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  • Another Public Option? How Many Do We Need?

    The public option has reared its head once again. Last week, H.R. 5808 was introduced in the House Ways and Means Committee to add a public option to the Patient Protection and Affordable Care Act (PPACA).

    The plan would be administered by the Secretary of Health and Human Services. Payment rates for providers would be set at Medicare rates plus 5 percent and would grow according to increasing physicians’ costs. The plan would be required to maintain solvency, so premiums would have to cover benefits offered and administrative costs.

    Momentarily setting aside the major drawbacks of a public plan, this legislation isn’t necessary—the PPACA already lays the groundwork for a robust public option. The new law will allow the Office of Personnel Management (OPM), which currently oversees federal employees’ health benefits, to administer plans in the exchanges. These plans would be offered by private insurers but run by unelected government officials.

    OPM would set benefits, premiums, and medical-loss ratios for these plans, and there’s nothing on the books to stop the agency from modeling the plans after a public option. Worse yet, the PPACA says nothing about any solvency requirements for the OPM-run plans, increasing the likelihood that these plans would require taxpayer bailouts.

    The public plan is lauded as a way to increase competition and choice among insurers, but in reality, it wouldn’t accomplish either. Because the government can choose what to reimburse health care providers and private insurers can’t, a government-run health plan will always tilt the playing field.

    Just take a look at Medicare and Medicaid, both of which reimburse significantly lower than private insurers. Health care expert James Capretta points out that analysts on both sides of the aisle agree that, when it comes to reducing costs in health care, “the Medicare program, as it operates today, is a primary cause of the cost problem.”

    In the case of Medicaid, payments often don’t even cover the overhead of seeing a patient. The only way for providers to break even is to transfer that cost to privately insured patients. This cost shift increases premiums for private coverage.

    A public plan would make this phenomenon even more widespread, and as it did so would further squeeze out private insurance. This wouldn’t increase competition at all, and since lower reimbursement rates often mean reduced access to providers under government-run health care, choice can be ruled out, too. As Heritage expert Robert Moffit writes, “There is good reason to believe that a public plan operating within a national health insurance exchange would accomplish the single-payer objective.”

    The Congressional Budget Office predicts that the recently proposed public plan would reduce the deficit by $58 billion between 2014 and 2019. This is partially from the public plan’s effects on the new subsidies created by Obamacare. The rest comes from the fact that more Americans would lose their employer-sponsored coverage and instead purchase insurance on their own with after-tax dollars, raising tax revenues by $27 billion.

    America already rejected the public plan during last year’s debate over health care reform. Lawmakers should now repeal Obamacare, which includes the seed for a public option, rather than continue to beat a dead horse.

    Posted in Obamacare [slideshow_deploy]

    5 Responses to Another Public Option? How Many Do We Need?

    1. West Texan says:

      "The public plan is lauded as a way to increase competition and choice among insurers"

      What??? 1) Who is the Federal government to interfere into states' business.

      2) Free markets create competitive options, NOT government!

      3) How does a personnel department get away with overseeing the nation's health care?

      Where do these congressional buffoons come from? What simple minded majority do they represent?

      I've requested Greta's On the Record to ask Governor Perry if nullification of Obamacare is on the table for Texas. He's on her program this evening. Past experience tells me my question will likely end up in the usual round file.

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    3. West Texan says:

      Greta's interview with Governor Perry was focused on Arizona's immigration enforcement ruling. Sure like to know the Governor's thoughts about nullifying Obamacare's overreach in Texas.

    4. Jim says:

      Good. If true, I'm glad they have some sort of public option in the health care bill. And for the record, states are nothing more than imaginary boundaries.

    5. Bobbie says:

      All public options are unconstitutional. Government is an invasion of privacy and all sorts of freedoms and liberties when they make private insurance too expensive for the independent, private sector to afford. Programs paid for at the expense of a person's income, social security and the like, are not public options, those were government promises.

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