The Public Option - A Realistic Alternative in Health Care

John Baackes, CEO, L.A. Care Health Plan

May 30, 2019

Medicare for All is trending in today’s American political discourse. But, while talk is cheap, actually getting to a single-payer system, like Medicare for all, is not. Taxes would have to rise to intolerable levels to cover the projected cost of more than $32 trillion in the first 10 years. Even doubling individual and corporate income tax collections would not pay for it.

If we, as a society, were building a health care system from scratch, single-payer would at least be feasible. But we’re not. We have had organized health care for nearly 130 years, and it has turned into an incredibly complicated system that can’t be easily undone. There are hundreds of thousands who work in the health insurance industry. Where would they go? And, most people who have health coverage get it through their employer and they like it. It’s doubtful that they’d like being stripped of that coverage.

At this point, it is much more realistic to stick with the Affordable Care Act (ACA), but make it better by reintroducing the public option. A public option was in the original version of the ACA. It made it through the House of Representatives, but the provision was cut in the Senate. The public option said there should be public entities in every state that would offer competing products in the individual insurance market. The public plan would have a lower cost structure and legitimately compete with the commercial plans.

In fact, the public option is healthy competition for commercial plans. Competition is the main thing missing from all the single-payer options. If there is no competition, where will the innovation come from? Consider another government-run monopoly – the post office. You could still be waiting seven days for packages to arrive, if not for UPS and FedEx, forcing innovation to occur.

The only place in the country where you have a public option performing as the original ACA intended is at L.A. Care Health Plan in California. L.A. Care is one of 16 public plans in California, but it is the only one participating in Covered California, the state’s ACA exchange. L.A. Care has proven that a public plan can be competitive in the commercial marketplace, as it is now fourth in Covered California membership.

Looking back at our health care history, we would be wise to remember that for a decade after Medicare and Medicaid were passed in 1965, lawmakers made technical corrections to those bills. Sponsors of the ACA legislation always expected improvements would be made over time. Unfortunately, time wasted on ‘repeal and replace’ efforts prevented that from happening. There is an opportunity now with the new Congress to take some positive steps, as well as the possibility of a new administration in two years. 

As the CEO of a public plan – a true public option – I ask lawmakers to take a closer look. Through greater competition, we will have a better chance of seeing the innovation needed to ensure health care for more people. I welcome the competition. It keeps us on our toes, and with our market size continuing to grow in the individual marketplace, I would bet our commercial challengers are asking, “What do we have to do to compete with them?”



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