The Great Health Reform Debate
This is just the beginning of the debate over health care reform. The initial bone of contention is whether a Medicare like public plan should compete with private insurers.
According to the Democratic party a public health plan is the only solution to a market that has been private for so long and has not delivered affordable and quality care. The Republican right thinks this will lead to higher taxes and a rationing of health care.
In the Medicare fee for service plan there is no attempt to manage and coordinate care or pay for that care based on the quality. If this is the public option then it is not a good idea and a step in the wrong direction.
If the public insurance plan is well designed then private insurers would be forced to emulate this plan. In private plans, non medical costs account for a big portion of the outgoing. This includes profit, underwriting, reserves, taxes and marketing. In Medicare these expenses are only 5 percent compared to up to 30 percent with private plans.
Because of an administrative cost advantage, a public plan would send premiums down. Also there would be a disciplinary effect on pricing. Big hospital chains dictate pricing. With a public option there would be more price competition and efficiency which would be passed on to consumers.
So that is the case for a public option in health insurance.
