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A Public Option

By Zachary Garai

Government exists with the consent of the governed, with citizens relinquishing some rights in exchange for security — be it military security, economic security, or domestic security. The Constitution epitomizes this “social contract” and codifies it into law. Yet, it also states that the role of government is to “promote the general welfare” of its citizens. But how can the government “promote the general welfare” of its citizens when the insurance market is dominated by oligopolies, who themselves constantly merge to form larger and ever-more-powerful blocs? Is it not the role of government to take a stand for the citizen, in the face of the corporation? Is it not the sworn duty of every member of Congress to defend the life and the liberty of every American? Is it not the responsibility of the executive to defend the rights we hold so dear, amongst them the right to life? There is little question that it is. Yet, how can this administration pride itself on its successes, when its tenure has been marked by the failure of bills dedicated to undoing those limited guarantees on healthcare that we already have? Instead of attempting to fix the system, the White House is attempting to initiate a “death spiral” to destroy it, in the name of private donors and profit. Instead of undermining the system put in place by the Affordable Care Act, the government should institute a public option for healthcare; one subject to federal regulation and relatively free from governmental influence, but also subject to enough federal control as to use the free market to protect consumers.

The modern health insurance system in America is imperfect and under siege. In many rural states, such as Arizona and Iowa, the “Obamacare” markets are dominated by a single provider with a monopoly and the ability to raise premiums. In larger states, like Illinois, this is a problem too. According to the Chicago Tribune, in 2016, Blue Cross and Blue Shield of Illinois (the largest ACA insurer in the state) was losing 32 cents on the dollar — hence, premiums skyrocketed (Chicago Tribune). Health insurance wouldn’t be so pricey for providers (or consumers) if young, healthy individuals entered the market. This was what the ACA tried to accomplish, with the individual mandate. When healthy individuals buy insurance, insurers make more money with a disproportionately small increase in expenses, thereby allowing prices to stay low. But when the premiums — due to monopolies and oligopolies — rise, the cost of healthcare exceeds the penalties from noncompliance, and the system falls apart in a so-called “death spiral.” Clearly, there’s a problem.

In response, rival healthcare bills have appeared on Capitol Hill. The Republicans have promised for seven years to repeal Obamacare; now, with full control over all three branches of government, they intend to do just that. The GOP has sponsored or promoted multiple bills, all of which intended to repeal the individual mandate and would have decreased the tax burden on the upper class. According to a CBO analysis of the so-called “skinny repeal,” the bill that came closest to passing the Senate with a 49-51 vote against it, and as cited by Forbes, the bill would have left 15 million Americans uninsured (Jaspen). According to Dr. Barbe of the American Medical Association, “Eliminating the individual mandate will lead to adverse selection, triggering higher premiums and further destabilizing the individual market” (Jaspen), which would create more problems than it would solve. Other groups also warned about the “death spiral” the market could fall into. After a series of failed efforts, the GOP eventually gave up.

The Democrats also have a plan, but since their party was routed in 2014 and in 2016, they don’t have the votes to actually pass it. Senator Bernie Sanders (I-Vt.), a self-proclaimed “democratic socialist,” used his newfound stardom after the 2016 primaries to promote a single-payer healthcare plan. According to the National Review, a business-conservative publication, Sanders’ “Medicare for All” would nationalize the health insurance industry and eliminate private competition. The article goes on to lambast the proposal, which over a dozen Democratic senators are co-sponsoring, as “the cost of such a proposal would be phenomenal” (Pope 1). It goes on to refute the arguments made by the bill and by its proponents: The costs of healthcare in nations such as Canada and Germany are lower, not because of the insurance system itself, but because the scope of needs that the insurance covers is significantly reduced. Due to fiduciary concerns (unfortunately, they must be taken into consideration), single-payer insurance isn’t feasible at this time.

