We’ve Long Had a Public Option
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President Obama and the far-left in Congress say that a “public
option” health insurance plan is necessary because the profit
motive results in too much coverage denial, therefore America
needs a non-profit option to “keep the insurance companies
honest.”
In Colorado, Obama explained it this way:
The argument around public option is, should one of the choices
— not the only choice — but one of the choices on that
exchange be a public option? And the idea here would be that a
government-run non-for-profit would have its own option that
people could sign up for — they wouldn’t have to, but they
could sign up for it — and if it could keep its costs lower
and provide a good-quality service and good benefits, then that
would help keep the insurance companies honest because the idea
being — the idea being that as a non-for-profit, potentially
with lower administrative costs, they could do a good job.
Rebutting concerns that the public option would be a
government-subsidized plan, Obama has said repeatedly that it
won’t be. Rather, it would function as a nonprofit insurer.
He said in Colorado, “a public option can only work if they have
to collect premiums just like a private insurer and compete on a
level playing field.”
If that is true, then there is no need for a public option plan
because roughly half of Americans who have private health
insurance get it from the same type of entity Obama says he wants
to create — a nonprofit insurer.
According to the same Census report that produced the figure of
46 million uninsured Americans, 202 million of us are covered by
private insurance. According to the Alliance for Advancing
Nonprofit Health Care, an industry group, “Of the 138 health
plans in the United States with at least 100,000 medical
enrollees, 84 or 61% are nonprofit.” Nearly half — 48 percent –
of the people covered by the country’s 138 largest insurers are
enrolled in a non-profit health plan, the Alliance reports.
That’s 97 million people. That doesn’t include those covered by
small, non-profit insurers.
Advocates for left-leaning health care reform like to target the
small-group market, meaning the market for small employers,
usually defined as businesses with fewer than 100 employees. They
often cite a shortage of competition in this market as a reason
or the primary reason health care is so expensive and there are
so few options. Fingers are usually pointed at big, for-profit
insurers. Conveniently ignored are the big non-profits.
The Congressional Budget Office surveyed the small group market
in 2005, and reported this finding:
Thirty of the 40 states supplying information identified a Blue
Cross and Blue Shield (BCBS) carrier as the largest carrier
offering health insurance in the small group market, and in all
but 1 of the remaining 10 states, a BCBS carrier was among the
five largest carriers.The median market share of all the BCBS carriers in the 34
states supplying information was about 44 percent, with a range
from about 6 percent in Wisconsin to about 93 percent in North
Dakota.
The idea that for-profit insurers control the market with no
serious nonprofit competition and therefore need a non-profit to
“keep them honest” is nonsense. Nonprofit health insurers such as
Blue Cross/Blue Shield and Kaiser Permanente already cover scores
of millions of Americans and are often the dominant insurer in a
given state or region.
And that doesn’t even get into the issue of nonprofit health care
providers, which often dominate care in large portions of the
country. For example, Excela Health is the sole health care
provider, and the largest employer, in Westmoreland Co., Penn.,
the largest county in the state.
Now, there are lots of reasons why nonprofits might function
essentially as for-profits when it comes to health insurance (the
need to avoid becoming a dumping ground for the sickest of the
sick, for instance). And there are lots of reasons why nonprofits
might not be able to offer significantly cheaper alternatives
(state coverage mandates, for instance). But no one is proposing
reforms that make sure nonprofits are fulfilling their stated
missions (and thus justifying their tax-exempt status) by
actually offering low-cost coverage for high-risk populations.
And no one is talking about bringing for-profit hospitals or
physician networks to compete with monopoly or dominant nonprofit
hospitals and physician groups.
Instead, they are attacking for-profit insurers and suggesting
that the profit motive itself is the real masked villain here.
That argument simply doesn’t hold when one realizes how much of
the market nonprofit insurers (and providers) claim.
What President Obama and the Democrats want is not a nonprofit
alternative to for-profit insurers. The United States is chock
full of those. They want a government-run alternative. But the
type of alternative Obama claims the “public option” would be
already exists. So what, one wonders, is he really trying to
create?
