Insurers Nix Public Option

A new industry-funded study on the Democrats' universal health care plans shows all but Dennis Kucinich's single-payer plan will be a boon to the health insurance industry, which will get tens of millions of new customers pouring $100 billion in new revenue into the system, the Wall Street Journal reports this morning.

But the "biggest risk," according to the study, is that some of the plans call for a public sector alternative for the uninsured that will compete with private plans. This is "disturbing" to insurance companies because it will create a competitive "government-run plan" (read non-profit) that offers price competition.

But the story takes a curious turn. It assumes this option will be separate from Medicare, creating an entirely new bureaucracy to make payment decisions.

That's not the way it has to work. Why not offer an expanded Medicare as the public sector option? Any employers who don't want to buy insurance for their employees can simply make a payment to Medicare to get coverage. and the existing bureaucracy can include their workers in the system. Or individual can buy in. As a start, the Medicare option could be offered to people who are 55 and over but have lost their jobs, the ranks of whom will probably grow substantially in the next economic downturn. Let's not forget that among all health plans, Medicare gets the highest customer satisfaction ratings.

This study signals that the public sector option for the uninsured contained in many of the Democratic universal health care plans will draw fierce opposition from the insurance industry, whose Harry and Loise ads helped sink the 1993-94 reform effort. It also threatens to split the progressive coalition backing health care form into two camps: those that are desperate to insure the uninsured at any price, consider cost a secondary issue, and don't want to alienate insurers; and those that understand that the long-term sustainability of both private and public systems requires reining in rising costs, and that requires an active public sector to keep prices in check while maintaining high standards.