An Argument in Favor of the Public Option

This hard truth—that to provide for universal coverage, health care costs have to be reduced—must be reflected in any serious proposal for system-wide reform. But the Baucus bill fails on this count as well. It proposes a series of half-measures to rein in expense, ignoring the systemic basis for a perpetual spiral. Partially innocently, partially not, the U.S. has established perfect storm conditions for health care costs. First, and most fundamentally, both insurance and care are largely for-profit animals here—and when profits are the goal, prices naturally ascend to the greatest heights permitted by the market. Secondly, the health insurance industry is poorly regulated and opaque, as well as grossly uncompetitive (how it managed to wangle a federal anti-trust exemption in the ’40s and maintain it until the present-day is some sort of marvel of influence peddling, regulatory and legislative myopia, or both). Finally, the prevalence of a perverse system in which doctors’ compensation is directly tied to the amount and cost of care provided—number of tests and procedures performed, follow-ups prescribed, etc.—means that American doctors have undeniable financial incentive to prescribe the most expensive care possible. That isn’t to say that all, or even most, doctors consciously overprescribe in order to line their pockets; however, in the currently configured system, the justification for “just in case” care (i.e. an MRI “just in case” the kid who took a spill on his bike has a brain injury, though he presents no symptoms) is built in.

The Senate Finance Committee bill attempts to address only the second of these three issues, and unsurprisingly so—in spite of the fierceness and financial heft of the insurance industry lobby, it is the easiest to tackle. But it is also the least likely to reduce costs in the long-term. The creation of insurance “exchanges” at the state level, the bill’s most prominent thrust at an uncompetitive industry, may very well decrease the cost of insurance plans in the short-term (and repeal of the industry’s anti-trust exemption, which is currently being bruited, would work toward that end as well), but it does nothing to address the more fundamental sources of ever-buoyant costs in the sector. Changing the system of reimbursement for doctors by divorcing pay from quantity of care is an absolute necessity, but any effort to do this will be a slog fought tooth and nail by the American Medical Association and other interest groups. Encouragingly, models for a better, more rational system of compensation and care already exist in this country (Is there anything inherently strange about a salaried doctor?). Unfortunately, Congress has not yet reached a point where it is willing to acknowledge the importance of the fundamental link between cost and compensatory systems—it’s scarcely come up in the current debate—and it will likely be several more years before it does so.

This leaves Congress to tackle the sector’s profit-orientation, which is an absolute political non-starter. However, it is also where the public option is an essential tool, and why leaving it out of any reform bill may very well doom us to decades more of cost explosion and the continuing shame of millions of uninsured Americans. The primary argument for a public option among Democrats—that it will create competition for the insurance industry and thereby drive down premiums for everyone—is nearly as disingenuous as all of the invocations of Mother Russia by Republicans. If a government-run insurance plan reimburses doctors and hospitals at Medicare-like rates, as it should, the insurance industry simply won’t be able to compete. This runs profoundly counter to our national free market ethos, but far from being the cataclysm that the right-wing suggests it would be, the creation of a public health insurance option for all Americans is a first step toward a necessary realignment in our thinking. A public option would reveal that the government can ensure its citizens’ right to health care less expensively and more efficiently than the private sector, without a decline in the quality of care provided. It would extend coverage to all Americans regardless of their financial standing and medical history. And it could break the back of the perfidious insurance industry, paving the way for a future in which all Americans are insured either through the government or non-profit health care cooperatives.

In the early ‘60s, prominent conservatives such as Barry Goldwater and Ronald Reagan condemned proposed Medicare legislation as “socialized medicine.” Sound familiar? Now conservatives defend Medicare with a vehemence more familiarly employed in Second Amendment debates. And why? Medicare proved that government-run health care worked best for the elderly, just as Medicaid proved that it worked best for the indigent. And including a public option in current legislation could offer the same proof regarding health care for all, or nearly all Americans. News came last weekend that Senate Majority Leader Harry Reid would push anew for the inclusion of a public option in the Senate bill (albeit with states able to opt out—that is, bar their citizens from participating). If Reid is successful, the ensuing legislative battle will be epically pitched. Here’s hoping that Congress does the right things this time—the welfare of millions of Americans, and that of their pocketbooks, depends upon it.