What's So Wrong with a Public Option as Part of Healthcare Reform?
Posted: Sunday, October 18, 2009
by Mogama
http://www.mogama.info
Back in February 2007, John Edwards was the first of the presidential candidates to make a Public Option Healthcare plan a part of his platform. Discovering that Edwards' idea was popular with grassroots democrats, candidates Barack Obama and Hilary Clinton soon adopted the Public Option as part of their healthcare reform proposals.
What exactly is the Public Option? Simply put, it is a government-run healthcare plan that will compete with private plans, as Medicaid and Medicare now do. Someone has described the Public Option as "Medicare for all Americans". "Medicare allows a free choice of doctors and hospitals... Its premiums and co-payments are much lower than private plans, and its administrative costs run at about 3-5%, compared to about 18-30% for private plans" (Rachel Port, Associated Content). Tim Foley, writing for Change dot org, has the administrative costs at 3% for Medicare, 7% for Medicaid and 15-30% for private insurance.
As you can see, just the overhead cost alone is reason to scare providers of private healthcare plans. For these private sector providers, one of the things wrong with the Public Option is that it threatens their "administrative costs", which may be a code word for hefty salaries and bonuses for CEOs and other big money health tycoons. If I were one of these healthcare CEOs I too would battle any reform that threatens to yank a chunk from my greens (money).
The bottom line for healthcare reform can be summed up in three goals, which are part of the House and Senate bills: (1) control the costs of healthcare; (2) expand access to health care; and (3) improve the quality of healthcare.
The Public Option as part of health reform will achieve seven important things: (1) provide coverage for all applicants, (2) charge the same amount regardless of whether one has a pre-existing condition, (3) not dump the sick or raise rates when a policy holder gets sick, (4) not pay for unspecified medical services, (6) not lose your insurance when you lose your job, (7) not base your premium on your gender (at present, women are charged more than men for healthcare).
In one word, what private healthcare providers fear most about the Public Option is "competition". The same free-market heavy weights who value competition are suddenly dead scared of having to compete with "the government". Ironic.
If the government is such a bad business manager as most people think, then why would healthcare professionals fear competing with the know-nothings of the government? Shouldn't the healthcare pros be salivating at the prospects of running rings around government healthcare?
Could it be that if reform includes mandatory health insurance for all Americans, the private providers may drop their opposition to the Public Option? I think so, because that will mean millions more new customers for the healthcare industry, and that will rake in billions of dollars more in healthcare premiums, a good chunk of which will go for those beloved "administrative costs" (up to 30% of healthcare dollars).
The reality of private and unequal wealth makes it impossible for any government program to destroy any national industry in the United States. Americans who have the money will always opt to pay for Cadillac healthcare plans to suit their fancy.
Even if most doctors and hospitals charged little or nothing for medical care, as long as there are a handful of hospitals and doctors charging for privileged care, the wealthy will choose to pay. Thus there is bound to be private healthcare as long as there is some semblance of capitalism or profit motive left in the American economy. The profit motive is too strong a force to be obliterated by competition from the public sector.
But "The Public Option will drive private health insurance companies out of business. It will result in British-style socialized medicine, which will mean a government takeover of healthcare".
That's the tired argument, and it's about to make me puke. Don't we already have public options in some sectors of America's economy?
Doesn't the transportation industry have a Public Option? Just about every American city has a public transit system. Has that discouraged Americans from using the service of private taxi companies?
Doesn't the retirement industry have a Public Option known as Social Security? Has that resulted in a government takeover of the retirement sector? Has it bankrupted 401K, IRA, Roth IRA, and other market-based retirement plans? Don't wealthy people still have retirement accounts in mutual funds and other investment vehicles?
Don't we have a Public Option in the postal industry? It's called the United States Postal System (USPS), and it has FedEx, UPS, and DHL to compete with. How come those private companies have not closed shop because of all the unfair competition from government-run USPS? In fact, it is the government-run postal system that's been struggling to stay afloat by constantly raising the price of stamps.
Am I missing the point about the Public Option? Is it really the nuclear option, the death nail to private health insurance in America? Somebody educate me, please...
Mogama, your article on the public option for helath care was EXCELLENT! I only wish more people would understand the points you've made here.
Also, I wanted to thank you for your nice words about my Special Friendship article. Ute and I are truely blessed with this friendship.Please log in to respond to this comment.Thanks, Joyce, for reading and commenting. You are an excellent story teller; I look forward to reading more of your captivating articles. ~mogama~Please log in to respond to this comment.
Mogama (which rhymes with Obama ;=)People freak anytime a government play of such size is mentioned. There's the cost factor, speed (or lack of it) of getting care, and BIG government, of course. People freaked out when Medicare and Medicaid were first being thrown about (socialism, communism, govt. control, oh my!). Actually, I'm less fearful of big government and more of the fact that $90 billion a year is spent on private insurance and most of that does NOT go to health care but in the pockets of big rip off artists. Thanks for the informing article, Obama . . . errr Mogama ;=)Please log in to respond to this comment.You know, Jeff, I'd lived the rest of my life without realizing that "Mogama" rhymes with "Obama"! Seriously I've never connected the two. Actually the rhyme only applies in the last syllable - the "ma". Thanks for the eye opener; politics may be in my future-:) On a more serious note, I too am not a huge fan of BIG government, but recent unethical scams by BIG business have put me, and I believe millions of others, in a catch 22: while big government devices ways to whack us with higher taxes, big business invents ways to zap us with greed-laden rip-off deals. Which is worse or less evil? Frankly, I can hardly tell anymore. ~mogama~Please log in to respond to this comment.
