American Families Can’t Afford The Public Option

WASHINGTON – While some proponents try to paint new government-controlled health insurance systems – such as the public option and Medicare buy-in – as “moderate” alternatives to Medicare for All, in reality these proposals would ultimately lead to the same unaffordable costs and harmful consequences. 

A new study by Tom Church, Daniel L. Heil, and Lanhee J. Chen, Ph.D. of the Hoover Institution with support from the Partnership for America’s Health Care Future reveals that the public option “could require tax increases on most Americans, including middle-income families” and could “add over $700 billion to the 10-year federal deficit, with dramatically larger losses in subsequent years.”  The study finds:

• A politically realistic public option could lead to a new 4.8 percent payroll tax on American families over 30 years – far higher than the combined Medicare payroll tax Americans pay today.

• Over 30 years, the public option would become the third most expensive government program behind only Medicare and Social Security – both of which are at risk for the seniors who rely on them.

• While proponents try to claim the public option could reduce costs by reimbursing providers at Medicare rates, recent history at both the federal and state levels demonstrates that putting politicians in charge of a new government-controlled health insurance system could lead to higher costs and tax burdens for American families.

• The public option could add as much as $700 billion to the federal deficit in its first 10 years.

Economists agree that the public option would burden American families with unaffordable costs.  Recently, Chris Pope, a senior fellow at the Manhattan Institute noted in National Review, “[t]he more a public option is able to achieve the increases in coverage and benefit generosity promised by single-payer, the more it is likely to yield the associated disadvantages of tax increases or cutbacks in access to quality medical services.”

• “The public option would cause premiums for private insurance to skyrocket,” economist Dr. Scott Atlas of Stanford University writes in The Wall Street Journal.  “A single-payer option is not a moderate, compromise proposal.  Its inevitable consequence is the death of affordable private insurance … Massive taxation would be needed to expand Medicare, whether optionally or not,” Atlas continues.

• Eric Levitz at New York Magazine notes that in reality these new government-controlled systems “would be vastly more expensive,” and would need “tax increases nearly as large as those put forward by Sanders and Warren.”

• The public option “could also lead to a 10 percent increase in premiums for the remaining pool of insured people.” (Reed Abelson, “How A Medicare Buy-In Or Public Option Could Threaten Obamacare,” The New York Times, 7/29/19)

• “[A] government buy-in that attracted older Americans could indeed raise premiums for those who remained in the A.C.A. markets, especially if those consumers had high medical costs.” (Reed Abelson, “How A Medicare Buy-In Or Public Option Could Threaten Obamacare,” The New York Times, 7/29/19)

• “[A] government plan that attracted people with expensive conditions could prove costly.” (Reed Abelson, “How A Medicare Buy-In Or Public Option Could Threaten Obamacare,” The New York Times, 7/29/19)

• And a report found that an effort to implement the public option in Colorado, “could imperil thousands of jobs in the health-care industry or take hundreds of millions of dollars out of the state’s economy.” (Ed Sealover, “Colorado Public-Option Insurance Plan Could Cost Health-Care Jobs, Study Argues,” Denver Business Journal, 9/10/19)

And, an analysis released by the American Action Forum (AAF) finds that a new government-controlled health insurance system known as Medicare buy-in would cost an additional $184 billion that American families can’t afford. 

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