Thursday, September 10, 2009

Public Option Identity Crisis

The public option will be small and you probably won’t use it. Or at least that’s the message that President Obama presented in his joint address to Congress.

“Let me be clear – it would only be an option for those who don't have insurance. No one would be forced to choose it, and it would not impact those of you who already have insurance. In fact, based on Congressional Budget Office estimates, we believe that less than 5% of Americans would sign up,” said Obama.

For a provision that was once a major component of Obama’s health care reform, the speech expressed a willingness to experiment to get everyone covered, that’s not a lot of impact. In fact, a plan that size will have little chance of rivaling the big insurance plans that Obama wants to see face more competition. According to Obama’s own count 34 states have at least 75 percent of their health insurance market controlled by five or fewer companies. President Obama’s public option sounds like backing Tata to take on Ford, Chrysler, and GM in the US.

This size issue presents two plausible paths.

The first is that the public option really will only attract 5 percent of the population. Those most desperately unable to access private insurance will gravitate to this plan due to heavy subsidies. Anyone who can get care by other means will continue to do so. The unwillingness of average Americans to join the option will speak to substandard quality of care. It will be poor service targeted at the poor.

Yet the administration wants to argue that the public option can be competitive. Alright, if that’s true than more Americans will want to buy it and its share of the marketplace will rise about 5 percent, possibly by leaps and bounds.

Wait did I say there were two plausible paths? Yes, unless the government does with this small public program what it has done with past programs. Take Social Security for instance. At its founding the program covered only workers in commerce and industry. Railroad workers and more importantly American farmers, who made up a large share of the labor force (in fact according to the Department of Agriculture the number of farms in the US peaked in 1935), were excluded. In the early 1950’s both those groups were rolled into Social Security and today almost all workers are covered by the system. There’s nothing inevitable about this choice. Social Security intentionally excluded wealthy Americans in the beginning because it was believed that they could fend for themselves. As the program grew, our trust in any American’s ability to plan for their own retirement declined and the system’s growing deficit demanded that more people be integrated in order to pay for it.

There’s nothing inevitable about this path for the public option either. Medicare and the food stamp program have expanded in some ways but remain options for the poorest. Obama’s plan would be better directed at those most in need of health care rather than trying to constantly wade between access and leaving most Americans alone. It would make the plan more efficient and remove the spector of government control from people who are already insured.

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