The public option

A public option will cover more people, lower premiums, and force private insurance companies to compete.

by Eric Murphy

In many areas of the country, the health insurance industry lacks competition: there are a few companies that dominate each market, allowing insurance premiums to increase three times as fast as wages and millions of Americans to go uncovered. Enter the public option, designed to compete with private health insurance companies. The public option is health insurance that the government provides for those who are unable to get the health care they want in the private market. The government offers public universities to compete with private ones in the same way. Students arenâÄôt forced to choose the public option, but those who canâÄôt afford private universities have an alternative, which has not destroyed private universities the way some fear a public health insurance option may destroy the health insurance industry by being âÄúunfair competition.âÄù President Barack Obama has insisted that âÄúlike any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects.âÄù The saving comes by being not-for-profit and not paying exorbitant executive salaries. Furthermore, private insurance companies have no incentive to provide affordable care to those who need it. Since they have a pool of customers with a variety of risks , they have an incentive not to take on high-risk customers, like those with pre-existing conditions. They are better off if they deny coverage to the people who are most likely to need it. Those who canâÄôt get the coverage they want due to these market forces will be able to do so with a public option. Competition is even more important in the event of a health care mandate. If it wants to guarantee coverage of high-risk people with pre-existing conditions, the government will have to make low-risk people buy into the health insurance pool. But if there is a mandate, Americans will not want to be forced to buy into the private insurance system we have, in which companies have no motivation to offer affordable health care to everyone. They will have even less reason to keep prices down if customers are forced to buy their product by law. The government must offer a public another option in order to give citizens more freedom when purchasing health care, to ensure lower premiums for everyone, and to keep private insurance companies honest. Eric Murphy welcomes comments at [email protected]