Posted on July 28, 2009

Public Option Advocates: Time to Come Home to Single Payer


By Mark Dunlea
Executive Director, Hunger Action Network of NYS
Co-chair, Single Payer New York

As the various public option proposals in Congress for national health care reform become weaker every day, there is still time for its proponents to support what they really believe in: a single payer, Medicare for all type program.

The architects of creating a “public option” as part of the push for national universal health care have always admitted that a single payer Medicare for All type programs was the best solution for America. It does the best job in controlling costs by eliminating the waste and bureaucracy of private health insurance while guaranteeing that every American would receive quality health care and have freedom of choice in selecting whom to receive health care services from.

The public option advocates — well-funded public interest groups and unions used to insider political wheeling and dealing — argued that the lesson from the 1993 defeat of the Clinton plan was that insurance companies were too powerful to defeat. Thus they had to abandon the best solution, single payer, to instead craft a proposal that would have a chance of passage by ensuring a continued large role for the present for-profit health insurance industry.

Their solution was to create an “800 pound gorilla” in the form of a public health insurance system that would provide quality and affordable health care coverage to more than one hundred million Americans. It would be large enough to operate efficiently and achieve cost savings. They argued that by setting up a fair fight between a public option and the private for-profit health insurance companies, over time the advantages of the public option — no profit margins, reduced paperwork and administrative costs, less marketing costs — would become clear. The public option would grow stronger, and under the best case scenario, either we would move to a single payer system or private for-profit health insurance would become a boutique industry serving the rich.

Before either House of Congress has adopted a specific plan, the public option 800 pound gorilla has turned into a five pound Chihuahua. And with four months or more of intense negotiations to take place among the nation’s power players before a final deal is reached, the public option will only get weaker.

The only clear winner in the process will be insurance companies. Americans will be mandated to purchase health insurance — or pay a fine. Insurance companies’ revenues — and profits — will increase under the Congressional plans. The mandate that everyone purchase insurance is one of the few consensus positions; the fight instead is over how taxpayers, employees and employers will have to pay for it.

Single payer advocates have always contended that public option proponents, despite their commitment to Machiavellian politics, were naive politically.

First, public option advocates violated the basic rule of negotiation by significantly weakening their opening position (i.e., dropping single payer for a public option) without getting any concessions in exchange. In addition, by calling for a major continued role for private for-profit health insurance, public option proponents also removed what should have been a key focus on the health care debate, namely that it was in the public interest to eliminate our present insurance system

Second, there was the real question of whether a public option would actually accomplish what its proponents claimed. The history of similar approaches at the state level in recent decades was quite bad. Doctors and hospitals would still have to keep in place their expensive billing and cost-tracking systems to deal with the various insurance programs.

Third, it was quite clear to everyone but its proponents that a “robust” public option was going to generate significant political opposition from the insurance industry. Like most industries, it would oppose anything that sought major cuts in its market share. Unlike single payer, which had the evidence of both Medicare and most of the other industrial nations to prove that it would work, the insurance industry would have a much easier time challenging the claims of benefits of a public option. State plans which had tried similar approaches had all crashed and burned, largely due to its failure to control costs. In addition, evidence from prior Congressional fights - say with Medicare - showed that rather than setting up a “fair fight” between the public option and insurance companies, Congress would likely seek to tilt the “competition” to favor the insurance companies.

So how has the public option fared so far in Congress?

When the “public option” campaign began, its proponents sought a huge “Medicare-like” program. Studies by the Lewin think tank group of the Hacker proposal estimated that it would enroll as many as 130 million people. Thus it would enjoy the advantages that make Medicare so efficient — large size, low provider payment rates (about 20% less than what private insurance pays) and low overhead (2 to 3%).

Today, the “public options” outlined in the Democrats’ legislation, according to the Congressional Budget Office, might enroll 10 million people and will have virtually no effect on health care costs. The program is so small it would have no impact by itself on reducing the number of the uninsured. The main House bill would delay establishing a public option until 2013 — conveniently after the next Presidential election — and would require it to follow the same rules (drawbacks) of private insurance. The ability of workers and others who presently have insurance to move into a public option program is significantly restricted.

Hacker had proposed jump-starting the public option plan by moving all or most of uninsured people as well as Medicaid and SCHIP enrollees into it. Starting with a huge population would reduce its startup, administrative and marketing costs and give it the ability to negotiate lower premiums. Under the present Congressional proposals, it starts with no one, which will greatly increase its initial overhead and marketing costs while largely eliminating its ability to cut costs through lower premium.

The power and political campaign activities of the public option proponents means that many liberal Congresspeople feel obligated to insist that a public option be included in the final bill. It will a public option primarily in name only, especially since so few people ever understood the details of the initial proposal. Meanwhile, the Republicans and right wingers are using the “public option” as a focal point of their criticism of Congressional efforts for universal health care, claiming it is socialism and a first step to single payer, an effort to drive insurance companies out of business. Rather than saying “yes, we want to eliminate private health insurance”, Congress instead seeks to deflate these attacks by doing more to subsidize and strengthen insurance companies.

An additional problem is that Congress is largely equating access to quality health care with having insurance. Yet neither private health insurance nor even public programs like Medicaid guarantee that you will actually obtain health services. We see this in the fact that 77% of Americans who go bankrupt due to high health care bills had health insurance. The co-pays, deductibles, exclusions, prior approval and restrictions on out of network services that come with insurance all impede access to health care. Many Medicaid patients, due to lower physician reimbursement rates, have a difficult time accessing health services outside of a clinic setting. It is quite possible that the public option will experience some if not all of these problems.

Public option proponents started with good intentions. It is time for them to admit that their vision for a public option has been rejected by Congress. Hopefully they will rejoin the movement for single payer health care and fight to establish health care as a human right in America.