Friday, July 31, 2009

The Public Option

President Obama is championing a "Public Option" to offer insurance to Americans. The government's Public Option is proposed to give Americans more choices and pressure traditional insurance companies to do better. Obama has stated that the Public Option would compete fairly with the private insurers on a "level field".

We all need to evaluate this issue. If the Public Option is subsidized by the government, then it will offer 'cheaper' premiums - even if its costs are really higher. If people can buy a government subsidized Public Option that may cover more with lower premiums, then how will private insurers survive? They won't over time.

So will the Public Option use the government's power to compete on a "level field" with private insurance?

Let's make this simple. One proposal states that the Public Option would pay healthcare providers 105% of Medicare rates. However, a Federal Court in Florida recently ruled that a private insurer must pay 239% of Medicare rates to providers. The Federal Court found that 239% of Medicare rates was fair and a reasonable market rate to pay providers. See Weinberger, et al v. Aetna Health, Inc., No. 1:2006-cv-20249).

So let's stop there. The Public Option will pay less than 50% of a fair market rate.

Is there any way the Public Option can be championed as another market based insurance alternative competing on a level field?

What will happen to private insurance as an option?

Where is the mature, responsible and thoughtful health reform we need?

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