Perhaps the answer can be found not at the extremities of this debate, but in the oft-avoided realm of moderation. The free market depends on supply and demand; in our current healthcare system, demand is fairly high and supply is startlingly low. Paul Demko of POLITICO details some of the effects of the Affordable Care Act in Iowa, where it actually undermined the competition in the state’s health insurance market. In places like the Hawkeye State, there’s only one healthcare provider under “Obamacare” (Medica) — leading to a 50 percent rise in premiums due to an unchecked monopoly and, according to the Iowa Insurance Division, a decrease in coverage of at least 25 percent (Demko). The situation is similarly dire in other rural states, where the scarcity of hospitals reduces the available options, hence reducing competition and increasing the price of insurance. If a public insurer was added, then that provider could lower prices — drawing customers away from the private corporation — which would lead to the latter lowering its prices to compete. This could also open up room for other insurers to enter the market, which would ensure competition in the long run outside of government interference.

Competition would lower prices, and regulation would ensure the protection of the people. A public option could save so many the cost of mere survival, as the free market has no conscience and pulls no punches. A public option could allow people to get the quality care they need, and get that where they need it. A public option is a viable solution that would benefit all Americans. There are some dissenters. Frank Rosenbloom of Oregon Right to Life argues that a public option would inevitably lead to a government monopoly (Rosenbloom). He cites Medicare in the 1960s as evidence of the dangers of a public option; however, he neglects to consider the dramatic changes that have taken place in the decades since and the ways in which a modern plan would differ from President Johnson’s. In doing so, the argument rests on an illusory bedrock: One historical example is not definitive evidence of much of anything. There’s a reason why we have a whole field of statistics — one data point, one number, one incident does not reflect the reality of the larger whole, it merely points out a single item in a sea of possibilities. As for the threat of government monopoly, look to the Federal Reserve. The Reserve has a monopoly on money, yet it has maintained a great deal of independence from the federal government (The Economist). So why can’t the government create an insurance arm also maintaining its distance from the three branches?

Government exists to protect its citizens, and the free market exists to protect those with the drive or the resources to succeed. These two objectives are seldom reconciled, as is shown by the modern healthcare system. The government is incapable of regulating the health insurance market under the current system, so clearly (and both sides of the aisle agree) reform is necessary. A public healthcare option, regulated directly by the government and operated independently of the government, would be capable of protecting the healthcare of all Americans by using the free market system itself. Sometimes, the extremities are ill-equipped to handle the issues of the day.

Works Cited

Demko, Paul, et al. “How Iowa Became An Obamacare Horror Story.” POLITICO Magazine, 23 Oct. 2017, www.politico.com/magazine/story/2017/10/23/iowa-obamacare-aca-markets-215736.

Holahan, John, and Linda J. Blumberg. "A Public Plan Option Is Necessary for Competition." Health Care, edited by Noël Merino, Greenhaven Press, 2011. Current Controversies. Opposing Viewpoints in Context, link.galegroup.com/apps/doc/EJ3010450250/OVIC?u=paci91811&xid=ff86e3c2. Accessed 14 Nov. 2017. Originally published as "Is the Public Plan Option a Necessary Part of Health Reform?" Urban Institute, 2009, pp. 1-13.

Japsen, Bruce. “GOP Defections Defeat Senate's 'Skinny Repeal' Of Obamacare.” Forbes, Forbes Magazine, 28 July 2017, www.forbes.com/sites/brucejapsen/2017/07/28/gop-defections-defeat-senates-skinny-repeal-bill-of-obamacare/#1e1004fd709a.

“Monopoly Power over Money.” The Economist, The Economist Newspaper, 20 Nov. 1999, www.economist.com/node/260590.

Pope, Chris. "Bernie's Bad Medicine: The folly of Medicare-for-all." National Review, 16 Oct. 2017, p. 26+. Opposing Viewpoints in Context, link.galegroup.com/apps/doc/A508425137/OVIC?u=paci91811&xid=9bde9ce6. Accessed 14 Nov. 2017.

Rosenbloom, Frank S. "A Public Option Would Worsen the Health Care System." Health Care, edited by Noël Merino, Greenhaven Press, 2011. Current Controversies. Opposing Viewpoints in Context, link.galegroup.com/apps/doc/EJ3010450253/OVIC?u=paci91811&xid=11c40da7. Accessed 14 Nov. 2017. Originally published as "The Failed Promises of Government Funded Health Care," American Thinker, 7 July 2009.