ICYMI: ‘Eventually, The Public Option Would Be The Only Option’
WASHINGTON – As former Vice President Joe Biden and other proponents of a new government insurance system – known as a “public option” – struggle to explain its impacts on patients and health care consumers, the Pacific Research Institute’s Sally Pipes explains that “[a] public option would gradually destroy the private insurance market — and ultimately result in single-payer healthcare.”
Biden’s public option would be able to under-price private insurers for two reasons. First, it wouldn’t have to break even, much less make a profit. Federal taxpayers would be called on to fill in any gaps in the program’s finances. Second, it would pay doctors and hospitals Medicare’s rates, which are lower than those for private insurance. One analysis of common procedures revealed that, on average, private insurers paid physicians over 200% more than Medicare. In 2017, hospitals received just 87 cents from Medicare for every dollar they spent caring for the program’s beneficiaries. Many Americans who shop for coverage on the individual market would therefore opt for the low-cost public option. Employers may be tempted to scrap the coverage they provide and dump their employees into the public option, too. In 2018, employers paid about $14,000 per worker for family coverage. Many would love to offload that cost onto their employees, with assistance from taxpayers. As enrollment in the public option swells, doctors and hospitals would need to raise the rates they charge private insurers in order to balance their books. Insurers would raise premiums in response, and yet more people would jump to the public option. The cycle would repeat, until private insurers found themselves without any customers. Eventually, the public option would be the only option.
NBC News reporter Jonathan Allen explained to viewers last week that “[t]he public option is essentially a back door to Medicare for all. You can say all day long if you want it’s not Medicare for all. But this is a different packaging of how to get there. In a general election, that’s a different question.” And, as Dr. Scott Atlas of Stanford University explained in The Wall Street Journal, a “public option” would raise costs for families and “mainly erode, or ‘crowd out,’ private insurance, rather than provide coverage to the uninsured.”
The public option would cause premiums for private insurance to skyrocket because of underpayment by government insurance compared with costs for services … A single-payer option is not a moderate, compromise proposal. Its inevitable consequence is the death of affordable private insurance. Even Democratic presidential candidates calling for “a public option” openly admitted in the recent debate that it would inevitably lead to a single-payer-dominated system. And although Medicare is popular, it is already unsustainable even without expanding it to everyone. As the population ages, the taxpayer base financing Medicare is dramatically shrinking. Nearly four million Americans turn 65 annually; by 2040, that population will reach 87 million, twice what it was in 2012. Medicare’s Hospitalization Insurance fund will be depleted in 2026, the Medicare trustees predict … Massive taxation would be needed to expand Medicare, whether optionally or not.
A recent study found that government insurance systems like the one Biden proposes could force hospitals to limit the care they provide, produce significant “layoffs” and “potentially force the closure of essential hospitals.” Another study found that “[f]or hospitals, the introduction of a public plan that reimburses providers using Medicare rates would compound financial stresses they are already facing, potentially impacting access to care and provider quality.”