public option paper final
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Information on the public option, why we need it health care reform, and information about the history of health care in the U.S. and other countries.TRANSCRIPT
Public Option 1
Public Option: Optional or Necessary?
Eric S. Enright & Dianne L. Drinkard
Introduction to Health Care
Keri Stevens
November 9, 2009
Public Option 2
Table of Contents
I. Introduction
II. The Face of the Uninsured in the United States
III. Health Care Systems of the World
A. The Beveridge Model
B. The Bismarck Model
C. The National Health Insurance Model
D. The Out-of-Pocket Model
IV. The History of Health Care in the United States
A. Beginning to the Baylor Plan
B. The Birth of Blue Cross
C. Medicaid and Medicare
D. SCHIP and Medicare Part D
E. Our Current Quandary
V. Current Reform Proposals Being Considered
A. Obama's Plan With an National Insurance Exchange
B. The Public Option
VI. What Is the Public Option?
VII. Pros and Cons of the Public Option
VIII. Conclusion
IX. References
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Abstract
Industrialized nations around the world have found a way to ensure health care for every citizen.
In the United States, however, millions of uninsured people cannot afford to pay for their health
care. Here we provide evidence to support a public option as the best way to provide a vehicle
for all those within our shores to obtain it. We compare current world health care systems and
ours, and give a brief history of how our current system came into existence. We also discuss the
current reform proposals being considered, show the pros and cons of a public option, and show
how getting involved together can help us gain a government protected right to health care for
all.
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Public Option: Optional or Necessary?
Many industrialized countries with economies and governments similar to the United
States of America have found the ability to provide health care to all of their citizens, while
spending less money per capita on health care then the United States. With nearly 50 million
U.S. citizens without affordable access to health care, we need a government sponsored, public
option health care plan.
The Face of the Uninsured in the United States
In the United States of America there are arguments on who is uninsured and why. In
The Uninsured, an analysis written by The Henry Kaiser Family Foundation (2009) it states,
“The number of non-elderly uninsured Americans rose to 45.7 million in 2008” and of the 45.7
million “80% of the uninsured under 65 are native born or naturalized citizens” (p. 6).
That leaves 36,560,000 citizens of the United States of America uninsured. Some argue
that many can afford to obtain insurance for themselves, as “8 in 10 are members of working
families. Only 19% are in families with no one working” (James, 2009). With health care costs
raising faster than inflation and insurance coverage dropping rapidly, many employers are
unable to keep employer-sponsored insurance because of the rapidly increasing premiums. The
employers that are able to keep coverage have raised the share that employees must pay “from
$ 1,543 to $ 3, 515” (National Coalition on Health Care, p. 2).
About two-thirds of the uninsured are individuals and families who are poor (income
less than the federal poverty level of 22,025 for a family of four in 2008) or near-poor (with
income between one and two times the poverty level) (The Kaiser Family Foundation, 2009)
To this two thirds of the uninsured, the $ 3,515 employee contribution is just a portion of the
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medical expenses they would incur. There would be charges for many prescriptions, co pays,
office visits, and many other expenses. This puts the option of employer-sponsored health
insurance out of reach for many. The fact is, many families have to make a choice between
health insurance or many essential things for daily living such as food and shelter.
Not to be forgotten are the 9,140,000 uninsured non-citizens in the United States, a
number obtained by subtracting the number of uninsured naturalized citizens from the total of
uninsured (The Kaiser Family Foundation, 2009). Some argue that taxes should not help these
people, to just forget about them, but laws state that they are entitled to emergency treatment if
their situation is life threatening. If we just ignore the problem, we are burdening the hospitals
and bringing up a question of morality. Dr. Fizan Abdullah, a pediatric surgeon at John
Hopkins Children’s Center, stated "Our civilization and our nation will be judged by how we
treat our most vulnerable" (Carmichael, 2009). Don't you agree? We do.
Health Care Systems of the World
To understand how our system works, we shall explore the different health care
systems in the world, of which there are four main systems. They all have the same basic goals;
to keep people healthy, treat them when they are sick, and protect them from financial ruin.
The differences come in how they are managed and financed. In The Healing of America, a
book by T.R. Reid (2009), they are explained, we will summarize these four models here.
First there is the Beveridge Model, a single-payer system of health care, where the
government owns and finances health care to all citizens through taxes. The government owns
and operates most hospitals and doctors. The Beveridge system has general practitioners
(gatekeepers) which must give a referral for one to see a specialist. This takes away choice and
has increased waiting times. In this form, the unemployed and poor are provided the same care
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as everyone that works and pays taxes (universal coverage). Patients never receive a bill for
health care services. This is often referred to as single payer, national health services. It began
in Great Britain and is now found in Spain, New Zealand, most of Scandinavia, and Cuba.
