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Public option key to reining in health care costs

Written by Diane Archer

Yale University Professor, Jacob Hacker, argues in a recent New York Times opinion piece that a public option is key to driving competition and reining in health care costs in the state health insurance exchanges. Premiums in the state exchanges are set to increase more than 20 percent in 2017, and these increases are unsustainable. If we add a public health insurance option, a Medicare-like health plan, we can stabilize the state exchanges and help ensure that health care is affordable.

People who oppose the public option claim it will push private insurance plans out of business. But, we know that is not true. Traditional Medicare competes with Medicare Advantage plans successfully. In fact, it provides a benchmark on prices, helping the private commercial insurers that offer Medicare plans to keep their costs down. At the same time, traditional Medicare offers people one choice they can count on. Medicare Advantage plans enter and leave the market as they will, and their networks of doctors and hospitals are constantly changing.

Back in 2009 and 2010 polls showed that a substantial majority of the public valued a public health insurance option. The public option, if designed like traditional Medicare, would offer people a wide network of doctors and hospitals. It can also drive health system change to improve health care quality. And, it can rein in prices. For inpatient care, Medicare rates are 53 percent of private commercial plan rates.

Moving Congress to adopt the public option is no small feat, but it is possible. Today, 33 Senate Democrats support the public option. Moreover, Hillary Clinton has embraced it, which could spur Congressional support and action, if she is elected President. To avoid a filibuster, Hacker suggests that the public option could be adopted through the budget process–much like Republican legislation repealing the Affordable Care Act, which President Obama vetoed. Moreover, the public option would reduce the deficit by $158 billion over ten yearsaccording to the Congressional Budget Office.

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