Opinion: Public option health plan would kill private insurance
Most Americans like private health insurance. That's the key finding of a recent Wall Street Journal/NBC News poll. Fifty-six percent of voters oppose Medicare for All if it eliminates private coverage.
Many moderate lawmakers are well aware of these polling figures. So they're calling for an expanded version of Medicare — or the creation of a new government-run plan to compete against private insurers.
All these approaches — whether Medicare for All, Medicare for All Who Want It or a public option — would be disastrous. Each would raise taxes, reduce the quality of care and eliminate the private health coverage that most consumers have, like and expect to keep.
Let's start with Medicare for All. The general concept — extending comprehensive, government-funded coverage to all Americans — polls well. About half of Americans give it the thumbs-up, according to the Kaiser Family Foundation.
That majority support turns to opposition once people learn Medicare for All would ban private insurance. The plan grants the federal government a monopoly on health insurance — no private insurers or employers would be permitted to pay for health benefits.
People are big fans of private insurance. Seven in 10 Americans say they're satisfied with the coverage they receive through work. That's a lot of people — more than 180 million Americans have employer-sponsored health insurance.
The "public option" aims to assuage these folks' fears by allowing people who have employer-sponsored coverage to keep it and giving those who don't an alternative. A government-sponsored health plan that's open to everyone should also put pressure on private insurers to keep prices as low as possible — at least, that's the thinking.
But like Medicare for All, a public option would lead to the destruction of the private insurance market. It'd just do so more slowly.
The public option would have the power to tilt the insurance market in its favor. Most public option proposals envision reimbursing hospitals and doctors at Medicare's rates, which are artificially low. In 2017, for every dollar hospitals spent caring for Medicare patients, they received only 87 cents in reimbursement.
Those lower costs would allow the public option to charge less than commercial insurers, which don't have the power to underpay providers.
Many Americans would understandably switch from private insurance to the public option. As they did so, hospitals and doctors would raise prices for the privately insured to compensate. Insurers would be forced to hike premiums in response, to cover providers' higher payment demands. That would compel even more individuals to switch to the public option.
Some employers would surely do the same, dropping their benefits programs and encouraging their workers to enroll in the public plan. Indeed, a recent study from KNG Health Consulting found that Medicare for America — a proposal that would transfer everyone who does not receive coverage through an employer to a government-run plan — would cause one in four workers to lose access to employer-sponsored insurance by 2023. More than half of employees at small businesses would lose their employer-sponsored coverage under Medicare for America.
Eventually, the public option would be the only option. The insurance market can't function unless all the players in the market are operating by the same rules.
As Seema Verma, administrator of the Centers for Medicare & Medicaid Services, rightly put it, "The public option is a Trojan horse" for Medicare for All.
Americans would suffer under a government-run healthcare system. Approximately 5,000 community hospitals would lose over $151 billion under a Medicare for All system, according to a recent Stanford University study. Robert Pollin — an economist at the University of Massachusetts Amherst and supporter of Medicare for All — estimates that 2 million jobs across hospitals, health care facilities and the insurance industry could disappear.
A report from the Congressional Budget Office concluded that Medicare for All could "lead to a shortage of providers, longer wait times and changes in the quality of care."
That's a lot of disruption to a health insurance system that works well for most people. More than eight in 10 Americans with private coverage say they receive "good" or "excellent" care, according to a Gallup poll. Nearly 92% of U.S. residents have health insurance.
It'd be far simpler — and more popular — to expand access to coverage through our existing private, employer-driven system than to launch a government takeover of health insurance.
Janet Trautwein is CEO of the National Association of Health Underwriters.