January 22, 2020 | Updates

Public Option Would Lead To ‘Tax Increases’ & ‘Cutbacks In Access To Quality’ Health Care

WASHINGTON – While some candidates 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.  As 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.”

As The New York Times reported recently, the public option “could be plenty disruptive” and “tilt in the same direction” as Medicare for All.  This is backed up by the findings of a new study, conducted by FTI Consulting for the Partnership for America’s Health Care Future, which reveals that the public option could eliminate consumer choice for millions of Americans and “eventually cause the elimination of all private plans in the individual market.”  The study finds:

  • After the first 10 years of the public option, more than seven million current enrollees would no longer have private coverage through the marketplaces – with two million of those enrollees being forced off their private plans as insurers exit the marketplaces altogether.
  • The study also warns that the public option could eventually cause the elimination of all private plans in the individual marketplaces, eliminating choice for millions of Americans, even those with the resources or subsidies available to cover their preferred plan.
  • In fact, the report finds that by 2050, 70 percent of state marketplaces (34 U.S. states) would no longer offer a single private insurance option.
  • Rural families would be especially hard hit by the public option, the study warns, and could find few if any options available to them.

As The New York Times also reported in their story, the public option “could shake up the private market and also wind up erasing some current insurance arrangements … There’s also the possibility that linking public-option coverage to Medicare could cause some doctors to stop accepting Medicare patients, [Sherry Glied, the dean of the N.Y.U. Wagner Graduate School of Public Service, and a former health official in the Obama administration] said.  That would be another form of politically risky disruption.  Further, The Times explains, the public option “could have effects on employer insurance [T]he existence of a public option might also induce some employers to abandon private coverage altogether … If it took a lot of market share from private insurers, some might decide to stop selling certain lines of coverage.  Private insurance could disappear from some places, or exist largely to fill certain niches, like high-deductible plans.”

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.  Even worse, the new system would decrease access to doctors and health care providers by nine percent and would lead to a four percent decrease in medical productivity. 

Economists agree that the public option would burden American families with unaffordable costs.  “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.”

… To extend quality coverage to the millions of Americans who are uninsured or underinsured, you either need to force providers to accept drastically lower payment rates … or increase federal spending on health care The estimated price tag on [Senator Bernie Sanders’s (I-VT)] plan is (infamously) $32.6 trillion a decade … A plan that sought to provide universal, comprehensive health coverage – without disrupting private insurers or imposing big pay cuts on hospitals and doctors – would be vastly more expensive … Biden’s [public option] will not allow most Americans to “keep their private insurance,” at least, not for long … And to make the public option fiscally sustainable … [public option supporters] would need to propose tax increases nearly as large as those put forward by Sanders and Warren.

… All of which is to say, when Medicare for All Who Want It stops being a campaign pitch, and becomes a bill before Congress, it will face almost all of the same political obstacles as single-payer … [The public option] will require Congress to vote to (effectively) abolish the private insurance industry as we’ve known it, slash doctors’ salaries and hospitals profits, enact hefty tax increases, and disrupt the existing insurance coverage of millions of Americans.



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