The Public Option

[Recursion]

I just kind of want a general sense-of-DU. When you say "public option", you're referring to a hypothetical program that was not put into the health care reform. In terms of the program you're thinking of:

1. How much would the premiums be? (roughly)

2. How would it have negotiated payments with providers?

3. What would coverage include (eg prescription drugs, preventive care, mental health)?

4. Would it be run by the state governments or by the federal government?

5. If its premiums exceeded its payouts what would it do with the extra money?

6. If its payouts exceeded its premiums how would it get the extra money?

The unsubsidized premiums for Medicare parts A, B, and D is about $900 per month per person: $450 for Part A, $395 for part B, and $100 or so for part D (D is a little sketchier to find exact prices). Keep in mind Medicare has by far lower administrative costs than any insurance company, and very aggressive negotiation abilities with providers. If a Medicare beneficiary is paying less than that per month (and they pretty much all of them are), they're having the difference paid to Medicare from the Medicare trust fund.

Would the public option cost less than $900 per month? If so how would it either get costs lower per-person than Medicare or find the money to subsidize enrollees?

[no limit]

1. Unfortuantely we will never know the answers to your questions, will we?

[Recursion]

4. Well, what got me thinking about this was complaints about the high-risk pools

The high risk pools are basically public options for people who can't get other insurance.

Its premiums are -- wait for it -- about $800-$900 per month in most states. This seems to be what it costs to insure people who are sick. How can we get that lower?

[no limit]

7. Not really, the high risk pool is for people that cost a lot of money to take care of

so the premiums will be higher. One of the big complaints progressives such as me had with these high risk pools would be how expensive they would be.

But that's totally sperate from a public option. A public option would cover everyone, from the sick to the young healthy people. So premiums would be balanced much in the same way they are in private insurance. But because of the lower administrative costs a public option would be able to compete with private insurance.

[zipplewrath]

2. There were many proposals

"Would the public option cost less than $900 per month? If so how would it either get costs lower per-person than Medicare or find the money to subsidize enrollees?"

A large part of the objection to the public option from many conservative democrats was that they couldn't quite figure out how the premiums would be set, and to what extent it would be subsidized. That was the concern of the insurance companies as well. They would have enough trouble competing with the public option, they would have none if the premiums were basically subsidized.

Your question also gets into the debate between the "robust" public option and some of the stripped down versions. Most of that had to do with who would be eligible for them, or over what regional areas any particular "plan" would apply. With the robust option, there was the possibility that the government would get the barganing power to negotiate extremely low rates, partially through the trade off of having a very streamlined billing system. There was even concern that it could get combined with the medicare system giving the feds even more barganing power.

Funding was another serious point of debate. It was to some extent why Obama ultimately walked away from the public option. In the short run it wasn't going to save the feds any money. In the end HCR was all about saving the feds money, not anyone else. They succeded at that, but a public option could have been problematic in that because they'd either have to initially charge "what it cost" well before they'd have a chance to negotiate lower rates, or they'd have to subsidize it until they got the costs in line with the rates. The House suggested raising taxes on the top 2% of wage earners, the Senate prefered mandates and cadillac taxes. The White House sided with the Senate.

Another big concern was that the PO would be too popular, too fast. If they got costs or premiums in line as they wanted to, or held the line on premiums when the insurance companies weren't, there could have been a "run" on the PO by individuals and small companies. Progressives were sure that is what was going to happen and we'd end up with a defacto single payer. Conservatives were afraid it would happen and we'd end up with a defacto single payer. The conservatives fears trumped the progressive's hopes.

[Recursion]

3. Even with all of medicare's advantages

The unsubsidized premium is $900 per month. Insurance companies can (for a little while longer, at least) get premiums lower than that by denying coverage to people who are likely to get sick. Medicare can't do that, nor could a public option. Nor will insurance companies be able to, in a couple of years.

How can we get the price of insurance down below $900?

[no limit]

5. You comparing medicare costs to a public option is not accurate

Medicare is for people 65 and over. Therefore the costs for those people will be much higher. If you could buy private insurance at the age of 70 you would be paying much more than $900 a month.

[zipplewrath]

6. Get down the cost of CARE

"How can we get the price of insurance down below $900?"

By getting the cost of the underlying care down. You achieve that by getting control of the cost of care delivery, mostly by having the negotiated clout to force them down. They can also improve delivery by avoiding the cost of health care delivery to the uninsured by eliminating the uninsured. The insurance companies won't be able to "compete" when everyone must be insured and they get to push the sickest off onto the federal government.

In the end, the public option had the potential of being more expensive, directly, to the federal government than the status quo, but could have saved the general population billions, through lower cost health CARE.

[Massacure]

8. The U.S. spends about 15% of its GDP on healthcare

It works out to about $600 per person per month, using figures of 14.2 trillion dollars for the GDP and 310 million people for the population. About 30% of health costs are administrative overhead. Most other countries spend between 8-10% of the GDP on health care, and so the U.S. should have little difficulty reducing cost below 10% of the GDP.

As for your other questions in the original post;

To pay for the program, I'd be curious what burdens the working class less -- a straight 10% tax on all income, or a 10% payroll tax split equally between the employee and the employer. Ten percent might not be the exact number used, but whatever the tax rate, it should be a little high. It is better to send out rebate checks to refund unspent money than to not raise enough.

I'd like to see the program reimburse people for 90% of all their health care costs. A 10% copay gives people incentive to shop around for price deals. Given the option between a generic drug for $20 and a brand name drug for $80, a person would probably save themselves six bucks and go with the generic, and it saves the government $54. There would need to be a cap on out of pocket expenses though. Even with single payer, various tragedies such as car accidents could still rack up $100,000 hospital bills and it isn't acceptable to bankrupt someone with a $10,000 copay.