The public health insurance option is a proposal to create a government-run health insurance agency that would compete with private health insurance companies within the United States. The motive behind the public option health insurance was to make health insurance affordable for uninsured citizens, who are unable to either afford the premiums of private health insurers or they are rejected by private health insurers due to pre-existing medical conditions. The supporters of public option health insurance believed that a government insurance agency would create pressure on private health insurers to lower their premium costs and accept more reasonable profit margins and encourage them to create more competitive plans with wider coverage, eventually leading to a more competitive and reasonably priced healthcare market. The public health insurance option would operate just like the Medicare program for seniors or the Veterans Affairs system. However, many Americans doubted its existence and it is mainly due to their ignorance towards how this public option would work. Americans should have clarification on the concepts as well as on the terminology.
How Would the Public Option Be Run?
A public option health insurance program will be run by the government and can be implemented like private health insurance. The program can be the following:
In this option, the public health insurance program will be self-sustaining. It means that the insurance premiums will be paid by the members who belong to this program.
Tax Subsidized Program
In another option, the public health insurance plan’s premium cost will be subsidized through government taxes.
Another approach for this public health insurance plan is that it can be both federal or state-administered, and may not be handled solely by the federal government. The plan can be administered by individual states who can set their own requirements.
It was not a part of the healthcare reform but if private health insurers are unable to keep the pricing fair and do not insure people with pre-existing conditions, then public option health plans can be implemented.
Who Would Be Included in a Public Option Health Insurance Plan?
Public option health insurance plan is designed targeting two sections of people who are challenged by health insurance coverage. These people will find easier and complete access to health insurance with a public option plan. The two sections of people who will benefit from this plan include:
Americans who are unable to afford expensive, private insurance plans, especially those who don’t have employer-sponsored health insurance. Such people would find a more affordable option with a public payer option.
People having pre-existing medical conditions will find access to more affordable insurance options through public option health insurance. A public option plan that may modify or replace the ACA needs to continue this protection because the Affordable Care Act ensures that this group is not discriminated by the insurers.
The health insurance was not mandatory before the ACA, Individuals were given a choice whether they wish to have health insurance or not. Generally, people who mostly use healthcare services usually purchase health insurance.
It is equally believed by politicians and professionals that everyone should purchase health insurance coverage to control costs irrespective of the fact that a public option is implemented or not. If healthier and younger people invest into the health insurance system, then it would reduce the financial strain on others, and they would benefit later in life or when they will become sick. The public option can be thought like social security, where people pay when young and reap their benefits on becoming old or disabled.
Benefits of a Public Option Health Insurance
The biggest and important benefit of a public option health insurance is that with so many people participating in a public option, the cost for healthcare needs will come down, which further means that the premiums would be lower than the premiums of the private health plans.
Why Would the Public Option Premium Cost Be Low?
The Public Option Health Insurance premium cost below mainly because it will be a government program and since the government is a non-profit organization, so their goal is to just cover their costs and they don’t intend to make a profit by the service. Thus, they do not build the profit into their premium costs. Besides, even there would be lower administrative costs, which is a substantial part of healthcare spending in the U.S. but is significantly less for public payer programs like Medicare and Medicaid.
It is also observed that a large entity has better-negotiating power that would bring down prices for all aspects of healthcare. In addition to this, even private insurers will compete with the public insurers, so they will have to reduce their premiums and intensely bargain.
A public option health insurance would be tax-exempted because it does not earn a profit, whereas private insurers exist just to make a profit for themselves as well as their investors. Their profits would earn them tax liability, which they have to bear and include in their premium costs.
The other benefits of public health insurance options are that they allow portability so that people could move or change jobs without any fear of losing their health insurance or switching to a different healthcare plan and selecting a new provider. They can move anywhere within their state with a state-run public option and they could move anywhere within the U.S. with a federal program. Though the portability feature is with the ACA-plans too but people have to switch to a different plan on moving or changing jobs. However, with a public option, people will not require to change to a different plan.
Disadvantages of a Public Health Insurance Option
All the demerits of a public option health insurance are related to the professionals involved in healthcare. Thus, with professionals affected it also starts affecting patients too.
It is believed by the private insurers that a public option will throw them out of business, as it would cost less and will also have massive negotiating power. Private insurers will not be able to financially sustain their service levels and will also find difficulty in paying their investors. Private insurers also fear that a great number of people will move towards public option, and so the U.S. would turn up with a single-payer system.
Health care providers also fear that huge negotiating power of public option would force lower patient costs that mostly would be borne by healthcare providers. Even doctor fears that they would not be fairly reimbursed and their reimbursement will reduce further. As per the healthcare reform watchdogs, lower reimbursements would even encourage doctors and providers to reject patients with public option plans.