I've been very busy the last few months, and I've had only one eye on the health care reform debate. My passive efforts to follow it were frustrating because the media stories and even the diaries here almost never actually explained what was at stake. There was a huge debate over "the public option" and even a "strong public option" but very little discussion about what those terms actually mean.
I was also skeptical of having a knee jerk view that the public option was critically important because jumping on that without thinking reminded me of the conservatives who deny climate change just because that's the conservative position.
So let me see if I've got this right -- and please chime in and correct me where I don't.
The Public Option
Remember, I don't really know what I'm talking about here, so please correct me if I'm wrong. But I'm pretty certain of one fact -- the public option is not a single payer plan a la Canada or France.
Rather, the public option is going to be a not-for-profit insurance provider run by the government. It is not going to be taxpayer financed, but financed by premiums from its customers, the insured. OK, got that. Apparently Joe Lieberman and Mary Landrieu don't know that, but I've got that much figured out.
But what role does it play and who will be eligible? For example, I noticed that the CBO estimate states that just 3-4% of the public will be enrolled in the public option -- why so small?
My understanding is that health care reform doesn't want to dismantle the existing system of employer based coverage. So employers that already provide coverage are supposed to be incentivized to maintain that coverage (can someone explain how?) And large employers are going to be required to provide coverage for employees. The employers don't get to buy into the public option, correct? (and why?)
In addition, individuals not eligible for employer insurance will be required to buy insurance in the individual market. Risk pools will be established to fix that market, which is currently a disaster. In exchange for the mandatory purchase requirement, the insurance companies are going to be required to sell insurance without regard to preexisting conditions. It's in this revised individual market that the public option comes into play, right? (I'm pretty sure that's right, but please correct me if I'm wrong)
So there may be several plans available for individuals who aren't in an employer risk pool -- the private companies that joined that market and the government provider (the public option).
The next issue is what role does the government provider play. Do they act as just another market participant who negotiates from the leverage provided by its customers, or does the government provider get to set medicare rates (the strong public option)?
It seems to me the difference between the strong public option and standard public option is being oversold. Even in the strong public option, the government can't just set the rates unilaterally. Health care providers could opt not to take patients who only pay the medicare rates. But could they take medicare patients while refusing public option patients? Does the legislation say anything about that? I don't know. It seems the strong public option may be much ado about nothing if providers could still ignore those patients, because what's the difference between negotiated rates and following the medicare rates if the providers don't have to accept them? You may have cheap insurance, but if you can't find a doctor or hospital or x-ray service, etc, that will take you, you'll likely agree to pay a little more for private insurance to ensure you actually get to see a doctor.
Why do we care so much about the public option. It seems the theory is that the public provider will negotiate hard for the lowest rates, which will lower the overall market rates and benefit even the participants in the other plans. Is that assumption correct? It really turns on how big the public option becomes, and whether it can use the additional leverage of medicare patients in its bargaining.
The Subsidy
Here, I'm pretty sure I know what the plan is. The public option is not subsidized any more than any of the other plans. If it is losing money, it will have to raise premiums to cover its losses. The subsidy is given to the consumer, who can use it to buy insurance from anyone, so the private companies are just as subsidized as the public one. Again, Lieberman and his ilk don't seem to get this, but this point is clear. There may be a need to increase these subsidies if health care premiums continue to skyrocket and we keep requiring people to buy insurance, but the existence of the public option doesn't make that more likely or more expensive. Rather, if the assumption that the public option will reduce rates is correct, then it's less likely that the government will have to increase its subsidies in the future.
I know this is elementary stuff to most of you, but for others like me who have sort of followed this with one eye while the other eye keeps track of daily life, I thought it would be useful to confirm the basics.
Please correct or amplify in the comments.