What is a "Public Option"

The idea of a public option is that the government takes on the role of an insurance company.  The government creates a variety of health insurance plans and then sets prices for those plans at a level which it expects to break even.  Consumers who wish to purchase these plans may do so at these "break even" rates.  This forces private health insurance providers to adjust their prices for similar plans, or to offer new innovative plans targeting specific sectors of the customer base.  Since smaller companies can operate at a lower overhead, options will also exist to purchase coverage comparable to government rates.  Some people may be inclined to purchase more expensive coverage if they believe that the quality of care will be better on either the medical or administrative side.  Some people may simply prefer a private plan.  

As long as the government plan is not subsidized with taxpayer money, and is governed by the same rules as any other insurance provider, the concept of a "public option" is a feasible, logical possibility for lowering health insurance costs.  It is also totally and wholly unrelated to the health care reform being promoted by the President and Congress. 

Why the President's Reform Plan is not a Public Option

In discussing health care "reform", President Obama has repeatedly cited the 30 to 40 million Americans that at any given time do not have have health insurance.  His solution for these people is to create a public option plan for health insurance, and then place those without insurance on this plan.  If the plan is successful in lowering the cost of insurance, there may be a small percentage of Americans who were previously uninsured that can now afford to pay for this coverage.  Those that still cannot afford the cost of any insurance will be given what the President calls a "hardship waiver" for their premiums.  Of course, those that cannot pay for premiums will also not be able to pay for deductibles and co-pays. 

If the government is acting both as the insurance provider and as the entity paying the premiums, deductibles, and co-pays, then the government is providing this person with free health care and is simply using the "public option" as a means to reimburse the medical practitioners.  The end result is that the government is funding the health care of this individual, the only difference is that this funding is now viewed as insurance, and as a right.

The distinction between health insurance and health care must be clear.  A public insurance option is meant to lower the cost of insurance for those already paying for such a service, and has no relation to those unable to pay for any type of health insurance.  

Why any plan called a "Public Option" is really Universal Health Care

Forgiving the logistics of the President mixing health insurance and health care, what is wrong with placing those who cannot afford any insurance on the public plan?  The problem is that the public option simply cannot be run as an insurance company and provide care for those who do not pay for it.  Yet, this is exactly what the President is proposing.

The addition of one non-paying person to the public system creates a situation where either premiums must be raised on all others to offset the cost, or the same amount of medical resources must be spread over the paying customers to cover this one person.  At a ratio of one hardship waiver to one million paying customers, the additional cost or distribution is not a problem.  However, there will be some point where the number of people who are incapable of paying will begin to affect either the quality of care provided by those paying, or the overall cost of the public option.  

When this happens, paying customers will seek a private plan where the ratio of those paying for care to those receiving care is 1 to 1. The public option will then fail because as more payers leave, it will reach a state where it is simply not taking in enough money from the remaining payers to cover the full cost of all health care recipients.  This public option system will therefore always fail as it is the only system compelled to provide coverage to those who cannot afford it.  

If the government option starts with half the country opting for one of the public plans, then by the President's own estimation of 30 million people who cannot afford insurance, 1 in 6 people on this plan will be receiving health care, but not paying for it.  The government cannot sustain a plan of 600 people on the funds of 500, and still compete with private insurance companies who always have a payer to receiver ratio of 1 to 1. There are only two possible outcomes; the government uses taxpayer funds to keep the system going or the government outlaws private health insurance and forces everyone onto the public "option".

Government subsidization of its own health insurance company is not a "public option".  It is taxation for a universal health care program with the label of a "public option". 

Is a single-payer system the real goal?

There is currently a great deal of evidence to suggest that the flawed logic in the public option argument has not been missed by the high ranking democrats, but rather that a universal health care system is the desired goal and the public option plan is simply a means to achieve this goal.  

In this 1993 video, then Senator-Elect Obama tells the AFL-CIO that he is a proponent of a single payer system.  He describes the system and uses the phrase "Every in - Nobody out".  As described above, one of only two outcomes of the "public option" system that the President is proposing is a requirement that everyone join the "public option".      

When asked about this video at later times during the campaign and during his presidency, Senator and President Obama stated that he only supported a single payer system in a theoretical sense; if the country was "starting from scratch", but the presence of the current system prevents the implementation of a single payer system.  The videos below show this response.

Another major proponent of a single payer system is Congresswoman Jan Schakowsky from the Chicago, Illinois area.  Congresswoman Schakowsky also sits on the Health Subcommittee for the Committee on Energy and Commerce, one point of origin for health care legislation. 

This is why I oppose health care reform.  The goal of driving down health insurance for those capable of paying cannot be mixed with the goal of providing health care to those who cannot pay for it.  I cannot believe that the President and others like Representative Schakowsky can speak with such conviction about the desire to provide health care for all and the desire to destroy the private health insurance industry, and yet write legislation which does not have as its goal these objectives.  While I may support an actual public option, I can support no reform from this congress as those writing such legislation do not have the goal of reforming health insurance, but rather the goal of eliminating health insurance.

The lessons of TARP

In October of 2008, Congress passed the Emergency Economic Stabilization Act of 2008.  The chief component of this legislation was the Troubled Asset Relief Program - otherwise known as TARP.  TARP was passed with very specific guidelines and rules as to what could be purchased with the funds and what institutions were eligible to receive such funding.  Section 113 of the legislation clearly states that only common stock without voting rights or preferred stock could be purchased, and these items could only be purchased from institutions meeting the definition of "financial institution" as set forth in the legislation.

Before leaving office, President Bush made the decision to "loan" money from the TARP fund to GM and other automobile companies, a clear violation of section 113.  His justification was that the purpose of the legislation was to save the economy, a goal that he was acting to fulfill.   President Obama has double-downed on this expansion of executive power by not only continuing to "loan" more money to GM, but also dictating the purchase of stock with voting rights, and directly interfering with the management at GM.  This was clearly not the intent of this legislation.

If the explicit text of TARP can be ignored by two Presidents simply because the "goal" of the legislation was to rescue the economy, what is stopping President Obama from implementing a single payer system using the justification that the purpose of health care legislation is to "save the health care system"?