Commentary

Only public option will save health costs

Marketplace Staff Jun 17, 2009
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Commentary

Only public option will save health costs

Marketplace Staff Jun 17, 2009
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TEXT OF COMMENTARY

Kai Ryssdal: For all the president’s politicking about it the past couple of days, work on overhauling the health-care system didn’t officially start until this morning. That’s when the Senate Committee on Health, Education, Labor and Pensions held its first formal hearing on the topic. Between the White House and Congress there are a couple of reform plans floating around out there, all of them with trillion-dollar price tags. But other than how to pay for it, the biggest fight is shaping up to be whether the government ought to offer some kind of public insurance option. Commentator Robert Reich says really there’s only one choice.


ROBERT REICH: The only way to ensure that medical costs will be contained by any upcoming health-care bill is to include a public, Medicare-like option that people can choose as their health insurer over a private insurer, if they want.

Although most Americans who know about the issue favor a public option, and the president has said he wants it in the bill, don’t bet on it being there in whatever emerges from committees days or weeks from now. Most Republicans don’t want the public option. And many Democrats are being lobbied heavily against it.

Pharmaceutical companies don’t want a public option because they fear it will be so big as to have substantial bargaining power to get low drug prices. And private for-profit insurance companies don’t want a public option because they fear it will under-price them. After all, the public plan won’t have to show a profit — it just has to cover costs.

Both these powerhouse industries are saying a public option would be unfair. But what’s unfair to them may be a boon to you and me if it means lower prices and premiums.

If politics is the art of compromise, as the saying goes, we may get a public option, but one that’s barred from negotiating low drug prices, or prevented from charging less than private insurers, or allowed to come into existence only if, at some point down the road, private insurers have failed to lower medical costs and expand coverage by some amount.

In other words, we’ll get a public option that won’t be able to deliver substantially lower prices. Which is the whole point of having it in the first place, and the whole reason why drug companies and private insurers don’t want it.

So there’s really no room for compromise here. Either we’ll have a public option that disciplines private insurers and offers lower prices and premiums and thereby contains health-care costs or we won’t. In the meantime, don’t be fooled by the label. Just because a health-care bill includes something called a public option doesn’t mean it’s the real thing.

RYSSDAL: Robert Reich is a professor of public policy at the University of California, Berkeley.

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