The public option is back in the ether, though it's hard to see a path by which it may walk this earth. Hillary Clinton has reiterated her verbal support for it as part of her package of Bernie mollifications. Obama has also floated a kind of public option ghost, to haunt only those ACA markets where competition is scarce. Democratic yearning is in high gear.
The public option is designed to mitigate the fact that a private, subsidized insurance marketplace expands the very sector of our healthcare system that pays healthcare providers the highest rates. While a "strong" public option would pay Medicare rates, private insurers typically pay probably more than 150% of that, at least in the employer-sponsored market (many do pay less, some much less, in the ACA marketplace).
Insurers understandably don't like a public option because it would put them up against a competitor that pays less for the care they retail than they typically do. That would seem, in many ACA markets, an impossible task. Competition can't force insurers to charge lower premiums when premium revenue is less than medical payments, as it is in some ACA markets. Competition is great if it pushes insurers' medical loss ratios from 80% to 85%; it's futile if it pushes them from 87% to 92% or 102% or 120%.
Thus a public option is pushing on a string -- or at best, pushing insurers toward ever narrower networks.
Perhaps what's needed is for the government to set affordable rates, or take bids within a given rate range, and invite the insurers to compete on that basis. That's how Medicare Advantage works, and also how Medicaid managed care programs work, with some important differences in how bidding is structured.
The public option is designed to mitigate the fact that a private, subsidized insurance marketplace expands the very sector of our healthcare system that pays healthcare providers the highest rates. While a "strong" public option would pay Medicare rates, private insurers typically pay probably more than 150% of that, at least in the employer-sponsored market (many do pay less, some much less, in the ACA marketplace).
Insurers understandably don't like a public option because it would put them up against a competitor that pays less for the care they retail than they typically do. That would seem, in many ACA markets, an impossible task. Competition can't force insurers to charge lower premiums when premium revenue is less than medical payments, as it is in some ACA markets. Competition is great if it pushes insurers' medical loss ratios from 80% to 85%; it's futile if it pushes them from 87% to 92% or 102% or 120%.
Thus a public option is pushing on a string -- or at best, pushing insurers toward ever narrower networks.
Perhaps what's needed is for the government to set affordable rates, or take bids within a given rate range, and invite the insurers to compete on that basis. That's how Medicare Advantage works, and also how Medicaid managed care programs work, with some important differences in how bidding is structured.
