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Clinton's ‘Public Option’ is a Diversion: We Need Single Payer, Medicare for All

"Hillary Clinton has always been an opponent of single payer," writes McCanne, "and instead has supported the private insurance industry." (Photo: Getty)

You remember the public option. During the drafting of the Affordable Care Act (ACA), efforts were made to include a public option – a government-run plan that would compete with the private health plans in the insurance marketplace.

If the private plans proved that they could provide greater value, then they would prevail. If the government could do a better job, then the public option could expand by demand and eventually become the single payer for the nation, so supporters believed.

"Clinton is now showing us how the public option is a diversion from the reform we really need – single payer."

The original concept for the public option was to allow individuals to buy into the Medicare program instead of purchasing private insurance. There were some obvious problems. Medicare lacked some important features required of the private plans such as catastrophic coverage – establishing a maximum out-of-pocket responsibility of paying for health care. Also, the existing Medicare pool was composed of the elderly and those with long-term disabilities – expensive groups to insure. The exorbitant premium that would have to be charged could not be competitive with the private plans.

It was then decided to establish a new public insurance program that was designed like the private plans and that would have to follow the same rules. The insurance industry immediately opposed this since it would be “unfair” competition considering the government resources backing up the public plan, and the inherently higher administrative costs that the private insurers face, not to mention the need to profit from their operations – profit not being a feature of a publicly owned insurer. Several (anti-competitive) features were proposed for the public option which would give the private insurers a “fair” playing field.

The insurers were still concerned that they could not compete against even a restricted government plan, and thus they continued to oppose it. There is a basis for that concern since the private Medicare Advantage plans are able to “compete” with the traditional Medicare program only because of the overpayments that are being made to the private plans. If they were in the same playing field, the private plans would perish.

Nevertheless, the issue of the public option became moot when Sen. Joseph Lieberman, with no votes to spare, threatened to kill the entire Affordable Care Act if the public option were included.

There's something in the air...

We were left with the co-ops as a substitute for the public option. The co-ops are nonprofit organizations in which the insured members are the owners. Congress, under the Republicans, has refused to provide promised funds, and half of them have collapsed. They are now being used by opponents of single payer to “prove” that the government would be incapable of running a single-payer system – an obvious non sequitur.

Since the enactment of ACA there have been endless calls to add a public option. Single payer failed to gain traction because of the pervasive meme that single payer was not politically feasible. But if we could just get a public option, that would automatically evolve into a single-payer system, they said.

Then along came Bernie Sanders. He carried the message that not only was single payer politically feasible, it was a moral imperative to achieve health care justice for all.

To the surprise of Hillary Clinton and her campaign staff, Bernie Sanders came out of nowhere and gained traction carrying the single-payer banner, and, as a result, has become a genuine challenge to her candidacy.

Hillary Clinton has always been an opponent of single payer and instead has supported the private insurance industry. Some have misinterpreted a statement of hers many years ago as supporting the fact that we would have single payer in the United States. But that statement was not in support of single payer but rather was her threat to us that if we did not accept her managed-competition model of reform, we would have single payer.

So what was her campaign to do? They decided to bring back the concept of a public option to appease those who were turning to Sanders because of his advocacy of single payer. They are relying on the meme that the public option is our door to single payer (even though it is not true). But what is her version of the public option?

She says we should build on ACA. She has proposed no new federal public option legislation but she is merely suggesting that the states look at Section 1332 of ACA which authorizes waivers for limited innovations on a state level.


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Imagine the difficulties that states would have, within the confines of Section 1332, in building their own intra-state public plan. Unless they used private insurance innovations such as high deductibles, narrow provider networks, and tiered services, the premiums would be unaffordable to most. A single-payer system would be funded equitably through progressive taxes, but you could not do that with a public option since that is only one plan in a multi-payer system.

In 2009, David Himmelstein and Steffie Woolhandler explained in very brief terms why the public option is a flawed concept:

The “public plan option” won’t work to fix the health care system for two reasons.

1. It forgoes at least 84 percent of the administrative savings available through single payer. The public plan option would do nothing to streamline the administrative tasks (and costs) of hospitals, physicians offices, and nursing homes, which would still contend with multiple payers, and hence still need the complex cost-tracking and billing apparatus that drives administrative costs. These unnecessary provider administrative costs account for the vast majority of bureaucratic waste. Hence, even if 95 percent of Americans who are currently privately insured were to join the public plan (and it had overhead costs at current Medicare levels), the savings on insurance overhead would amount to only 16 percent of the roughly $400 billion annually achievable through single payer – not enough to make reform affordable.

2. A quarter century of experience with public/private competition in the Medicare program demonstrates that the private plans will not allow a level playing field. Despite strict regulation, private insurers have successfully cherry-picked healthier seniors, and have exploited regional health spending differences to their advantage. They have progressively undermined the public plan – which started as the single payer for seniors and has now become a funding mechanism for HMOs – and a place to dump the unprofitably ill. A public plan option does not lead toward single payer, but toward the segregation of patients, with profitable ones in private plans and unprofitable ones in the public plan.

Hillary Clinton is now showing us how the public option is a diversion from the reform we really need – single payer. It is up to us, the people, to convince our politicians that single payer is what we want. It will not happen without us.

Don McCanne

Don McCanne

Dr. Don McCanne is senior health policy fellow at Physicians for a National Healthcare Program (PNHP), a nonprofit, nonpartisan organization of 20,000 physicians who support single-payer national health insurance. He resides in San Juan Capistrano, California.

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