STUDY: Economic Shocks and Probable Expansions to a Public Option
A new study released by Lanhee J. Chen, Ph.D., Tom Church and Daniel L. Heil, with support from the Partnership for America’s Health Care Future, finds that the cost of a new government-controlled health insurance system like the public option could increase when the economy is at its worst. In fact, in the event of an economic recession, the long-term cost of the new government health insurance system could balloon by an additional $1.4 trillion, placing an even greater financial burden on working families.
According to the study, the consequences of politically realistic responses to an economic shock such as a recession could exacerbate the costs of the public option. For example, freezing premiums during a recession could increase the 2050 debt burden. “To avoid this debt increase, Congress would need to raise taxes,” and as a result, “if the public option were financed similarly to Medicare Part A, middle-income tax filers would see their taxes rise by an inflation-adjusted total of $2,833 in 2050.”
The public option could be more expensive for working families than originally projected during economic recessions. In the first ten years after its enactment, the federal deficit could grow by $932 billion if unemployment relief is needed during a recession — a $132 billion increase from original projections. As a result, politicians could be forced to either raise taxes on working families or increase the federal debt to pay for a new government-controlled health insurance system.
During critical times, let’s build on what’s working where private coverage, Medicare and Medicaid work together to help American families get healthy and stay healthy, not start over with a new government-controlled health insurance system like the public option.