In the midst of the current healthcare system crisis, where drug and insurance premiums are on the rise and a growing number of sick patients are being denied health insurance, politicians on capital hill are battling over the controversial issue of healthcare reform. One hotly, contested tested resolution to healthcare reform would be the idea of activating a public option for health insurance. The public option is essentially a government-run health insurance plan designed to compete with private insurance plans. While the idea of a public option is to keep private insurers in check, many Americans will still have the choice of staying with their initial carrier if they are cheaper. In spite of the bill’s good intentions to provide the uninsured and underinsured with an affordable option, the real topic of debate is whether or not the public option will actually lower health expenses. In other words, will it bend the curve, so to speak?
Like most ideas in theory, the public option seems like a viable alternative to the current private-run industry. An insurance plan with the full backing of the government would be able to operate on such a grand scale that it would have greater leverage when negotiating prices with healthcare providers (e.g. physicians, hospitals). Public option or not, it is quite evident that the American people are in dire need of health reform, especially on the heels of an economic recession. According to the Henry J. Kaiser Family Institute, a non-profit research leader in health policy and communications, “family health premiums rose to $13,375 annually in 2009 Up 5% as inflation fell nearly 1%.” In 10 years time, premiums have increased an astounding 131%, nearly three and a half times more than workers’ wages (increased by 38 percent since 1999) and nearly five times that of inflation (an increase of 28 percent since 1999).
Yet despite the promise a public option holds, there are some that will argue that the premiums will actually increase under a government-run plan. According to the Congressional Budget Office, “The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees.” If the government implements its own version of an insurance plan then will have to abide by a higher standard of care much to its own undoing. They will not turn away the very sick and incurable, and they will not engage in cost-minimized manage care. Consequently, the government will have to spend more to accommodate is consumers. As a result, the small minority of Americans that actually choose the public option will experience higher premiums.
Government-run healthcare may also place a deadweight loss on society. Government premiums would essentially act like a binding price ceiling, causing a downward pressure on quality as a result. Because private insurers are forced to compete by lowering their prices they will decrease the quality of care. To add to this, many physicians will leave the industry as a result of not being able to sustain business operations.
To go back to my original question--a public option for healthcare will in fact bend the curve, but in the wrong direction. These are unintended consequences as a byproduct of government intervention. Government efficiencies will cause inefficiencies elsewhere. For instance, a decrease in administrative costs may appear to lower healthcare costs in general, but these costs are actually intended to try and improve the quality of healthcare and insurance. Bureaucracy costs and stagnation of government will further add to the unnecessary costs of healthcare on society, while increasing the suffering of many consumers. A public option may allow many Americans to gain access to “affordable” insurance, but will do so at a greater cost to society. There must be healthcare reformation in order to fix the current system, but a government-run plan, in its current state is not the only option.
Bibliography:
· 2009 Employer Health Benefits; The Kaiser Family Foundation
· “Will the public plan have higher premiums than private insurance?” Ezra Klein, Washington Post
· “Fannie Med?” Why a Public Option is Hazardous to your Health,” Michael F. Cannon
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