Let the Public Option Rest in Peace

Most will remember that one of the most spirited debates during congressional consideration of the Affordable Care Act, back in the early days of the Obama administration, concerned the proposed creation of a government-run health insurance plan that would compete alongside private plans in the new insurance exchanges.  Lawmakers rightly rejected the idea, arguing that it would create a degree of federal involvement in health insurance far exceeding the comfort level of moderates and conservatives, create an uneven and potentially destabilizing playing field in the health coverage marketplace, and cause a displacement of employer-based insurance as a result of federally-set, artificially-low premiums and deductibles.

Even HHS Secretary Kathleen Sebelius said, at the time, that the public option was not “an essential element for reform.”

As we’re witnessing the health insurance exchanges facing some well-publicized difficulties today, we’re hearing more calls from candidates and interest groups to bring back the public option.

We need to give those calls a deaf ear.

No doubt, the next Congress and administration will need to address the state of the Obamacare exchanges, making the right policy decisions to enable health plans to compete without absorbing unsustainable losses.  Forcing those plans to compete with a taxpayer-subsidized insurance alternative will only bring less stability, not more.

And just as important to the long-term sustainability of our healthcare system and accessibility to care for a growing number of patients, the public option is detrimental to physicians and hospitals.  A government-run plan that reimburses for services at Medicare rates will “disrupt the fragile financial system that sustains hospitals today.”

The quotation in the previous paragraph came from a letter jointly written this summer by the American Hospital Association and the Federation of American Hospitals.  Their letter points out that Medicare is paying less than the actual cost of care being delivered to patients.  They note, “adding millions more enrollees whose health care would be reimbursed at Medicare rates would likely threaten access to needed health care services, particularly for those in vulnerable communities.”

They added, “We continue to believe the framework of health care exchanges providing subsidized coverage, combined with expansion of the Medicaid program, was the best means of achieving universal coverage.  The addition of a public option at this time would only introduce greater uncertainty to a health care system that is experiencing rapid transformation.”

We agree.  Let’s strengthen the health insurance exchanges and leave the public option as an interesting chapter in the history of healthcare policy debates.