Governor Inslee's Public Option Plan

By ROGER STARK  | 
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Jan 9, 2019

This week, Governor Inslee announced his plan to add a public option to health insurance plans offered in the Washington State Health Benefits Exchange. Democrats will introduce the appropriate legislation in both the Washington State House and Senate this session. (here)

A bit of history puts this proposal in perspective.

When Obamacare was debated in 2009, the idea of a public option in the Affordable Care Act Exchanges was championed by elected officials who wanted more government involvement in the health care system. A public option would compete with private insurance plans. Customers who would choose a public option would pay less in premiums and have smaller co-pays and deductibles. Tax payers would pick up the difference in costs between the public option and a private plan.

The public option was not included in the ACA because Republicans and many centrist Democrats saw it as a reach too far and too close to a single-payer system. As the country learned from Medicare, it is impossible to compete with the government. Today, Medicare is the only option for major medical health insurance for seniors and has driven private insurers out of the senior market.

Governor Inslee’s rational for proposing a public option is the fact that the ACA is failing. He blames the current federal administration for the Obamacare failure. The reality is that the ACA was doomed from the beginning. Young healthy people would make a realistic economic decision and opt out, leaving older, sicker individuals left in the exchanges with ever increasing premium costs. This happened during the Obama Administration, long before Trump became president.

The governor proposes that provider reimbursement in the public option plans would be “consistent” with Medicare payments. Medicare payments to physicians average about 70 percent of what private insurance pays for the same treatment or procedure. These low payments have forced many doctors, especially in primary care specialties, to limit the number of seniors they treat because the reimbursements don’t cover overhead costs.

Governor Inslee wants all companies with plans in the state exchange to offer one “standardized” public option plan by 2021. By 2025, only these standardized plans can be offered in the exchange. In other words, by 2025, all patients in the individual market in Washington state would have only one, government-approved and taxpayer-funded health insurance plan available.

Legislation to meet the governor’s proposal is being drawn up for this session. Hopefully, this will include a fiscal note so state taxpayers can see how much extra funding and extra taxes will be required. Undoubtedly, Washington state officials will count on the federal government coming to their financial rescue after what they hope to be a Democratic landslide in the 2020 election.

Although a single-payer, government-run health care system is now being hotly debated, an incremental approach to a totally socialized system is more insidious and politically possible. By allowing a Medicare buy-in for everyone, by increasing enrollment in the Medicaid entitlement, and by instituting a public option in the Obamacare exchanges, politicians can achieve a single-payer system without a formal declaration or a formal vote.