I believe that much of the argument over whether we should support a national health care plan that includes a public option for all Americans, but which also leaves some room for private insurance company participation (for those who choose it), vs. a pure single payer system, is misplaced.

The most important goal of a national health plan is that all Americans have access to good quality health care at an affordable cost – and also that the system be reasonably efficient, so as to keep the cost to our faltering economy within reasonable limits. A third goal, which I personally do not consider to be quite as important as the first two, but which is probably politically essential to the enactment of the plan by Congress, is that Americans maintain their choice of physicians.

A single payer system, by itself, does not guarantee any of these goals. And alternatively, it is possible for a public option plan, appropriately devised, to attain them.


The basic difference between a single payer plan and the “public option” plan

When you get down to the basics, there isn’t really that much difference between these two plans that are advocated by progressives. A single payer national health care plan is one where the government pays for all medical care for everyone. The “public option” plan is one in which all Americans would have the choice between a government sponsored health insurance plan or a private insurance plan or none at all.

Since the “public option” plan would give us all the opportunity to make our own choice, for those of us who choose the government plan the effect on us would be virtually identical to operating under a single payer system. The only difference would be that in the “public option” plan, Americans could instead choose private insurance. Therefore, private insurance companies would not be totally out of the picture – at least not initially.


The problem with private health insurance

Most of us are well aware of the problems with private health insurance, as compared to government sponsored health insurance. Private insurance companies exist to make a profit. Therefore, part of the money that could otherwise be used to provide good quality health care would instead go into profit for the insurance company. Furthermore, there are many other costs that private health insurance companies have that government sponsored health insurance does not have: they pay for screening out prospective clients whom they consider to be poor health risks, based on prior medical history or other risk factors; they pay for advertisement; and they pay of lobbying government to pass laws that are favorable to their bottom line. After they pay for all these things, what is left for providing the health care that they promise to the health care consumers who purchase their product? Not much. For all these reasons, government sponsored health insurance is much more efficient than private health insurance. And on top of all that, in their desire to make profits, private health care insurance companies often cheat their clients. I’ve had several experiences myself where they tried to cheat me and my family.


How a single payer national insurance plan could fail to provide adequate health care

Though government health insurance is far more efficient than private health insurance, for the reasons described above, that doesn’t mean that government health insurance will automatically lead to good quality, or even decent health care.

What if, due to right wing political pressure, legislation providing for single payer health care simply does not provide enough money to offer a decent health care package? If that is the case, then health care consumers under such a plan may be no better off, or even worse off than they are under private health insurance plans.


How to devise a national health care plan that provides good affordable health care to all Americans

Therefore, it seems to me that one of the first steps in devising a good national health care plan is to determine what specific health care services, and at what cost, are required in order to provide good quality health care to individual Americans. After this is determined, then do the following:

1) Offer that as the “public option” package to all Americans
All Americans would have the option of choosing that package to cover their health care needs.

2) Determine the value of the package
Determine the value of the package at today’s market prices. That would be the price that we would all be charged for the package if we chose to purchase it.

3) Help Americans to be able to afford the “public option” package
Provide Americans with the money that they need to be able to easily afford the package, either through tax credits or other means.

Those with the lowest incomes would receive the full value of the package. Essentially, that would mean that they would receive it for free – if they so chose to do so.

It does not seem feasible that the full value of the package could be provided to all Americans. That would probably make the plan too expensive, and therefore ruin our fragile economy. Therefore, those Americans making incomes above the minimum required to receive the public option plan for free would receive less tax credits (or other subsidy) than required to pay for the full plan, on a sliding scale. Persons with incomes above a certain maximum would perhaps receive no money at all to pay for it. I don’t want to specify the specifics of the sliding scale. But the purpose would be to make good quality health care affordable to all Americans without excessive cost.

A reasonable alternative to a sliding scale for subsidies would be simply to give all Americans the full value of the public option package (or simply make it available to all Americans for free), and pay for it by increasing income taxes (and the inheritance tax too) on a progressive scale.

4) Two remaining important issues
This would then leave two important structural questions: Should Americans have the option of purchasing private health insurance instead of the public option; and, should Americans have the option of not purchasing any health insurance at all, instead opting to keep the money they received from the federal government. If the answer is no to both these questions, that would leave us with a single payer system. If the answer is yes, then we would have what is commonly referred to as a “public option” plan.


What would be the effect of a “public option” plan on private insurance companies?

