Ezra Klein of Washingtonpost.com and Jonathan Chait of the New Republic both point out that Lieberman's reason for opposing the public option—that it's too expensive—makes no sense, because the public option actually lowers the cost of health reform by exerting downward competitive pressure on the private-insurance premiums whose purchase the government would subsidize.

"Lowers the cost"? Holy cr*p... do you know where this magic "government subsidize" money comes from? I'll give you a hint - it has something to do with the pockets of working people.

As with any other insurance plan, the "public option" plan would pay out claims from monies paid in as premium payments from its members. That's how every single insurance plan operates. You choose the public option, and you pay premium payments, just as with any other plan. All insurors take that capital and invest it to generate much (most?) of their revenue. This is the financial base from which claims are paid out.

The distinction is that the public option would not have as its goal the generation of profits for stockholders. And it would, presumably, not spend money on advertising/promotion. And it would not be providing mega-million salaries and bonuses to executives. It would also probably negotiate lower fees to healthcare providers, possibly including different structures to base payments on. As with any other insurance plan, Physicians and healthcare organizations could choose not to belong to the network of public-option insurance.

There's nothing "free" about any insurance plan. Every single insurance plan consists of some method for sharing risk among its pool of insurees. It's really a shame, how so many Americans still don't grasp the very old concept of insurance.

Presumably the government will not be investing the premiums. So how does a 3% decrease for profit offset the revenue generated by investment?

"Presumably the government will not be investing the premiums."

Presumption is the enemy of reason. I don't know why this public insurance plan would not be permitted to make investments in broad based market index funds, or treasury bonds.

In any insurance plan, the management and investment of the premiums is an important part of making it work. Of course, the more people you have in the risk pool, the smaller the relative variation in medical expenditures.

In other words, if you have a large enough pool, the investment of capital becomes less important (because the month to month premiums will match the month to month medical disbursement).

Halley's Comet:

"Presumably the government will not be investing the premiums."

Presumption is the enemy of reason. I don't know why this public insurance plan would not be permitted to make investments in broad based market index funds, or treasury bonds.

Shouldn't rules for what can be done with the money be in any bill with a public option?

Halley's Comet:

In any insurance plan, the management and investment of the premiums is an important part of making it work. Of course, the more people you have in the risk pool, the smaller the relative variation in medical expenditures.

In other words, if you have a large enough pool, the investment of capital becomes less important (because the month to month premiums will match the month to month medical disbursement).

Except everyone has medical expenses. Healthcare doesn't function like other insurance. Most of our houses will never burn down so the aggregate premiums will cover those that do. Healthcare is an expense most people will need so the premiums have to be high enough that we essentially pay for our own healthcare. Who can afford that?

More and more I see the wisdom of a single payer system. Better that than a hodge podge public/private system.

You may be underestimating the cost of the government to run this in terms of people, office space, etc... Private industry has every incentive in the world to cut those kind of costs, government is at best neutral and at worst expansive in that regard. Also, every discussion of the public option includes folks with massively expensive pre-existing conditions, so it is very doubtful that premium payments will be both affordable to the target market and revenue neutral. One or the other certainly, but not both.

Precisely the problem. Private industry sees as a primary incentive, the cutting of costs -- which has, so far, translated into "Find every possible way to deny coverage to anybody who might need healthcare. Find every possible way to deny claims for customers who have coverage." Yes, there are other ways of cost-cutting -- including cutting back those mega-million salaries and bonuses. Another way would be to reduce the level of profit -- which flies in the face of the very purpose of a for-profit company.

Now, you may suspect that "government" is unable to run an effective insurance program. But, so far, we have no evidence that they'll be somehow worse than the existing for-profits. And there's every reason to believe they actually can lower overall healthcare costs while providing coverage to many more Americans.

I agree with the above poster that a truely socialist, single-payer system would be a better and more efficient solution than the "public option.". But, the public option is far better than the existing system.

My main point to this thread is that so many Americans don't seem to grasp the essential concept of insurance. Whether public or private, all insurance is a system for sharing risk among the insured pool.

Now, you may suspect that "government" is unable to run an effective insurance program. But, so far, we have no evidence that they'll be somehow worse than the existing for-profits. And there's every reason to believe they actually can lower overall healthcare costs while providing coverage to many more Americans.

Medicare says hello.

Why do the public option people throw the word "competition" around? If the plan needs Federal dollars to survive, than its not compeition is it? Why don't we allow Amtrak to "compete" with CSX and Norfolk Southern for freight traffic? Absured you say? There have been alot of complaints lately about freight shipping rates being to high.

And yes, there is plenty of evidence that the government can not run a health care system. They can not run a retirement system either, but thats another story. Despite having a monoploy on senior health care, medicare currently only pays out 85% of promised benifits and is still about to go broke.

I think your contention is that "sharing risk among the insured pool" means that a public option should only provide coverage in a catastrophic health situation, that is, a health emergency so expensive that a person likely can't reasonably afford it. Like the fire-burning-down-your-house analogy, you may be expected to cough up thousands in deductibles so you don't have to come up with hundreds of thousands. My suspicion is that this is not what people imagine when they talk about public option health care. They are imagining an indemnity plan where they go to any health provider, for any reason, and it's covered. These two viewpoints are worlds apart in politics and cost.

