The Public Option…

This being my first post to Abyss of Intention I wanted to take a moment to thank all those involved in the blog for the invitation to write and to wish AOT continued success in representing the thoughts and views of recent college graduates, grad students, etc.  I think we all represent an incredibly unique viewpoint.

HEALTH CARE REFORM!  Alongside social security and the capital gains tax, no three words strike the same fear in the hearts of American law makers and politicians.  No issue has represented the proverbial third rail of politics like the dicey topic of health care reform.  And yet, never has health care represented such a large percentage of per household spending than now.  Never have we needed better health care than now.  As the Obama administration pushed back the deadline for health care legislation this week from August to the end of the year, they reinforced the public’s understanding of one thing: this is an increasingly complex topic.  It needs to be.  In order for health care to be tailored to the needs of the consumer, while maintaining the financial feasibility of a financial services market, it needs to be.

THE PUBLIC OPTION

As of late, the Obama administration and a number (of mostly Democrat) law makers have proposed the introduction of a public health care option.  This option would make it available to purchase a government-run health insurance plan either in lieu of an employer-provided or private insurance plan.  It is important to preface a discussion of this public option with stating that this is only a proposal and efforts in congress and the white house have, to this point, only begun debates on specific reforms.

At issue with the proposal of a government-run health care provision is a concern of fundamental liberal economics: competition.  Competition is the driving force of free market economies to which current private health care insurers participate.  A potential insurance purchaser determines his or her purchase within the framework of a cost/benefit analysis of each of the private insurers.  Even employer-provided insurance plans typically provide a ‘menu’ of health care giver options.  Not only do purchasers choose from a range of potential co-pay levels, Rx costs, and dental and optic packages but their decision is based on the per month cost of the insurance plan.  Insurance agencies all work on the same plane in this regard.  They must all provide a consumable product which competes (there’s that competition word, again) with other private options on the market.

If a public option is indeed introduced, the viability of a health care market could be put at risk.  A taxpayer-backed public option would provide the potential for a near endless stream of program capital.  In all, the issue with the public option would be the program’s ability to provide more services for much cheaper than any of the private insurers.  To the extreme end, the public program could even work at a revenue negative rate, truly putting it out of the competitive grasp of private insurers.  Obama officials have laid claim from the outset of the proposed public option that this could provide a corrective competition in the market, which has up to now, taken on an unfair advantage for the companies.

For the public option to work, proposed legislation will have to answer questions of who will be allowed to purchase the public option.  Is there a cap at how many will be allowed?  Health restrictions?  Very real accommodations will need to be made in order for a public option to be a viable market participant, not a market dominator.

I certainly applaud the administration on a number of different topics relating to this debate.  First, a hat must be tipped to President Obama, Peter Orszag, Zeke Emanuel (Check out the Huffington Posts article on him here), and much of congress for taking the bold step to say, “We must fix it this time”.  Also, the administration must be given credit for its efforts to address fundamental shortcomings, such as: preventative medicine, prescription costs, health care employee work conditions and for generally raising the level of debate regarding the crisis of health care.

More important than any discussion of market economies and the viability of private insurance interests is the health and welfare of all Americans.  I hope and pray that this might be the focus of those with the loudest voice.