Public Option Poses Serious Risks To American Families

WASHINGTON – On the debate stage tomorrow, some presidential candidates will inevitably try to paint their calls for the public option as a more moderate approach than Medicare for all.  But voters shouldn’t be fooled.  The truth is, the public option is just another government-controlled health insurance system that 2020 presidential hopefuls and others acknowledge would ultimately lead down the same path to a one-size-fits-all system – with all the same unaffordable costs, tax increases, and threats to patients’ choices, access and quality of care.
 
The Wall Street Journal reports that these government health insurance systems represent “stepping stones to single payer,” a fact acknowledged by supporters of such proposals, including Senator Chris Murphy (D-CT), who admitted it would bring about the “slow death” of employer-provided and other private coverage and serve as an “on ramp to a single-payer system.”  And, as Dr. Scott Atlas of Stanford University explained in The Wall Street Journal, the “public option” would raise costs for families and “mainly erode, or ‘crowd out,’ private insurance, rather than provide coverage to the uninsured.”
 
This new government-controlled health insurance system would also serve to undermine the progress made under the Affordable Care Act (ACA) and would raise health care premiums on American families across the country.  In a story headlined “How a Medicare Buy-In or Public Option Could Threaten Obamacare,” The New York Times reports that “a public option may well threaten the A.C.A. in unexpected ways.”

A government plan, even a Medicare buy-in, could shrink the number of customers buying policies on the Obamacare markets, making them less appealing for leading insurers, according to many health insurers, policy analysts and even some Democrats … [A] buy-in shift in insurance coverage could profoundly unsettle the nation’s private health sector, which makes up almost a fifth of the United States economy.  Depending on who is allowed to sign up for the plan, it could also rock the employer-based system that now covers some 160 million Americans … Siphoning off such a large group of customers could also lead to a 10 percent increase in premiums for the remaining pool of insured people, according to the Blue Cross analysis.  More younger people with expensive medical conditions have enrolled than insurers expected, and insurers would have to increase premiums to cover their costs, Mr. Haltmeyer said.  Tricia Neuman, a senior vice president at the Kaiser Family Foundation, which studies insurance markets, said 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 … Dr. David Blumenthal, the president of the Commonwealth Fund, a foundation that funds health care research, said a government plan that attracted people with expensive conditions could prove costly.  “You might, as a taxpayer, become concerned that they would be more like high-risk pools,” he said.

In addition to the unaffordable costs and elimination of choice, recent headlines and studies have also warned about the severe consequences the public option would have on quality and access to care for American families, particularly in rural communities.

• The Gazette (Cedar Rapids): “Iowa’s rural hospitals could experience a loss of more than $476 million dollars under a public health insurance proposal, putting dozens at high risk for closure, according to an analysis … the analysis said those hospitals could be confronted with an even bigger detriment if a public option is implemented using Medicare reimbursement rates … If a public option plan would go into effect, the study found that between 25 and 52 of Iowa’s 90 rural hospitals would be at high financial risk for closure due to a loss of millions in revenue.”
• Las Vegas Review-Journal: “… [H]ospitals lose money on Medicare patients … But if more people were on Medicare, those losses could be unsustainable.  An industry group estimates that more than 50 percent of rural hospitals would face a high risk of closure if a public option were in place.”
• Virginia Public Radio: “… [A]s many as 10 rural hospitals in Virginia could close if the federal government starts offering a public option health plan – the kind of public option that’s now being talked about on the campaign trail by former Vice President Joe Biden and others.”

The new study, conducted by Navigant, finds that the public option could put more than 1,000 rural U.S. hospitals in 46 states “at high risk of closure.”  These hospitals serve more than 60 million Americans, and as Kaiser Health News and NPR report, hospital closures can have “profound social, emotional and medical consequences.”  As RevCycleIntelligence also reports, “[p]atient access to care suffers when a rural hospital closes its doors for good, and consequently, patient outcomes can deteriorate.” 

A previous 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.”  Another study found that government insurance systems such as “buy-in” or “public option” could force hospitals to limit the care they provide, produce significant “layoffs” and “potentially force the closure of essential hospitals.”
 
The risks to rural hospitals under the public option resemble those surrounding Medicare for all, as The New York Times reports that experts are also sounding alarm bells about the “violent upheaval” a Medicare for all system would cause hospitals: “Some hospitals, especially struggling rural centers, would close virtually overnight, according to policy experts.  Others, they say, would try to offset the steep cuts by laying off hundreds of thousands of workers and abandoning lower-paying services like mental health.”

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