I suppose I agree with you and Tarkol that single payer would be the most efficient. If there were a Medicare-for-everyone plan, I'd ask how many on Medicare also pay for a supplemental plan. I'd contend that anyone who can afford it would. Why? Because it would get you to the front of the line. If we have health providers now who won't treat Medicare patients because the reimbursement rates are too low, although those checks are going to cash, imagine if everyone was in that system. Just having an insurance card doesn't mean you have access. We'd be right back in the same boat. Medicare picks up some sort of government mandated minimum coverage. Those with the best supplemental plans would be first in line with the newest treatments. Government would again intervene so that everyone could get the new treatments. Supplemental rates would increase to cost shift for those on the basic plan, ad infinitum.

It's a sticky wicket. Giving everyone the same care seems impossible when some are willing to pay more than others for it.

gcal1971:

Why do the public option people throw the word "competition" around? If the plan needs Federal dollars to survive, than its not compeition is it? Why don't we allow Amtrak to "compete" with CSX and Norfolk Southern for freight traffic? Absured you say? There have been alot of complaints lately about freight shipping rates being to high.

And yes, there is plenty of evidence that the government can not run a health care system. They can not run a retirement system either, but thats another story. Despite having a monoploy on senior health care, medicare currently only pays out 85% of promised benifits and is still about to go broke.

Let's give this another try, shall we? The "public option" is an INSURANCE plan. This means it is funded from premium payments paid in by customers and by investments of that capital. If you don't want the public option, you opt not to take it and you don't make premium payments to it. That's why it's called an "option".

As with any other insurance provider, the public option does require substantial capital to get started. In the for-profit world, this is known as "venture capital"; it's gotten from investment banks and other investors, with some significant help from tax breaks. In the case of the public option, that startup capital would probably come mostly from our tax dollars. This might be a bite out of our public resources or -- in the most optimistic projections -- it might be paid back over time. In any case, the ongoing expense of the public option -- as in ANY insurance plan -- is covered premium payments from customers and from returns on investments of that capital.

Why "competition"? Well, because it is not committed to returning profits to investors and it would presumably have some significant caps on compensation to executives. And it would be available to all (or most) Americans -- including those in regions that are now served by quasi-monopalies of just a few companies. The for-profits would need to convince their customer base that they could provide better value if they hope to keep the business.

If you truly believe for-profit, private companies are inherently better, in terms of efficiency and services provided, then you should celebrate this chance for them to prove it.

So people with a pre-existing condition should just be kicked to the curb and told to go die and leave us healthy people alone. My, my, how very republicon of you.

EbenCooke:

Let's give this another try, shall we? The "public option" is an INSURANCE plan. This means it is funded from premium payments paid in by customers and by investments of that capital. If you don't want the public option, you opt not to take it and you don't make premium payments to it. That's why it's called an "option".

No, you'd have to be very naive to believe that. Do you remember a LONG time ago when banks and car companies were deemed too big to fail and given the taxpayer's money (and their children's as yet unearned money) to stay afloat? I do.

What do you think the .gov is going to do when the costs for the "public option" exceed the financial intake? Tell granny there's no more money and go out and die? Not likely. Any public insurance in this country is going to be WAY more expensive than advertised.

Not that that's bad, mind you, but don't lie to yourself.

Bondsman:

EbenCooke:

Let's give this another try, shall we? The "public option" is an INSURANCE plan. This means it is funded from premium payments paid in by customers and by investments of that capital. If you don't want the public option, you opt not to take it and you don't make premium payments to it. That's why it's called an "option".

No, you'd have to be very naive to believe that. Do you remember a LONG time ago when banks and car companies were deemed too big to fail and given the taxpayer's money (and their children's as yet unearned money) to stay afloat? I do.

What do you think the .gov is going to do when the costs for the "public option" exceed the financial intake? Tell granny there's no more money and go out and die? Not likely. Any public insurance in this country is going to be WAY more expensive than advertised.

Not that that's bad, mind you, but don't lie to yourself.

Neither Bush's TARP nor either of Obama's bailout plans were sold as insurance. They were bailouts. Your confusion sort of confirms my initial dismay -- that so many Americans have never really grasped what Insurance means.

I also disagree with the overall application of TARP and the bailouts -- although it may have been necessary to apply a drastic, poorly planned approach, once it was determined that a total economic collapse was imminent. If so, that certainly tells us that not enough people were paying attention in the months and years preceding the collapse -- including elected government officials, appointed regulatory officials, the press and media pundits, et. cet.

But my point here was not to discuss whether or not this administration or its predecessor was faultless. That dispute is just another diversion. What's been missing all along in the healthcare debate is some clarity of language -- and some good faith in the debate. If you think a government-managed healthcare insurance is a bad idea, try to express with some precision why you believe that. Just repeating a laundry list of unrelated complaints does not advance any argument at all.

And not every disagreement is a "lie".

" So people with a pre-existing condition should just be kicked to the curb and told to go die and leave us healthy people alone. My, my, how very republicon of you. "

Of course not-you should have gotten insurance before your condition occurred. Thats why its called insurance. You are not looking for someone to insure you for something that can go wrong in the future, you are looking for someone to pay for you today.

If you didn't get insurance when you could or if you don't have the current means to take care of yourself then really what you are after is charity-either from an insurance company or from the government. Once a condition becomes emergent by all means should hospitals continue to treat everyone, but to give 365 24/7 coverage to millions of people who declined to take care of themselves is a cost that the nation will not be able to handle in the long term without massive tax hikes or draconian rationing.