Public Insurance Isn't Coming, It's Been Here for Years

By :: June 16th, 2009

Note to critics of the public plan option for health insurance: This debate is over. You lost. In 2007, more than 45 percent of all medical costs in the U.S. were paid by government, vastly more than the one-third funded by private insurance.   

Many Americans already have access to public coverage. There is Medicare for those over 65, Medicaid for the poor, SCHIP for kids, coverage for the active military, and for many veterans. Together, the share of medical spending paid by government has grown from one-third in 1970 to nearly half today, according to the Current Population Survey. If your definition of “public plan” includes insurance available through highly-regulated private carriers to federal, state, and local employees, the numbers are even bigger. And, of course, there is the quarter-trillion dollar government tax subsidy for health insurance.  

But even using the most narrow definition—those getting direct government coverage-- more than 80 million Americans already have such insurance. That’s half as many as have employer-sponsored insurance, but it’s still a lot of policies.   

Of course, among those 65 and older, far more have Medicare than have private coverage (many have both). Nearly a quarter of all children under 18 are covered by the government.

Public plans have been a pillar of health insurance in the U.S. since the 1960s. We can have a perfectly good argument about whether these plans work as well as they should, whether there are markets where private insurance is more appropriate than public coverage, or how we should structure a public plan. But talking about government coverage as if it is the insurance equivalent of a four-leaf clover is just bizarre.  

It is especially odd to hear the American Medical Association grumble about public insurance. Back in the 60s, the AMA opposed creation of Medicare and Medicaid, never imagining that government would pay about one-quarter of the cost of physician office vists and clinical services as it does today.

It is no surprise that critics of health reform would revive the old Harry and Louise argument that government is trying to take over your health care. But if that’s a problem, it has been one for decades.    


  1. Anonymous  ::  10:44 pm on June 16th, 2009:

    No argument that many people are already covered by the government.
    The premise in your article is wrong, though, as opponents (aka, me) don't want a single payer solution that wipes our privatized health insurance.
    I am one of many who want government completely out of covering health care as it is contrary to the founding principles of the United States.
    You make a good argument, but it should have been used to demonstrate how 'socialized' we already are. Then let the arguments begin about how ineffective government run anything really is…. they are the problem, not the solution.

  2. Anonymous  ::  4:02 pm on June 17th, 2009:

    Anon.: Unless companies wish to cover retirees fully, I can't see ending Medicare – unless of course we give employers an exemption from paying Medicare taxes if they do cover retirees (including past employees who spent most of their career working for them and ended somewhere else). Covering retirees in-house would also work if medical care were provided in-house. This is how Tricare works, I believe – and why it is constitutional to provide health care for veterans. If we send them to get shot up, it is constitutional to treat their wounds – or their PTSD. By the same token, health care is provided to governmnent employees and retirees.

  3. Anonymous  ::  4:18 pm on June 17th, 2009:

    The Government Insurance Option is inevitable, not because we do it now, but because when you take away the ability of private insurers to exclude patients or punitively charge them based on experience or perceived risk, you will find that consolidation will occur, with some companies winning and many going broke and requiring bailouts. As insurance companies strive for profitability, they will also strive to shed their sickest clients. A Government Insurance Plan will allow them to do that.
    The uninsured 25 year old is not the challenge here. Companies will write that person a very cheap policy because, more than likely, he or she will not become seriously ill for 20 to 30 years (which is why many 25 year olds who don't get it automatically go without insurance).
    A 45 year old, obese man with a pre-existing condition – someone strangely like me – will be avoided at all costs, even and especially for high deductible plans. The problem is not, as some intimate, the overuse of option coverages, drugs or doctor visits, but the prospect of some catastrophic event which will result in hospitalization and costs in excess of $100,0000 (or more). Most insurers would rather not care for these folks under any circumstances, because they will lose money doing it. They certainly won't make money – and in this environment they want to make as much money as possible from this line of business. Health care reform won't let them do that – unless they can shed these people to a public insurance fund.
    It may be that some in the industry have not yet figured out that a public fund will let them shed the high risk cases. Perhaps it needs to be more explicit in the law – or maybe there are ideologues in the lobbying arm who need to do a better job of doing their homework. By the time the debate is over, I am sure the insurers will be quite comfortable with the public fund,even though it is the the camel's nose to single payer.
    A public fund is like crack cocaine. Once insurers are in the habit of dumping risky cases onto it, they will find it harder and harder to stop as profit targets rise (as they always do in capitalism).

  4. Anonymous  ::  4:45 pm on June 17th, 2009:

    No offense, I shouldn't be required to pay for other people's health problems.
    Your problem is NOT my problem. Of course, Obama and the Democrats see it differently.

  5. Anonymous  ::  5:11 pm on June 18th, 2009:

    If you pay them, you pay for their health problems. If your government buys a bomber, all the bomber maker's retirees get a chunk of that money for health care. If you buy a car, a bit of your money goes to the health care of retirees and workers.
    Even if there were no “fund” to provide it – the workers would get the money and THEY would fund their health care.
    Unless you live on an island and have your own captive doctor, not only are you paying for everyone's health care – but everyone is paying for yours in one way, shape, or form.
    In essence, health care reform is mainly an income support program to make sure everyone has enough income to cover their health care needs.
    The reason you should be required to pay into such a program is because people get the healthcare they need whether they can afford it or not, the question is whether they get it in an orderly and inexpensive fashion or instead get it from the ER between the hours of 7 pm Sunday and 9 am Monday (the most expensive option and the status quo). You pay for that because it is provided anyway, even if the patient can't pay.
    The biggest impediment to efficient healthcare is actually not the payment stream, but the existence of paid sick leave for some people and not others, forcing those without it into the ER at night. The way around this is to either mandate that doctors provide medical care until 10pm every night in their offices (or at least work weekends) or give everyone paid sick leave for doctor visits. Given the political power of doctors, I expect the latter is in our future.

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