I’ve already discussed why private health insurance is inherently less efficient than government health insurance. Because of all the additional costs for private health insurance it would seem impossible for them to offer a comparable health care package of equivalent value to a “public option” package if the public option package really provided good quality health care.

Indeed, that is exactly why the private health insurance industry is so strenuously objecting to a “public option”. They claim that a public option would make it impossible for them to offer a competitive plan and still be able to make decent profits. And they are correct about that.

So, what would happen to the private insurance companies if a good quality public option plan was available to all Americans? They would have three choices: They could quit the health care insurance business and figure out something more productive to do with their time; they could offer a much better product than they currently do; or, they could continue to offer what they currently do and take their chances. Frankly, I don’t see how it would be possible for them to offer a comparable product to government insurance if what the government offered really ensured that the health care needs of Americans would be met. But if the private insurance companies were somehow able to offer a comparable product, then fine. I say, let them do it.

Undoubtedly, no matter how inferior the health care product offered by private insurance companies, some Americans would continue to choose that over the government “public option” – either out of ignorance or ideological opposition to “big government”. But, as time passed and as word got around regarding the relative value of the “public option” vs. private insurance companies, more and more people would switch over to the public option.

Some have objected to a “public option” plan that fails to completely remove private insurance companies from the market on the basis that our government would then to some extent be subsidizing private insurance companies. That would apply to any individuals who currently do not have health insurance, who decide to use their government subsidy (tax credit, or whatever) to purchase private health insurance rather than the government “public option”. But I feel quite certain that any advantage they received from that would be offset (probably many times over) by individuals who currently purchase private health insurance but who would switch over to the “public option” as soon as it became available.

The net result of this would be that private health insurance companies would lose a great deal of business and most or all of them would be forced out of the market because of their inability to offer a competitive product. That is as it should be. There is no reason for private health insurance in our country or anywhere else. Private health insurance companies are nothing more than middle-men that scoop up profits as health consumers try to find a way to meet their health care needs.


What would be the effect of allowing Americans to receive government subsidies but not use them for any health insurance?

Allowing Americans to receive government subsidies for health care, while not using the money to purchase health insurance, is a little more problematic. Those people would cause a drain on the public treasury whenever they had emergency health care needs that they could not afford, which would then have to be paid for by the government. That is why during the Democratic primaries, Kucinich, Edwards and Clinton all made their health care plans mandatory rather than voluntary.


Paul Krugman’s views on this issue

I realize that some DUers don’t care much for Paul Krugman, I believe mainly because of his criticisms of Obama’s economic policies. But I have a great deal of respect for him. He was one of the most scathing and early critics of the Bush economic policies; along with several other of our best and most liberal economists (James Galbraith, Joseph Stiglitz, Dean Baker), he was a harsh critic of the Geithner bailout plan. And most important, health care is at the top of his list of interests. Here is what he had to say about our need for health care reform in “The Conscience of a Liberal”:


So I take what Krugman has to say on this subject very seriously. During the Democratic primaries, here is what he had to say about the Edwards plan, which was essentially a “public option” plan, meaning that it didn’t completely exclude private health insurers, though it would probably force them out of the market before too long:


My point in citing this is that Paul Krugman, for whom the provision of affordable quality health care to the American people has perhaps been his highest priority for a very long time, fully endorsed the Edwards plan as an excellent plan for delivering universal health care to the American people, even though it was not a single payer plan.


Conclusion

For all these reasons, I believe that a national health care plan with a robust universal public option for health care coverage could be nearly as good as any single payer plan. The main issue at stake is not whether private health insurance companies are immediately and completely excluded from a national health care plan, but rather the quality of the plan that is offered to all Americans. A good quality plan will force the private health care industry out of the market anyhow – which should be obvious from the vehemence with which they denounce a public option.

For those who say that any participation of private insurance companies in a national health care plan will make it inordinately expensive, I can’t see how that is possible. The added expense of such a plan will apply only to those Americans who choose private insurance over a public option. Those people will have to bear whatever added costs are attendant upon their use of private health care insurance, until they recognize the problem and switch over to the public option. (On the other hand, any plan that mandates people to use private insurance or fails to provide them with a good quality public option should be rejected out of hand.)

For all these reasons, I urge people to be supportive of a public option plan, depending upon its ability to ensure good quality health care for all Americans who choose it. If you want to advocate for single payer health care over a “public option” plan, then fine. But I urge you not to reject a public option plan if that turns out to be the only alternative left on the table. If progressives who care about the need for universal good quality health care for all Americans split up over the question of single payer vs. “public option”, that will only lessen our chances of getting any meaningful health care reform.