Joe Biden is trying to reassure voters. Like former President Barack Obama, he is promising that “If you like your health plan, your employer-based plan, you can keep it.” Don’t bet on it.
Some candidates support directly outlawing private health plans, and replacing them with a single-payer, government-run health plan. But others, like Biden, support a more indirect path to single payer — a “public option” government health plan intended to compete against private health plans.
During the 2009-2010 debate on Obamacare, congressional liberals said that they wanted to field the “public option” against private health insurance because it would “enhance competition” in the markets and keep private health plans “honest.”
The real purpose was to undercut private health plans by creating a government plan with special advantages, and thus crowd out and destroy private coverage. Moderate Senate Democrats objected, however, and the Senate jettisoned the “robust public option” scheme.
Congressional liberals fielded two smaller sets of government-sponsored plans to compete in the individual and small group health insurance markets: The Community Oriented and Operated Plans (Co-Op Plans) and the Multi-State Health Plans, otherwise known simply as the Multistate Plans (MSPs). Competing on a level playing field, both failed.
The CO-OP plans entered the exchanges to offer coverage as non-profit health plans. To jumpstart these federally sponsored plans, Congress authorized $6 billion and established a loan program. In 2012, Obama’s team also provided $2.4 billion in taxpayer-subsidized loans.
Despite heavy infusions of taxpayer cash, the plans started to fail. By 2016, only 11 plans were active in 23 states. Of the original 24 co-op plans, only four remain.
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The Multi-State Plans (MSPs) required the Office of Personnel Management (OPM) to contract with at least two insurance carriers of offer the federally standardized coverage in health insurance exchanges. In 2014, however, OPM managed to contract with only one, the Blue Cross/ Blue Shield Association.
That year administration officials projected enrollment of 750,000 persons. In 2015, it climbed to only 371,000. MSP enrollment trajectory continued downward. The penetration of MSP plans -- legally required to be operating in all 50 states by 2017 -- was likewise abysmal. In 2018, MSP plans existed in only one state: Arkansas.
Neither the Co-Op plans nor the MSP plans did much, if anything, to enhance market competition. Personal choice and competition in the health insurance exchanges in many parts of the country virtually collapsed. In 2019, 37% of U.S. counties had just one insurer, and 40% had just two.
Yet the “public option” proposal is making a comeback — this time as the more “robust public option” armed with powerful advantages for the government plan that will pave the way for a single-payer, government-run plan.
“Robust” options are based on a command-and-control model with government price setting, provider coercion, consolidation by squeezing out private competition, and shifting financial costs on to taxpayers.
Americans, who already fear losing private health plans, should be wary of politicians’ deceptive rhetoric about how a “public option” would “enhance” market competition, keep private plans “honest,” or make the health insurance markets — the markets they’ve already savaged — “work.”
The public-option strategy is nothing less than single payer on the installment plan, and with it the erosion private and employer-sponsored health coverage in America.