Public options all over the place…

Those who support universal single-payer health care point to Medicare as a model, which is provided to those over 65, paid for by a payroll tax. Another analogy of a completely tax-funded service is the fire department or the military–and there is a case to be made that health care is as essential, and there are particularly efficiencies and policy reasons, for funding a universal health coverage through taxes.

But for many political reasons, most particularly that some people are protective of the coverage they have, that’s not the emphasis of the health reform policy discussion. The reform would mostly secure and stabilize the coverage that people have through work, and would improve and expand the coverage that others get through Medicaid and Medicare. For those who have to buy as individuals, it would provide new consumer protections, affordability subsidies, and new options–including a public health insurance option.

This “public option” has gotten a disproportionate amount of attention, and it’s hard to figure out why. After all, there are many analagous “public options” throughout American life.

In a TV interview last weekend, I was asked if allowing health care consumers the choice of a public health insurance option would overwhelm other private insurers and lead to a “government takeover” of health care. In HR3200 and other plans under consideration, the public health insurance option would be one choice in a new health insurance exchange, competing against many private health plans. Insurers should be worried only if they believe that they cannot be competitive–but there’s lots of evidence that public and private options can live side-by-side:

* Postal service: President Obama made the comparison that the public plan is similar to the post office, which offers a basic level of service, but there’s Fedex and UPS doing lots of private business. The Post Office is largely self-funding, but provides a commitment to universal service, to ensure everybody has access can have a letter delivered to nearly everywhere else, for the mere cost of a stamp. Rep. Jesse Jackson, Jr. made a similar point.

* Universities: Senator Charles Schumer made the comparison to the university systems in states like New York, as well as California, which have excellent private and public universities. Our University of California and community college system provides public options, alongside private college options, from Stanford to Occidental.

* Television and radio: NPR and PBS offer public options over the airwaves. Because they have a different mission and structure, they have filled important markets niches—from NPR’s in-depth news and reporting, or PBS’ children’s educational television programming—that was not well served by the private market. But there activities complemented, rather than supplanted, that of the private industry.

None of these parallels are exact, but it’s hard to make a perfect comparison because the exact nature of the proposed “public health insurance option” is in flux, as policymakers struggle about how powerful and effective it is in the first place.

But there are analogies even within the health field, pointed out by California editorial boards:

A couple of months ago, the Los Angeles Times points out that there are already public, county-run public options, like L.A. Care, the bigest one in California:

That’s why it’s important to promote competition while imposing insurance mandates, starting by creating one-stop shopping exchanges where people can compare and purchase policies that meet a minimum standard for coverage. Although it’s a lightning rod for critics, the idea of the government establishing public insurance plans to vie with private ones for subsidized policies is worth exploring. It’s a potential counterweight to the power wielded by a single healthcare provider or insurer in too many communities, a recent Urban Institute study contends.

A good model is L.A. Care Health Plan, one of the county-based plans that California created in the early 1990s to manage the care of Medi-Cal patients. Unlike Medicare or Medicaid, which can dictate prices, it has to negotiate rates with doctors and hospitals just as its private competition does. And it’s steered by a board of healthcare providers, patients and county officials with a directive to preserve the safety net, which has encouraged it to pursue the best care at the least cost. The new public plans could take on a similar civic mission: to help develop prevention- and wellness-focused approaches to care.

Earlier this week, the Sacramento Bee suggested that employers (and many states) already have a public insurance option, with regards to workers compensation coverage that they are mandated to produce.:

As the politicians in Washington debate the wisdom of a “public option” in health insurance, California has a real-life example of how such a program might work. And oddly enough, Democrats here have voted to sell off a portion of our state-owned insurance company while Republicans are trying to preserve it.

That company is known as
State Fund, and it sells workers’ compensation insurance – the policies that every California employer must carry to pay for medical care and disability benefits for workers who are injured on the job…

Some history.. As in other states, the California Legislature in 1913 created a no-fault workers’ compensation system. It mandates that all employers carry insurance to cover workers who are injured or become ill at work. As part of that, California established a public option, the State Compensation Insurance Fund (known as “State Fund“)…

As a nonprofit, the public option provides insurance to employers at cost. The money to pay the medical care and lost wages of injured workers comes exclusively from employer premiums and investment revenue. No money comes from the public purse.

This public option plays a key role in the market, particularly for small businesses, start-up ventures and high-hazard businesses, such as construction and agriculture. As Poizner said Friday, many of these are businesses that “simply cannot get workers’ compensation insurance in the private market.” For these businesses,
State Fund plays a role as an “insurer of last resort.”

It also is a long-term, reliable source of insurance in a market that can be volatile especially during economic downturns… More recently, 28 private carriers went under or fled the market between 2001 and 2004, and rates skyrocketed. Many employers saw their premiums double or triple.
State Fund provided a stable and affordable option at a time when market conditions had worsened.

As Poizner points out, State Fund “has created healthy competition” between public and private options, resulting in choices for businesses at lower cost. Today, about 200,000 California employers get workers’ compensation insurance through State
State Fund is not without flaws… But through the years, the company has served its purpose as an insurer of last resort that keeps the private market honest.

So throughout American life, and even with our health system, having a “public option” is a key component. So tell me again why there’s so much heated opposition? Yeah, there are differences, but there’s nothing that make the notion of a “public health insurance option” some foreign, alien concept. If anything, given all these examples, a public option seems awfully American.

We’ll see what happens in the legislation in Septmeber.

Health Access California promotes quality, affordable health care for all Californians.
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