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Argument: Public option is better way to universal care than mandates

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Robert Creamer. "Three Reasons Why a Strong Public Option is Likely to be Part of Health Insurance Reform". Huffington Post. August 18, 2009: "[The] third approach [single-payer and government-provided insurance ("the public option") being the first and second] is to require individuals and businesses to purchase insurance and leave it to private insurance companies to provide that coverage. The problem with this approach is that requires some mechanism to control costs. That is particularly true in the United States where insurance companies are one of only two industries (Major League Baseball being the other) that are excepted from the anti-trust laws that are aimed at insuring competitive markets. In fact, most major health insurance markets are dominated by two or three companies so there is no real competition -particularly with respect to price.

Once everyone is required to buy insurance, the companies can have a field day raising prices and profits using the government to guarantee they are paid - either through subsidies or the imposition of fines. You can see why, from an insurance company perspective, this would be a great deal.

But from the point of view of the taxpayers - and the insurance ratepayers - it would be a disaster. It would be like giving the insurance companies a license to take your money - with no regulation - all enforced by government edict."

This, of course, is basically what happened with the prescription drug benefit - Medicare Part D. But there is a big political difference. A huge percentage of the money used to pay the insurance and drug companies in Medicare Part D comes from the taxpayers (or deficits). Most of the money that will go to pay for health insurance in a new system will come from ratepayers - individuals and companies who will feel the sting of rate increases directly.

What politician in his right mind would pass a law that requires individuals and businesses to buy products from companies who can then charge whatever the traffic will bear -- especially in an industry where premiums have increased three times faster than wages, and profits keep heading skyward even in the worst recession in 60 years? Once government requires you to purchase a product, it has to provide some means to guarantee that the price is fair.

There are only two real practical solutions to this problem. On the one hand, you could set up a public health insurance option that does not have the same incentives to increase profit or CEO salaries and would compete against the private insurance companies and keep them honest. That is what President Obama has proposed. Or you could regulate health insurance rates.

Now rate regulation is not a crazy idea. It's been done for years in segments of the insurance market at the state level. But if you think the private health insurance industry is fighting tooth and nail to stop a Public option - wait to see what they would do to stop rate regulation.

A public option has none of the bureaucratic complexity of rate regulation and uses competitive forces to keep rates down. It is simple and elegant.

That's why the President and his top advisors support a public option."

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