government also supplies insurance to specified groups through:
- Tricare – for both active and retired military
- Indian Health Service – for American Indian and Alaska native tribes
- Healthcare Group of Arizona – enacted in the 1980s for business with between two and 50 employees.
As the only group-based program on the list, it’s worth noting that the Arizona program operated in the red from 2004 to 2007 but got back into the black by raising deductibles, the lowest of which is now $2,000.
Hawaii enacted a children’s health insurance in 2007, Keiki Care, which offered coverage to uninsured children whose family income rose above Medicaid levels. The state paid $25.50 per child in partnership with a medical services association. The program lasted only seven months, ended by political debate about the legitimacy of recipient families in the program.
“Some 85% of those who signed up already had private insurance . Those costs were suddenly shifted onto other taxpayers,” Dr. Atlas claimed.
A “patient empowerment and advocacy consultant” wrote a web post for Very Well Health in July 2019 hashing out what Trisha Torrey contends are the pros and cons of the public option. The writer envisions a public option serving those unable to afford private insurance, those with pre-existing conditions, and “young, healthy people” as prime beneficiaries.
The downside, the writer admitted, is the eventual demise of private insurance, devolving into a single-payer system with puny reimbursement of services to providers.
Dr. Atlas pointed out that in Sweden and Great Britain, while the wealthy pay substantial taxes for socialized medicine, they also either purchase private insurance for themselves, or pay out of pocket.
“The public option would further stratify America’s health-care system—as it has done in other countries, where only the lower and middle classes suffer the full brunt of inferior single-payer care,” the doctor projected.
A More Dire Outlook
Writing in Forbes magazine recently, John C. Goodman contends “The history of government in medicine is not a pretty one,” citing:
- Forced sterilization in the early 20th century
- The 40-year Tuskegee medical experiment involving several hundred black males with syphilis
- The swine flu “fiasco,” in Goodman’s view, of the 1970s
Goodman, who proclaims himself “one of the leading thinkers on health policy.” In a single-payer system which would result eventually from a public option, Goodman contends, “government would determine what care you get, when you can get it, where you can get it, and how you can get it.”