Political campaigns are in full swing and, once again, the debate on health care is dominating the landscape, specifically how Americans will get their health care and who will pay for it.
On the campaign trail in 2016, Medicare for All became synonymous with Bernie Sanders’ presidential bid. In 2020, the term “public option” is growing in popularity among those who do not want to be tied to a complete government takeover of health care.
As of late, US Senate candidate Sara Gideon and US Rep. Jared Golden have voiced support of the idea, but what exactly is the public option and how would it work? In layman’s terms, the public option would be a government-run product available through the health insurance marketplace that would compete with private insurance plans. A consumer could choose to purchase the government plan or a traditional insurance plan.
Proponents of a public option have always touted its cost saving potential, however a recent report from Washington State shows otherwise. The state’s public option plan, called “Cascade Care”, is more expensive than traditional private plans. As highlighted by Katie Mahoney for the US Chamber of Commerce, “This disappointing reality was recently highlighted…by Bloomberg, which exposed the fact that the state’s public option…is a more costly health coverage option than what consumers were paying for their private coverage.”
Opponents of a public option have always questioned whether a government plan can compete with private insurance, and have often called a public option the first step toward a government-run takeover. New studies support the view that a public option could be costly for Americans.
The Hoover Institution released a study earlier this year which concludes that tax increases would be necessary to fund a public option. “To pay for a politically realistic public option, policymakers could impose a new 4.8 percent payroll tax, which would eventually cost the average American worker about $2,300 per year in higher taxes,” writes authors Lanhee Chen, Tom Church and Daniel L. Heil.
It’s not just higher taxes that have critics concerned. A public option also has the potential to increase costs for people enrolled in plans on the ACA marketplace. In July 2019, a Kaiser Family Foundation executive told the New York Times that a public option that attracts older consumers could raise premiums for Americans who remain enrolled in ACA markets, “especially if those consumers had high medical costs.” Right now, the public option in Washington offers less competitive prices than ACA plans.
In August, Bloomberg reported that “Five insurers in Washington State are offering 15 so-called public option plans for 2021, but their average proposed premium for 2021 is higher than what the state’s consumers typically paid for traditional Obamacare policies in 2020.”
Driving up the cost of ACA plans and being costly itself, a public option can actually reduce access to care. As the Chamber’s analysis concludes, “if Washington state’s 2021 public option premiums tell us anything, it’s that this new option is far from a silver bullet to reduce health costs and instead will likely make it harder for Americans to access health care services.”
Costs are not the only factor that could have outsized impacts on states like Maine that depend heavily on a network of rural hospitals to provide care for rural and aging populations. In August, FTI consulting released a study that found that a public option “could increase revenue losses for hospitals in rural and underserved communities by more than 40%– threatening access to affordable, high-quality care.”
Maine currently has 19 rural hospitals and Navigent Consulting estimates as many as 15 of them could be in jeopardy of closing under a system that supports a public option. According to the Partnership for America’s Health Care Future, the study shows that “as many as 55% of rural hospitals, or 1,037 hospitals across 46 states, could be at a high risk of closure under the public option. With rural hospitals already under significant strain, a new government insurance system would have drastic consequences for the availability of high-quality care.”
Mainers cannot afford an increase in health care costs, nor can they afford losing up to 15 rural hospitals. The public option may seem like a fair middle ground between a fully competitive marketplace and a full government takeover, but like the ladder, it comes with serious consequences. Maine should learn from the experiences of states like Washington.