How does the public option work?

In the current U.S. debate over health care reform, a government-sponsored public option has been a controversial topic. Tune in to this episode of BrainStuff to hear Marshall Brain explain the nuances and implications of the public option.

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Episode Transcript

Speaker 1 (00:00):
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(00:29):
with today's question. How does the public option work? You
know the public option, as in the healthcare reform debate
public option. For the last year, the government healthcare idea
known as the public option has been the focus of
intense discussion and debate. There's been so much debate, in fact,

(00:51):
that the future of the whole idea is far from certain.
The public option has been inserted into legislation, taken out,
put back in, cut again. Currently, the public option is
in So let's take a look at the idea and
see how it works. The simple summary of the public
option is this, the government will run a health insurance

(01:12):
company and citizens can choose to use it or not.
This idea sits in the middle of a spectrum of ideas.
At one end of the spectrum is a world in
which private insurance companies provide all health insurance. In the
United States, at the other end of the spectrum is
a single payer system, where the government provides all health

(01:33):
care coverage for everyone. In America, the public option is
more toward the former end than the latter. With the
public option, there's simply one more company in the pool
of companies providing healthcare coverage. That new company happens to
be run by the government on behalf of its citizens.
It should be noted that most other developed nations have

(01:54):
trended towards a single payer system. Single payer has the
potential to dramatically lower healthcare costs for a nation. It
also removes healthcare coverage from the backs of businesses, lowering
the cost of doing business. In the United States, there's
concerned that the single pairer idea doesn't have enough support
to pass into law. It might also be economically disruptive

(02:17):
in the short term, since it would fundamentally change an
industry that makes up eighteen per cent of the American economy.
The approach behind the public option is not unusual. For example,
the government run post office competes with private companies like
FedEx and UPS to provide letter and package delivery services.

(02:38):
At last check, EPs and FedEx were doing fine and
competing well against the government run delivery system. In the
same way, there are many public universities created by states,
and they live in harmony with private universities. This despite
the fact that many public universities have significantly lower tuition
costs because they receive state subsidies. These two examples demonstrate

(03:02):
that public and private companies can coexist in a marketplace.
Why would the government want to set up a health
insurance company? The idea is that a government runs system
could provide service at a lower cost. This is important
because healthcare costs are rising fast and they could eventually
cause serious problems for the economy. One prediction shows costs

(03:24):
nearly doubling by and consuming thirty four percent of the
nation's GDP. The public option would create competition that could,
in theory, compel private insurance companies to lower prices and
cover more people. How might the government run health insurance
company lower costs? First, it would eliminate the need to

(03:45):
create profit and dividends for shareholders. Second, it would be
able to do away with multimillion dollar executive salaries. Third,
it could probably lower other administrative costs, and it would,
through its size, probably negotiate better eates on drugs and services.
But where would the money for the public option come
from the stated goal of the public option is to

(04:08):
create a system that covers its own costs and is
self sustaining. People choosing the public option would pay premiums
like they do to a private insurance company. People unable
to afford insurance would receive subsidies from the government which
they could use to buy either public or private insurance.
Opposition to the public option idea comes on several fronts.

(04:31):
Existing private insurance companies express concern that the public option
will put them out of business, but is mentioned above,
this seems unlikely. Pharmaceutical companies are concerned about the bargaining
power of the public option. Some view the public option
is a first step towards a single payer system. It
will be interesting to see if these opposing forces can

(04:52):
eliminate the public option or if it survives. For more
on this and thousands of other topics. Because it has
sttworks dot com, Audible dot com is the leading provider
of digital audio books and spoken word with over one
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(05:16):
com slash stuff Brain to get a free audio book
download of your choice when you sign up today