Much Ado About Public Option

Politicians and special interest groups on all sides of the ideological spectrum are revving their engines about the importance of the public option - having it, or not.  It's a topic that's been on the board for our entire discussion and dissection of health care reform bills, but now more than ever people are starting to get more vocal, and frankly, kind of nervous, about what's likely to be put into law.  Let's me be very clear on this next point: a public option is not the back door to a single payer system, which is what many of it's proponent - liberal Dems- really want.  Furthermore, in response to it's critics - the entire Republican party sans Olympia Snowe - having a public option will not lead to a nationalized system and thus lead to the end of private insurance.  The public option is meant to increase market competition and lower the cost of insurance.  I've discussed how the insurance companies and their lobbying efforts have already had a monumental impact on the shaping of the reform bill, so today I'm going to focus on the argument of the single payer system and why the system has been brought into the public option debate. 

A Single Payer system is one that delivers near-universal public health care to all citizens in a given population.  It collects all medical fees and pays for services through a single government source.  Medicare is an example of a single payer system in the United States, except that it only serves a section of the population.  Single payer systems function in such nations as the United Kingdom and Taiwan.  With these systems, quality is at par with that of the U.S., but the costs are much lower.  The average cost of health care for an individual in the UK is $4,000 and staying steady while the average cost for an American is nearly $5,000 and growing at an alarming rate.  To provide some perspective on how wide ranging health care programs are across the globe, let's consider the case of Singapore.  They have a complex scheme of mandatory medical savings accounts compulsory savings based on income - a conservative's dream!  They also have catastrophic insurance, provided by the government on a single payer basis, paid for my taxes.  In total, their health care ranks in the top 10 in the world (with the US coming in down in the 30-range), and makes up less than 5% of their GDP.  Pretty amazing. 

What we're seeing happen in congress is that many of the bill's supporters think the only way to successfully have reform is through the single payer system, and knowing that is not a reality in the face of extreme opposition from the right, would settle for a public option and that's what they're putting their ammo into.  However, at the root the system, public option is not about coverage.  Public option  is about competition and lowering costs of insurance.  And even if a public option plan were to pass and be made into law, its not a building block for the single payer system.  President Obama has been very transparent in his intentions with health care reform:  we will tinker and tweak what we've already got, but we will not rebuild a brand new system.  All of the bills that will be debated in congress have the same fundamental elements:

• Universal guaranteed issue (no denials in coverage)
• Universal community ratings (no penalties for pre-existing conditions)
• Increased insurance company regulation
• Increased Medicaid and SCHIP (children's health care)
• Subsidies for lower income families to buy coverage
• Insurance exchange for those buying in the individual market
• Out of pocket caps - maximum you can ever pay

That being said, there is still a lot of good that will be done with these proposed changes.   For all of the attention put on the public option, the ultimate issue of cost containment and paying for the overhaul will be most important.  As I was saying in my last post, what we're getting so far is increased coverage, we haven't heard much about what plans are in place to make sure it's affordable for citizens and what will help save the government money.  The issue of taxing costly health care plans is one that's split down the middle in congress.  The intent of the tax is to pat down medical spending that over a decade would generate nearly $200 billion, which is a fourth of what the proposed legislation would cost.  The proposed tax is one of the few remaining proposals that could directly lead to a reduction in health care spending over the long term.  The tax would be imposed in 2013 on employer sponsored health care plans that exceed a certain threshold, $8,000 for individuals, $21,000 for families, regardless of whether the plans are completely paid for by employers, partially, or not at all.  The tax would be imposed on insurers and it will likely then be passed on to the customers.  The idea here is that employers, when shopping for health care for their employees, will consider these high costs and bargain hunt and attempt to avoid the tax, which will put pressure on insurance companies to provide cheaper coverage, and thus, slow the costs of medical coverage for everyone.  Critics say that employers will likely just pass the expense on to the employee as an out-of-pocket expense, raising costs for individuals and families, hitting the middle income population for which the tax is intending to protect.  Obama has embraces the idea of the tax, but it still stands to be seen if it will remain in the bill and further speak to the commitment of his party to slow the rise in medical expenses.

Before I sign off on this post, I must make mention of a key player in the issue - Olympia Snowe.  After the vote from the Senate Finance Committee for which she is a part of and voted as the sole republican in favor of the proposed bill, her name and face is likely one that you've seen on e-newspapers and magazines over the past few weeks.  While Snowe has made it clear that this bill has a long way to go and her vote for it last week does not represent a vote for it in the future, she is going to be a key figure in this legislation.  Democrats will likely spend a lot of time and energy to keep her on board, because without her, passing this bill will be very hard.  Not only may she bring along other Republicans to support the bill, she provides the bipartisan cover that is politically necessary for gaining the support of more conservative Democrats.  As more debates develop in congress we will also want to watch Rahm Emanueal, Obama's Chief of Staff, who will be taking a break from focusing on the war in Afghanistan to focus on health care deliberations.  He will be a central figure in crafting any Senate approved measure and the final bill.  Stay tuned for more next week.