October, 2009:

via Congress.org – News : Debate centers on public option

As the effort to reform health care nears the end, one of the biggest issues yet to be decided concerns the public insurance option.

Democratic leaders in Congress support creating a government-run health care plan that would be available to the uninsured.

No matter where you might stand on the public option, you have to agree that both arguments, for and against, have merit. Whether one person is a progressive liberal or another a “tea-bag party” righty, admittedly there are equal passions related to revamping our health care industry.

Being a progressive liberal, it is hard for me to swallow the other side’s arguments and I immediately go into debunking mode whenever I come across arguments against the public option and now is no different. I’ve found three good arguments here against the public option and I want to take this time to counter them.

There are some arguments on the con side that really don’t add up once the facts are explained and understood.

Argument against:

A government plan would have unfair advantages to negotiate prices. Eventually the public option would crowd out private insurance companies and lead to a government monopoly on health insurance or single-payer health care system.

Rebuttal:

It’s time for big insurance companies to shrink to reasonable, competitive sizes no matter how much pain it causes them in the same manner that the telephone system was broken up years ago.

Will the public option crowd out private insurance? Of course not. The insurance industry works along side of, not in competition to Medicare, Medicaid, Tricare, and the VA health system. But many people will see that the public option is cheaper and they will vote with their feet.

Don’t throw free market and competition as a reason against the public option because if the market forces were going to fix the broken system they would have done it by now. We’ve been in need of, and talking about, a public health system for over 60 years.

Many times, poor and rich alike find out too late that their insurance plan isn’t as wonderful as they thought. This happens when they try to file a claim. The government monopoly mentioned above would only serve to replace another one – the insurance monopoly – where one company in any particular state may control over half the insurance policies written. Judging from the success of Medicare, it would do a much better job keeping us all healthy. If there was public insurance that was both less expensive and offered as much or more benefits, then folks would naturally gravitate that way and the government is not to blame for it.

Argument against:

If the government negotiated to pay lower prices, doctors and hospitals would compensate by charging private insurance plans at higher rates. Experts say this “cost-shifting” already occurs with the government-run Medicare and Medicaid plans.

Rebuttal:

Cost-shifting would not be an issue if our nation’s poor and working poor had their hospital bill covered by the public option. There would be little or no cost to shift. The best way to unburden the private insurance premium is to have a more efficient system that gives continuous, low cost coverage to everyone.

Our nation’s poor suffer through disease until they can hold out no longer then seek treatment at the emergency room. After recovery, if they haven’t waited too long to survive, they struggle to pay for their treatment – a debt that the hospitals will go after with vulture-like voracity. Bankruptcy ensues, further burdening the private insurance premium. If the poor person had a government option to pay for preventive care, this scenario is likely to not have happened at all.

We have an economic system that allows businesses to cover their costs by raising prices. Conversely, we have an economic system that allows businesses to keep profits that occur from finding lower priced material markets and cheaper labor, like in China. When they lose money the public pays, but when the reap greater profits they keep it. It is a win-win for the corporations. It is time that these immensely wealthy insurance corporations feel our pain.

Argument against:

The public option costs too much.

Rebuttal:

Compared to what? The Iraqi occupation? Anyway, the total bill will be under President Obama’s bar or it won’t get signed.

The government loses more each year in loss of tax revenue from the federal exclusion on insurance premiums than the projected $90 Billion per year cost of the entire health reform package. This is from a study done by the Kaiser Family Foundation on tax subsidies for health premiums:

The largest tax subsidy for private health insurance — federal exclusion from income and payroll taxes of employer and employee contributions for employer-sponsored health insurance — was estimated to cost the U.S. Treasury around $200 billion in lost revenue in 2007, or more than one-half of the estimated net federal outlays for the Medicare program for that year. Other prominent tax subsidies for private health insurance include the exclusion of health insurance premiums from state income taxes, the federal tax deduction for the self-employed, and the health care deduction for health expenses (including premiums) exceeding 7.5% of adjusted gross income. (Emphasis mine.)

The health care reform package with the public option saves enough in premium dollars to offset any new taxes on health premiums which is just one way being considered to pay for reform. The option being considered in congress would affect only the most generous insurance plans.

My three points here are first, insurance companies could stand the strain of losing a few million customers since they monopolize the market. Secondly, the shifting of costs and subsequent over-burdening of privately held premiums due to the uninsured can be fixed by providing the uninsured with a low-cost, continual health care plan. Finally, there are many ways to pay for this plan, one of which is to eliminate the federal exclusion on only the most generous insurance policies.