The Public Option, What is it ?

Following Senator Harry Reid's stated support of the so-called public health insurance option, a CNN correspondent trying to make it through a hurried piece on that news event realized that he, nor by his own admission, most of his viewers didn't have a clue what the public option really was. Turning to his "political expert" for help didn't help and only brought forth things like, well we don't know all the details on how it would work, etc.

Imagine that!, something that has been on the networks for months, struck fear and spurred protest from some, been blamed for huge budget deficits to come, and folks don't even know what it is.

To understand it let's look at the way the new insurance exchange would work, which aside from some number variations, is pretty similar in all the bills.

People who can’t get insurance through their employer -about 45 million Americans-could buy it through an insurance “exchange”. In a particular geographic area, the exchange would offer a few private insurance plans and maybe a public insurance plan as well. All the plans offered would have to meet the same criteria in terms of coverage like insuring those with pre-existing conditions, providing annual limits on consumer out-of- pocket expenses(what the insurance doesn't cover and you pay directly to the health care provider) etc. If you earn less than 400 % of the poverty level the amount you would have to pay in premiums is limited based on your income, and is the same whether you choose a private or public plan. For example in the current House Bill if you are a family of three earning three times the poverty level ($ 54,930 per year) the maximum you would pay in premiums is 10 % of your income or $5,490 per year (Note ; you still may have to pay deductibles and out-of-pocket expenses). The less you earn the lower the percentage of your income you pay.

Depending again only on your income level, the government would subsidize the purchase of your insurance. You would get the same subsidy whether you buy a public or private plan. The amount the government pays (and the pressure on the deficit) is the difference between the average cost of the three least expensive plans in the exchange in your area and what you pay. So the lower that average is the less the government pays. It is likely that the government option would be a lower cost option because it doesn’t have to make a profit, and will bring down that average number. So compared to having three private plans to make that average it should cost the government less if there is a public option. Therefore the pressure on the deficit is actually likely to be less with a public option. Most importantly, the government's contribution and pressure on the deficit doesn't come from the public option, it comes from the bill's purpose which is provide health insurance-any kind, public or private- for those who can no longer afford it. If you support that objective note that the government cost will still be there even without the public option. It's also legitimate to not support the objective if you choose to, but recognize that your beef is with the overall objective, not the public option.

So why the furor over the public option? It seems to be an ideological, emotional thing. Some just fear and oppose government involvement. Alternately, others see it as welcome relief from the poor profit-driven claim payment practices of some private insurers.

This leads to the proposal in the Senate to allow individual states to “opt-out” of it, i.e. not have it offered in a particular state if the state legislature and governor decide to do that. For undecided Senators that makes it easier to vote for it. For those ideologically opposed to it this should remove their fears. In the end it probably won't weaken the public option much because -despite all the sound and fury against it -state legislatures will be reluctant to deny their citizens the choice of a health insurance plan that is likely to be just as good as a private one in terms of coverage and cheaper.