ICYMI: The Public Option Is Not A ‘Moderate’ Alternative

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

Appearing on Bloomberg’s “Balance of Power” Wednesday, Chen explained that “[f]or those who see the public option as more moderate, this study is a warning sign that it may not be what they thought it was.”

 … The reality is, if you look at the public option over time—and there are a variety of reasons why this is so – it actually ends up adding a significant amount to the federal deficit and debts over time.  What you find is, over 10 years, the public option proposal adds about $700 billion.  And, if you look even further, over 30 years, it has the possibility to become the third-largest government program behind Medicare and Social Security.  Again, [there are] a variety of reasons why this is so.  For those who see the public option potentially as more moderate, this study is a warning sign that it may not be what they thought it was…

… One of the things that we know is, if you have a public option operating in an attractive way, you end up with about one in three Americans, over 120 million Americans on this public option plan within a few years, and that would eat into, in some ways, the markets Obamacare tried to create.  It is an interesting question about the interaction between the public market and Obamacare.  If you could argue, as Joe Biden has, that somehow he’s shoring up Obamacare while also creating a public option, this study does raise concerns about the impact of the public option on existing choice and competition in the marketplace.

The study 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.

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