The second is the Bismarck Model, a multi-payer system of health care, where
employers and employees split the cost of insurance through payroll deductions. The insurance
companies, often called " sickness funds", are mainly non-profit, private, and must provide
coverage to everyone, regardless of health, age, or income. They are strictly regulated by the
government, and thus can provide cost control similar to a single payer system. In this system,
everyone that works pays a percentage of his or her income to a health insurance plan that the
employer matches. This is done to ensure affordability for everyone. If you have no income the
government pays for your insurance. In this model, hospitals and doctors are private, and there
are no restrictions on a choice of doctor. Primary care physicians do not have to refer a patient
to a specialist, so access to health care is universal, and a patient may go to any doctor they
choose and the insurance must cover the bill. This system began in Germany and is now found
in France, Belgium, Netherlands, Japan, and Switzerland.
Third there is the National Health Insurance Model, which employs parts of both the
Beveridge and Bismarck models. It has private hospitals and doctors, but the insurance is
government run and each citizen must pay through income taxes for the insurance. The
government is able to control costs by being their own non-profit insurance company,
negotiating very low prices for service. This system is a single-payer system, and is found
mainly in Canada. The primary care doctors are gatekeepers, as the government requires a
referral to see a specialist. This makes for long wait times to see a doctor and takes away the
freedom of choice of doctors.
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Last is the Out-of-Pocket Model, which provides health care to people who can pay
the entire cost out of pocket. There is no government involvement, and most citizens with this
system have no access to health care. It is found in many poorer nations such in Africa, India,
China, and South America where many citizens never see a doctor their entire life.
These four health care models are found in variations in every country in the world.
While none are perfect, they are being transformed by each country to improve the health of its
citizens. The United States is unique in that it has a multi-payer system that incorporates all
these models.
For the elderly, the disabled and children of recipients of TANF funding, it is much
like the Beveridge Model, with the government exercising much control over who can be
treated for what, and how much providers get paid. The government exercises total control
over this group. For the working middle and upper class group, our system would most
resemble the Bismarck Model, except that other countries that employ this model have a plan
to cover everyone, and do not make a profit. In some ways, the U.S. also resembles the
National Health Insurance Model as well, as the working pay into health care (Medicare)
which is paid by the government to private providers. Last, but certainly not least, and the
group we are concerned with the most, is the working poor, who cannot afford the high cost of
health insurance premiums and must go with the Out-of-Pocket Model, getting care in an
emergency, but having to pay the bill out of their pockets, or the costs being absorbed by the
hospitals, raising the total cost of health care for everyone. How did this come about? We will
now explore the history of health care in the U.S. and how it became the behemoth it is today.
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History of Health Care in the United States
Before 1929, most people in the United States paid for health care out of pocket to
private hospitals and doctors. With new medical technology and understanding of disease,
treatment became more effective and advanced, which led to much higher costs. This put
health care out of reach for most. In Delivering Health Care in America, a book by Leiyu Shi
and Douglas A. Singh (2008), it states:
Private health insurance began as a prepaid plan at the Baylor Hospital in 1929. For a
predetermined fixed fee per month, Baylor, and subsequently other hospitals, started
providing inpatient services. Thus, the financial structure of the first health insurance
plan was based on capitation…within a few years, the insurance function was taken
over by the Blue Cross Commission (pp. 338-339).
The Blue Cross Commission became the Blue Cross Association. Its primary goal was to make
hospital care more affordable. In the 1930s Blue Shield was added to provide affordable
patient care outside of the hospital. The Blue Cross /Blue Shield insurance program began as a
private, non-profit insurance company; they charged everyone the same, regardless of age or
health. The success of Blue Cross/ Blue Shield prompted for-profit insurers to enter the market.
The for-profit health care insurers are what most Americans use now, and they make a
profit mainly by covering the people who are the healthiest and ignoring the sickest, also
known as "cream skimming" (Shi & Singh, 2008, pp 235-236). They charge higher premiums
for age, gender, health status, and pre-existing medical conditions. The success of the for-profit
insurance agencies eventually pushed Blue Cross/ Blue Shield to become for-profit as well
(Shi & Singh, 2008, p. 98). This system kept gaining in popularity, with more and more
employers offering health insurance.
