With the collapse of the dismal Republican healthcare bill, some Democrats are reviving talk of a public option as the cure for the holes in the Affordable Care Act that opened the door for the GOP attack.
Some even project the public option as the path to real transformative reform, an improved and expanded Medicare for all. It’s not. The public option bears more in common with fool’s gold. It may look shiny, but it will still leave you broke.
And there’s a significant danger that a public option would not only fail to improve the ACA, it could undermine the movement for single payer, discrediting a fully publicly financed system that is not a feeble adjunct to the private insurance market.
Granted, the ACA did enact some important course corrections, especially the expansion of Medicaid, to a profit-focused healthcare system that had plummeted to 37th in World Health Organization rankings.
But ignoring the highly successful and popular model of a proven system, Medicare, the ACA architects instead opted for an alternative that left 28 million Americans uninsured and failed to reign in the price gouging practices of the private market.
The inevitable result was millions of newly insured people paying premiums for insurance they increasingly could not use because of ever-rising deductibles, co-pays and other out of pocket costs.
Enter the proposal for a public option, now again in vogue as the solution for driving down costs by offering competition for the private insurers. The public option, the argument goes, can offer less expensive coverage because it doesn’t have to divert massive sums for administrative costs, mainly profits, lush executive pay packages, claims denial paperwork, and marketing.
But in practice, the outcome would be far different. Medicare works in large part by including all the people it covers in one large risk pool so that healthier patients balance out sicker patients in costs that must be reimbursed to providers. But the public option would not have that protection. One of two scenarios is likely:
A. To actually compete, the public option has to employ the same cutthroat tactics private insurers employ to limit their costs.
Insurance companies reap profits by collecting premiums and restricting payments for care. They accomplish that goal by denying claims — data from California and Connecticut have shown insurers deny from one-fifth to one-fourth of all claims—or excluding patients likely to be sicker and in need of more costly care.
The ACA barred insurers from refusing to sell plans to people they used to summarily reject with even minor pre-existing conditions. But the insurers have decades of experience in gaming the system, such as the use of restrictive provider networks and drug formularies.
As Adam Gaffney and Danny McCormick wrote in The Lancet in April, in the massive New York market only one insurer, a consumer cooperative that ultimately collapsed financially, covered care at the city’s top cancer center. Another popular scam is charging their enrollees more for essential drugs for AIDS, cancer or other serious illnesses.
So the public option can engage in the same skullduggery to exclude sicker, more costly patients, or
B. The public option becomes the ACA escape valve by welcoming in the sickest people selected out by the private insurers, in effect another bailout for a failed private insurance market.
Noble, but fatal. Thus the public option has far higher operating costs than the private plans. To effectively compete, it must either greatly jack up its rates, eliminating it as a less expensive alternative, or endure the bankrupted fate of that consumer coop in New York.
To top it all off, the Congressional Budget Office in 2013 concluded that adding a public option would not even slice the number of uninsured, and could even encourage employers to dump workers they now cover into the ACA exchanges.
With millions still either uninsured or paying exorbitant costs for care, imagine promoting a publicly financed Medicare for all to a public that sees a public option that is just as unethical as the notorious private insurers, or a financial wreck that just went belly up.
In 1957, the Ford Motor Co. had the hot idea of a glitzy new car that would capture new market share. It was called the Edsel, which soon become a synonym for a flop. Nurses have a message to the public option purveyors. Stop trying to sell us an Edsel.
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