Salon.com | Why critics of a public option for healthcare are wrong

Why critics of a public option for healthcare are wrong

Those opposing a public option — Big Pharma, the AMA, the insurers — are doing so out of economic self-interest

By Robert Reich

Jun. 24, 2009 |

Without a public option, the other parties that comprise America’s non-system of healthcare — private insurers, doctors, hospitals, drug companies and medical suppliers — have little or no incentive to supply high-quality care at a lower cost than they do now.

Which is precisely why the public option has become such a lightning rod. The American Medical Association is dead set against it, Big Pharma rejects it out of hand, and the biggest insurance companies won’t consider it. No other issue in the current healthcare debate is as fiercely opposed by the medical establishment and their lobbies now swarming over Capitol Hill. Of course they don’t want it. A public option would squeeze their profits and force them to undertake major reforms. That’s the whole point.

Critics say the public option is really a Trojan Horse for a government takeover of all of health insurance. But nothing could be further from the truth. It’s an option. No one has to choose it. Individuals and families will merely be invited to compare costs and outcomes. Presumably they will choose the public plan only if it offers them and their families the best deal — more and better healthcare for less.

Private insurers say a public option would have an unfair advantage in achieving this goal. Being the one public plan, it will have large economies of scale that will enable it to negotiate more favorable terms with pharmaceutical companies and other providers. But why, exactly, is this unfair? Isn’t the whole point of cost containment to provide the public with healthcare on more favorable terms? If the public plan negotiates better terms — thereby demonstrating that drug companies and other providers can meet them — private plans could seek similar deals.

But, say the critics, the public plan starts off with an unfair advantage because it’s likely to have lower administrative costs. That may be true — Medicare’s administrative costs per enrollee are a small fraction of typical private insurance costs — but here again, why exactly is this unfair? Isn’t one of the goals of healthcare cost containment to lower administrative costs? If the public option pushes private plans to trim their bureaucracies and become more efficient, that’s fine.

via Salon.com | Why critics of a public option for healthcare are wrong.

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