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This new system provided no coverage for the poor or elderly, and was not affordable
to those whose employer did not offer insurance. This led to Medicaid and Medicare in 1965, a
type of insurance financed by the government through taxes, for the elderly, disabled, and the
very poor (Shi & Singh, 2008, pp. 207-216). These programs helped achieve the highest rate of
access to healthcare the United States had ever seen, but there are still 45.7 million uninsured
in the United States (Henry J. Kaiser Family Foundation, 2009). In more recent days, the State
Children's Health Insurance Program (SCHIP) began in 1997 to cover children under 19 that
would otherwise not have any coverage, due to the parents earning too much to qualify for
Medicaid (Shi & Singh, 2008, p.219). Also, part D of Medicare began in 2006 to assist the
elderly with the prescription costs (Shi & Singh,2008, pp.112-113). So children from poor
families and seniors are covered, but how about the rest of us? We must rely on employer-
sponsored or private health care plans, or pay out-of-pocket for our health expenses. With a
failing economy, many face job losses and loss of their insurance, unless they are lucky enough
to be able to afford COBRA to extend their coverage up to 18 months until they find work and
another plan. Many have been out of work that long already, and job losses continue. So what
of us? President Obama has proposed a plan to reform health care policy, but the details are
being fought out between political parties while many of us are facing acute illnesses such as
the pandemic of the Swine Flu, and chronic illnesses such as Rheumatoid Arthritis and Heart
Disease, which we cannot afford to treat. What is this plan? More importantly, will it be
sufficient to cover all Americans who need care, and will it reach us in time?
Current Reform Proposals Being Considered
Obama's plan includes a national insurance exchange, plans to increase competition in
the health care delivery market, to increase quality and access to care, while cutting costs in its
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delivery (Barack Obama and Joe Biden's plan to lower health care costs and ensure
affordable,accessible health coverage for all, 2009).
What is an exchange? Simply put, it is a warehouse of sorts for the various public and
private plans in existence, and is designed to provide consumer choice, and inspire competition
in the market. It could be a state-wide or nation-wide exchange, a nation-wide being the
strongest option for competition while increasing efficiency and lowering costs (Klein, 2009).
The largest issue by far, as of late, is the idea of a public option, but what is it? We will now
examine it, and our need for it in health care reform.
What is the Public Option?
The public option is a government sponsored health care plan much like the private
insurance plans now in existence, that people can purchase to pay for health care. How this
plan should be run and funded is still being debated, and there are several options for its
implementation. It could be funded solely by those who buy into the program, otherwise
known as self-sustaining, or it could be federally subsidized by taxes. There also is an option
for a state-run program, with each state setting the guidelines for its implementation. Another
option being debated is an option that would only be implemented as a "trigger effect", which
is to say that it would not be implemented at all unless the private insurance companies could
not keep their costs down or cover the many citizens with pre-existing conditions. In that case,
it would trigger the plan to be implemented (Torrey, 2009).
Who would benefit from such a plan? A public plan would benefit several groups,
mainly those who cannot already take advantage of an employer-sponsored plan, those with
pre-existing conditions which exclude them from most private insurance plans, and young,
healthy persons, who would find a cost-effective way to purchase insurance. In our current
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system, health insurance is voluntary, so those who purchase it are more likely to be the ones
who use it most, which keeps costs rising. Many professionals and officials believe that all
working individuals should be required to purchase insurance to keep costs lower. Their belief
is that by having more younger, healthier people in the plans, the burden is shared for the costs
of those already aged or with chronic conditions that require costly services, and it will help
the younger paying individuals as they age and need more services in the future, at a lower
cost. They believe it spreads the cost more effectively across the board (Torrey, 2009).
The Pros and Cons of the Public Option
The Pros of a Public Option
of a Public Option
Lower Premiums
There would be more people paying
into the program, which would drive
premium prices down (Torrey,
2009).
No Profit Margin or Tax Liability
Plan funds would have federal or state
funds to pay for them, therefore would
not require rate hikes to increase
profitability, as governments
are non-profit entities. Also, because
they would not make a profit from
premiums, they would not be
subject to taxation (Torrey, 2009).
The Cons of a Public Option
Private Insurance Companies Would Go
Out of Business
With such a large, profitable group to
compete with, insurance companies fear
they could not afford to keep providing
current levels of service to their
customers and still pay their investors
(Torrey, 2009).
Lower Payments to Providers
Some physicians now refuse to take
Medicaid patients because they do not
get reimbursed enough for their services
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from the government. With another
public program, they worry that they
Bargaining Power
Insurance companies would have to
compete with public funded programs
for customers. Having a large group to
contend with would force private
companies to keep the cost of premiums
down, and give customers better deals to
stay competitive (Torrey, 2009).
Portability
A public option would make it possible
for an individual to change jobs or move
and keep their insurance coverage.
Depending on whether it is federally
or state funded, one could go anywhere
in their state or the country and stay
covered with this type of plan (Torrey,
2009).
will receive even less payment for
services. (Torrey, 2009). Not all doctors
enjoy high wages, some rural doctors
make just enough to get by.
