Tuesday, August 18, 2009

The 'Honest' Question

Would it be possible for a public option to make the private sector ‘honest,’ or would a public option simply cause the private sector to go bankrupt? The very purpose of the public option is to force lower prices by interjecting a leaner, cleaner, operating machine that gives the insurance tycoons a run for their money.

The ‘honesty’ goal is causing some confusion. The public option will offer medical insurance at a lower price, therefore drawing in Americans who currently can’t afford medical insurance. Only those individuals without affordable employer-provided insurance and small businesses that can’t afford their own reasonably priced plans would qualify for the public plan. That means that most insurance company customers, who are affording their plans, would not be eligible for the public option. So how will the public option force the private sector to lower prices?

At the same time, new legislation will prevent insurance companies from denying customers with preexisting conditions. This is good news for the insurance companies because they will get more customers. If most people won’t turn to the public option, and health care reform increases business for private insurance companies, then how would a public option force the private sector to be ‘honest?’

I answer may lie in contradicting data. Even though many people will not be eligible for the public option, it is estimated that over 100 million Americans may leave private plans for government health care. In fact, the purpose of the public option itself implies that the government is betting many people will turn to government health care thereby forcing private companies to lower prices or file bankruptcy.

The eligibility requirements for the public option would serve as the governments leash on the private sector. The harder the government makes it to be eligible for the public option, the less competition threatens the private sector. So the next question is this: what are the public option eligibility requirements that will make insurance companies ‘honest’ without forcing them into bankruptcy?

4 comments:

  1. Wow there is a lot going on here. So what does honest even mean in terms of insurance companies? Right now they are corporations who charge the most they can in the market to reap the biggest profits for shareholders, any other way would violate fiduciary duty standards.

    I have not yet heard of eligibility stanards...if they are to exist, I'm assuming employers would not be able to purchase employee plans through the public option? Otherwise there would be a mad flux from private insurers to the public plan and they would go out of business.

    Insurance companies would not go out of business if employers were not eligible to purchase the public plan because then only people who do not have employer plans would be eligible- but employers must not fail to provide insurance simply because employees may sign up for the public option. I think the high cost problem would not be a major issue because the insurance companies would be charging the same rates to employers and individuals who are unable to pay these rates would be covered.

    I'm not worried about the insurance companies going out of business. Right now they charge much more than it costs them to operate- as any business should. If there is a public option it seems they would a) not have to lower prices at all because of eligibility requirements or b) they would all go out of business because Americans decided they did not want their health in the hands of profit maximizing corporations.

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  2. it's "good news" for insurance companies that they can't deny people with preexisting conditions? i don't exactly feel my brain exploding with reason here...

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  3. You're right, its not 'good news' for the insurance companies. I apologize for not exploding your brain with reason. More customers with preexisting conditions is good news for the drug companies.

    However, that still doesn't solve my eligibility problem. The wall street journal released an article that explained this is the most overlooked point, the fact that most poeple won't even be eligible for the public option. Herein lies my problem.

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  4. I have not heard of these elegibility requirements, but admittedly I have not been digging as diligently as I should distracted by the right's ranting about killing gmas and other outright lies. But I have a few questions. If you already have employer provided health care is it or will it be a viable option to leave that for the public option? Also, what does "affordable" employer provided insurance mean...like who's to say if it is affordable...where's the cut off point? Likewise, how can the public option be the way to go for some freelancers who can't even afford even assumingly low public option prices?

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