Too Cool an article my man. But you and I know the score: Money talks, compassion walks. The HC industry has it all now, the big golden eggs from the Big Golden Goose - ILLNESS- something that is not an option for people. So why should any of them: doctors, HMOs, insurance companies, hospitals, medical equip providers, big pharma - give up anything? Their profits are through the roof. The rich do not have the votes, but they use their money to influence, and it works perfectly. The people are so overwhelmingly in the majority, but a small percentage of clever wealthy people whisper in the middle and poor class's ear "socialism, big government, fear fear fear." And we stupidly listen to them. So it's really our fault.
But never fear; greed can never be satisfied, and when it all collapses, when the greed falls on its own sword and employers and individuals cannot afford insurance payments anymore, BIG GOVERNMENT (which is the elected representatives of the PEOPLE and not CEOs of BIG BUSINESS) will be there to pick up the pieces, and then we will have 100% socialized medicine, (except for the rich that can buy anything that they want to).You can thank Ronald Reagan for 99% of the pain that we are all now feeling , and which will become worse. Look up "Operation Coffee Cup" to see how the wealthy began to manipulate the common folk in the 60s.Please log in to respond to this comment.Wow, Raymond, you've unloaded some heavy-duty stuff here. From your words, our health situation may be far worse than I am aware of. So to say we have a healthcare crisis is no exaggeration! I'm not sure how Reagan brought any of this about, though. I will read up on Operation Coffee Cup; may be I'll find my answer there. Thanks for the heads up. ~mogama~Please log in to respond to this comment.
Nice article. And nice to point up the hypocrisy of those who disparage the government: "Shouldn't the healthcare pros be salivating at the prospects of running rings around government healthcare?" I love it.Please log in to respond to this comment.Exactly, Tony. Thanks for reading and commenting. ~mogama~Please log in to respond to this comment.
The point your missing is how will the government pay for their public option? I will tell you... on the backs of me and you. Public systems aren't working. Medicare, bankrupt! Social security, bankrupt! The post office, bankrupt! The bottom line is the idiots in Washington can't handle money, and I don't want to put my health in the hands of people who don't know what they are doing. Look at public schools. They have made the private option cost so high that it is generally only available to the wealthy and even Obama wont trust the public schools with his children! Just like he won't trust this public option with his healthcare! He has nothing to lose by passing these changes.Please log in to respond to this comment.You write, "The point your missing is how will the government pay for their public option? I will tell you... on the backs of me and you." Question: Who's paying for the private option now? Isn't private healthcare being paid for "on the backs of you and me"? You said, "...I don't want to put my health in the hands of people who don't know what they are doing." Question: If big private healthcare professionals know what they are doing, how come the price keeps skyrocketing without marked improvement in the health of the American people? "Look at public schools", you say. I say, "Which public schools?" Not all public schools are failing. We have great public schools where I live. Great teachers make great schools, not whether the school is private or public. As for where President Obama's children attend school...you're arguing against yourself: the president, like any other parent, has the "option" to choose public or private school, and he takes the private option for his kids. Why don't we have the same choices for healthcare. That's all we're saying. You trust private healthcare over public healthcare. I trust neither, but welcome the competition between both untrusted options. Thanks for your comment. ~mogama~Please log in to respond to this comment.
Great article, and you are right about the public option not running any insurance companies out of business. I think most are skeptical because of the way certain government options already in place are running. The post office, which is not in competition with UPS and FedEx (look at the package load of the post office compared to the other couriers), is running at a loss. Social Security, which is not in true competition with 401k's or IRA's, is running out of money, and city transit systems, which are paid for by taxes and more taxes and more taxes, are losing money. And the amount of abuse and waste in these programs is above that in the private sector since there is no government oversight of the government that has any power. People are rightly skeptical because this is healthcare, not a ride to work.Having said that, a public option - as with city busses - is a great idea for those who cannot otherwise afford health insurance.Please log in to respond to this comment.Big money is the real issue here. The private healthcare industry does not want to lose any of the billions they now exclusively command. All arguments against the public option is ultimately about the bottom line: "follow the money." Thanks for your comment. ~mogama~Please log in to respond to this comment.
I think that a public option has the potential to inject more competition into the market; private insurers will have to lower their prices and increase their benefits to compete. Who knows what will happen; there are a lot of issues involving taxes and the like--you can either pay taxes that support health care (including Medicare/Medicaid) at a group rate, or pay health insurance premiums. They seem equally costly.Please log in to respond to this comment.Isn't it ironic that the private sector which values competition as a cardinal virtue of the marketplace is all of a sudden dead set against competition? Proponents of the public option must keep using the language of competition, and they will win this argument, regardless of how loudly the other side shouts fear, fear, fear. ~mogama~Please log in to respond to this comment.
I learned a lot from your article, my friend. I had little idea what a "public option" was.I can see why private insurers would want everyone to be required to have HC insurance.Too many big corporations running the show.I was with you 100% until you cited Social Security as an example of how well the government runs things. Social Security is the biggest Ponzi scheme ever unleashed.Still, a well written and insightful article.Please log in to respond to this comment.Oh, no, Ken, I do not believe or think Social Security is a well-run government program at all. I wholly agree with you, and I have stated so elsewhere that Social Security is indeed the biggest Ponzi scheme of the American economy. In this article I'm simply making the point that Social Security has not put private retirement plans out of business as proponents of exclusive private insurance argue the public option will do to the healthcare industry. Thanks for commenting, my friend. ~mogama~Please log in to respond to this comment.