A Single-Payer System Might Emerge
Many people fear government
intervention in individual affairs, and
dislike the idea of a single-payer system
run by the government. The introduction
of a public option would cause many to
choose that option, and many believe it
may well be the first step towards a
government-run, single-payer system in
the U.S. (Torrey, 2009).
The pros clearly outweigh the cons in this case, as the points against the public option are
weak. For one, some countries (Canada, Great Britain, Germany) that have a Universal Health
Plan also have some private insurance plans available to supplement the public plans, suggesting
that a public plan will not put private insurers out of business (Shi & Singh, 2008, pp. 24-26).
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Also, the point that many physicians fear lack of reimbursement seems to be ill-founded as well,
as a majority of physicians support the public option (Henry J. Kaiser Family Foundation, 2009).
The final point against the public option is that it would lead to a single-payer system, which
politicians fear more than the general public. They speak of long waiting times and loss of
choices in Universal Health Care, but those of us who are uninsured or underinsured usually wait
until it is too late to be treated until it is an emergency, and then we have no choice in the matter
at all. Talk about wait times and choices! The fact is that the majority of the general public, as
well as many providers support a single-payer, Universal Health Care Plan (Neale, 2008).
Conclusion
It is now clear that as long as we take care of both patients and providers in health care
reform, a public option is necessary. A measure of a country is how they take care of their
citizens; it is a moral issue. In most industrialized countries, all citizens are created equally in the
health care arena, and though patients must often wait for treatment of non-emergency
conditions, the rich and poor wait an equal amount of time. This suggests a solidarity between
people that America apparently does not share. It takes a true moral commitment to serve the
citizens of a nation and succeed in developing a health care system that encompasses all persons,
regardless of status in the community (T.R.Reid, 2009). How can each of us assist in
accomplishing our task to provide dignified health care for all? The answer lies in GETTING
INVOLVED in the process, ensuring that proper health care reform happens. By contacting our
legislators on the local, state, and federal levels (by voting, phone, e-mail, rallies, etc.), we will
show them by sheer numbers that we stand together in solidarity (a word well known worldwide
but seldom heard in America) to obtain a public option in health care, not just today, but
ongoing. We must come together to fight for a common cause, and make certain all of us are
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assured a government protected right to good health in our quest for life liberty, and the pursuit
of happiness, rights which are already guaranteed by our constitution.
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References
Barack Obama and Joe Biden's plan to lower health care costs and ensure affordable, accessible
health coverage for all. (2009). Retrieved October 16, 2009, from
www.barackobama.com:
http://www.barackobama.com/pdf/issues/HealthCareFullPlan.pdf
Carmichael, M. (2009, October 30). For kids, being uninsured can be a killer. Retrieved
November 7, 2009, from www.newsweek.com:
http://blog.newsweek.com/blogs/thehumancondition/archive/2009/10/30/for-kids-being-
uninsured-can-be-a-killer.aspx
Henry J. Kaiser Family Foundation. (2009). The uninsured, a primer. Menlo Park, CA: The
Henry J. Kaiser Family Foundation. Retrieved November 6, from kff.org:
http://www.kff.org/uninsured/upload/7451-05.pdf
Henry J. Kaiser Family Foundation (2009, September 16). Poll: majority of doctors support
public option. Retrieved November 6, 2009, from www.medicalnewstoday.com:
http://www.medicalnewstoday.com/articles/164083.php
James, R. (2009, October 14). Which Americans are uninsured? Retrieved October 14, 2009,
from Time.com: http://www.time.com/time/health/article/0,8599,1930096,00.html
Klein, E. (2009, July 29). A market for health reform. Retrieved November 6, 2009, from
www.washingtonpost.com:http://www.washingtonpost.com/wp-dyn/content/article/
2009/07/28/AR2009072802114.html
National Coalition on Health Care. (2009, September). Health insurance costs. Retrieved
October 12, 2009, from the National Coalition on Health Care:
http://www.nchc.org/facts/cost.shtml
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Neale, T. (2008, June 20). Nationwide protests support a single payer healthcare plan. Retrieved
November 6, 2009, from www.medpage.today, com:
http://www.medpagetoday.com/PublicHealthPolicy/HealthPolicy/9889
Shi, L & Singh, D. A. (2008). Health services financing. Delivering health care in America: A
systems approach (Fourth ed.). Sudbury, MA: Jones and Bartlett
Reid, T.R. (2009, September 12). No country for sick men. Retrieved November 5, 2009, from
www.newsweek.com: http://newsweek.com/id/215290/
Torrey, T. (2009, October 21). Public option health insurance pros and cons. Retrieved
November 5, 2009, from www.about.com: Patient Empowerment:
http//patients.about.com/od/healthcarereform/a/publicoption.htm