Healthcare: What is the “Public Option”?

Way back in March, when Speaker Nancy Pelosi pledged to pass some kind of healthcare reform by July 31, people probably thought she was crazy. Now, two and a half months later, with little public information regarding the progress, it seems impossible. Up ‘til now, the only real public hearings about Healthcare Reform in the US Congress have been in the Senate Finance Committee, chaired by Sen. Max Baucus (D-MT). But the reality is, in addition to these hearings, behind the scenes, several legislators in both the House and the Senate have been working their butts off to get a healthcare proposal together that will both provide coverage and reduce costs for Americans. One of the things that has come out of this process is called the “public option”.

What is the “Public Option”? In short, the “Public Option” would extend to individuals and employers a government sponsored healthcare plan. This plan would be similar in some ways to Medicare, which currently covers people over the age of 65. How this option plays out in reality is still up to legislators in DC, and the coming weeks will be critical in ensuring that all people, regardless of pre-existing conditions and ability to pay, have an opportunity to access the healthcare system.

Gov. Howard Dean, former DNC Chair and founder of Democracy for America, who has been pushing for comprehensive Healthcare Reform since his run for President in the 2004 Democratic Primary, recently came out in favor of a plan put forth by the Senior Senator from New York, Chuck Schumer. The plan, which was introduced in early May, is an effort to assuage the fears of private insurers, who oppose ANY public option, by requiring that any “Public Option” be held to the same standards that private insurers are bound by. Despite this concession, private insurers are running scared from the “Public Option”.

Why are private insurers scared of the “Public Option”…competition, pure and simple. Health insurance premiums have been rising at a rate of 5% a year for several years. Often, this increase in cost happens at the same time that services are CUT. If the US Government were to embark on a “Public Option” health insurance plan, these private insurers would have to compete with the government, potentially cutting into their profits. This may seem anti-competitive on the front end, but when you consider that we currently spend $480b/year more than any other country that currently has universal coverage on just the ADMINISTRATION of private healthcare, there’s a clear opportunity for exploiting efficiencies in the market that would make such private insurance quite competitive with any “Public Option” that might emerge.

Unfortunately, over the next several months, you’re more likely to hear a FUD (Fear, Uncertainty, & Doubt) campaign from those whose interests are more grounded in a self-interested profit motive than the notion that affordable healthcare is a right.

The point of establishing a “Public Option” is to make private insurers do the job they should have been doing for their shareholders all along, by promoting efficiency and innovation in a market that has become stagnant. This innovation and efficiency will help drive costs down, alleviating the burden on employers who provide healthcare to employees and minimizing the Faustian choice many employers are left with; to cut benefits, or lay off employees.

Needless to say, this helps the economy at large in a variety of ways. First, it frees up capital in small businesses who have been struggling under the weight of their moral duty to provide healthcare to their employees by doing what we were told the market would do, create cost savings though efficiency. Secondly, it covers people who have been left behind in the Healthcare discussion, increasing their productivity in the long run by providing basic services to people in jobs that do not currently provide healthcare. Third, and most importantly it limits a cycle of graft and exploitation that has been present in the private system since the last major healthcare discussion in the early 1990’s, that will ultimately make healthcare more affordable not only for those who choose the “public option”, but also for those who, for what ever reason, feel a private insurer is the most sensible choice for them.

Over the next two months this debate will come into the public eye. Lots of money has been set aside to fight for both sides of the argument, including some $2m from a guy who seriously gamed the system that aired this weekend. More will follow. The key for us here in the South, and for our Representatives and Senators, is that we not fall prey to the hype brought forth by those who would deny us affordable healthcare. We likely won’t have another chance for at least 8 years. The last opportunity was 15 years ago. We can’t let this end up like it did in ’94. The time is now. Let’s get it done.

For more information check out the Change that Works campaign here in Tennessee. The National campaign can be found here.

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