A second look at the public option

The public option, if successful, leads to a single-payer model; the American people are not ready for one government approach to health care.

John Brown

Twenty years from now, the public option might not be all that optional. Proponents market the policy as a way to increase competition between private insurers. ItâÄôs a smart strategy âÄî competition is exactly what the industry needs, but an insurance policy subsidized by the federal government cannot fairly compete against insurers, and will likely do more harm by crowding them out of the spectrum of choice; thatâÄôs if itâÄôs successful, and a large pool of enrollees enhance the public optionâÄôs bargaining clout. If the public option offers better service a better rate than private insurers, insurance firms like BlueCross BlueShield of Minnesota (BCBSMN), which owns 50 percent of Minnesota health insurance market share, will shrivel and the American health care system will begin to look like a single-payer model, wherein all Americans belong to the same bargaining pool. Single-payer takes a lot of criticism as socialized medicine. ItâÄôs valid criticism. Socialism can be great; it can channel similar demands more efficiently than any other economic system. But American health-care demands are not similar. They are highly diverse and keenly touchy. Remember grandmaâÄôs plug? The critique may not have been the most honest, but it certainly struck a chord. One government approach to health care will not suffice. If America is ready for health care reform itâÄôs decentralization. Medical care has become too expensive, as have insurance policies. The private health insurance industry needs creativity and diversity. Luckily, congressional Democrats will now show whether they are anti-corporate capitalists or socialists, as they consider stripping anti-trust exemption from health insurance companies. As it stands, the statesâÄô regulatory red tape has propagated 50 distinct oligopoly playgrounds, as residents of Minnesota cannot purchase insurance out of state, say in Iowa or Florida. BCBSMN owns half the health insurance market share in Minnesota, Medica owns the next quarter. Inducing competition between these firms by repealing anti-trust loopholes is part of the solution. As is allowing consumers to buy across state lines. Both moves are essential for market competitiveness, but to repeal anti-trust exemptions while offering a strong public option subsidized by the government is industry homicide. The Congressional Budget Office recently projected the public option would reduce the federal budget deficit over the next 10 years, but the government has experience selling health insurance, and so far, it isnâÄôt pretty. ItâÄôs called Medicare, and the program accounts more than $70 trillion in unfunded liabilities. That means that seniors and other Medicare recipients have been guaranteed $70 trillion in future benefits. The entire U.S. public debt is currently estimated at $12 trillion, or an entire yearâÄôs gross domestic product. In short, if the government is to make good on its promise to Medicare beneficiaries, we the people would have to submit to a federal income tax of 100 percent for more than five years. Until our government shows it can manage sustainable health insurance, increasing true competition within the private insurance sector is the healthiest approach to health reform. John Brown welcomes comments at [email protected]