By ROSEMARIE DAY
As the coronavirus pandemic overtook the tail end of the Democratic primary season, attention rapidly shifted from examining the nuances of the differences between the candidates’ healthcare platforms to simply demanding a response to the pandemic. Beyond addressing the immediate crisis, however, lie many questions about the weaknesses of our current healthcare system, and how we will address them in the long run. These questions should be at the forefront of voters’ minds as we head into the election this fall.
One of the major weaknesses in our system is that we do not have universal healthcare. Importantly, virtually all of the Democratic candidates called for making healthcare a right in the U.S. This is a key first step toward universal healthcare. Their approaches to achieving this varied, however. Bernie Sanders and Elizabeth Warren called for “Medicare for All,” but most of the other candidates, including Joe Biden, have pushed for some kind of public option. The public option has faced criticism that it will simply maintain the status quo. This criticism inspired me to write this blog, because a large-scale public option program could actually help to reshape the US healthcare system and result in improvements in access to care in this country, ultimately getting us to universal healthcare.
What is a public option?
A public option is a health insurance plan (or plans) sold by the government and available to all Americans, regardless of income, age, or other personal characteristics. It competes with private insurance, rather than supplanting it. The public option idea has been kicking around for some time. It was originally included in the Affordable Care Act but was dropped due to strong opposition from Republicans, moderate Democrats, and health care interest groups.
Would a public option constrain runaway costs?
A public option is likely to challenge the prices of the private insurance plans against which it competes. Chances are the public option would be built off of Medicare or Medicaid’s lean administrative infrastructure, and would therefore have lower administrative costs (Medicare’s administrative costs would be about 6% versus the 12-20% average for private insurance). It also wouldn’t need to turn a profit to satisfy shareholders and could tie its rates to the lower ones offered through existing public plans. Lower prices would lead to higher market share, putting further pressure to reduce overall healthcare spending.
Has any state implemented a public option?
A few states have tried. It wasn’t until 2019 that Washington state became the first to ultimately pass a bill. Washington state’s bill, which was not priced as aggressively as some would have liked, is still projected to save consumers 5-10% on their premiums. Industry watchers, myself included, eagerly await the effects of this program when it goes live in 2021.
Would a public option achieve universal coverage?
It depends on how it’s implemented. If a public option plan is made available as just another option on the state and federal exchanges, requiring people to opt in and pay premiums, then we would see more moderate increases in coverage. However, if the plan instead automatically enrolls people, with the ability to opt out for private coverage, then universal coverage would be a true possibility. Most of the candidates’ public option proposals suggested auto-enrolling people below a certain income, which would make a big dent in the number of uninsured in the country by negating the need for them to go through the process of applying for coverage.
Would insurers have a role in the public option?
They certainly could. Washington state’s public option will be offered through insurers, similar to the private managed care organizations that cover roughly two-thirds of Medicaid enrollees and a third of Medicare enrollees in the country. A federal public option could be implemented more quickly and easily if done through private insurers like Washington state is doing, but expanding Medicare’s capacity to cover these additional lives would probably result in lower administrative costs.
But wouldn’t a single-payer system like other countries have ultimately work better?
There is a big misconception that the healthcare systems in Germany, the United Kingdom, Canada, Australia, Denmark, France and other countries are all single-payer systems. Most are not. Most are more similar to a public option system than they are to Bernie Sanders’ Medicare for All proposal. None of these countries have a true single-payer system and none of them outlawed private insurance, as Medicare for All proposes to do. All of the aforementioned countries feature a health system in which most people are covered by a public plan but have the option to pay for private insurance that gives them additional services.
Who would oppose a public option?
The idea of a public option is now widely embraced by the Democratic party—a far cry from just ten years ago when conservative and centrist members helped remove it from the Affordable Care Act. Republicans and many health industry interest groups oppose it, and passage would require both a Democratic supermajority and a large expense of political capital. Although the road is difficult, it is far less difficult than Medicare for All, which is supported by fewer than a third of Democrats in the House.
The public option could be a viable path to affordable health care
The public option is a more incremental approach to universal health care than Medicare for All, but could still be a bold step, particularly if it has an auto-enrollment component. Rather than enacting abrupt change by a government fiat that eliminates private insurance, the public option works by tipping the economic scales, changing the system through a more affordable consumer option. This gradual approach would be far less disruptive to hospitals and clinicians whose cost structures cannot accommodate a sudden, dramatic drop in revenue, and allow them to slowly adapt as more and more consumers move towards the public option. It also wouldn’t force Americans, most of whom have indicated that they like their insurance, to drop it in favor of a government plan.
The fact that a public option, thought unpassable a decade ago, was enacted in Washington state and was supported by the most centrist of the Democratic Presidential candidates, says a lot about how far this idea has come. A public option would be a big deal. It wouldn’t be as big of a change as Medicare for All, but it is more politically and economically realistic. We shouldn’t underestimate the public option’s potential to make some fundamental improvements to the US’s broken healthcare system, constraining runaway costs and covering millions of currently un-and under-insured Americans. And this is exactly what we need to have in place before the next pandemic.
I am grateful to Niko Lehman-White for his contributions to this piece.
Rosemarie Day is the Founder & CEO of Day Health Strategies and author of “Marching Toward Coverage: How Women Can Lead the Fight for Universal Healthcare” (Beacon Press, 2020). Twitter: @Rosemarie_Day1