Why the Less Disruptive Health Care Option Could Be Plenty Disruptive

If the public option became explicitly linked to Medicare — requiring all providers who wanted Medicare patients to accept public-option patients, too — the public option might be able to negotiate low prices for care and include a wide range of doctors and hospitals. In most markets of the country, that might make it far more appealing than the choices that people who buy their own insurance now have.

Insurers would have to adjust. Either they would also have to lower prices, or they would have to offer some sort of special services. Otherwise, they would lose a lot of customers. “It would push them to demonstrate the value of what they are selling,” said Linda Blumberg, a fellow at the Urban Institute. Her research has estimated the effects of several public-option plans, and found that the plans would tend to change remaining private insurance.

There’s also the possibility that linking public-option coverage to Medicare could cause some doctors to stop accepting Medicare patients, Ms. Glied said. That would be another form of politically risky disruption.

Plans from the leading presidential candidates would also change rules around employer health plans, allowing workers to leave their work-based coverage to buy the public option. That change could have effects on employer insurance. Some workers, particularly those whose low incomes would qualify them for financial assistance in buying a public plan, might shift over. Ms. Blumberg said that the transition of individuals out of private plans would most likely be slower there, because employer insurance tends to be “sticky.” But the existence of a public option might also induce some employers to abandon private coverage altogether.

A public-option plan wouldn’t directly affect private insurers. But by changing the rules of the market, it could influence a company’s business decisions. And that could affect consumers who want to buy private coverage. Under Obamacare, new health plans had to follow a set of rules, while many old ones were allowed to stick around under the old rules. Many insurance companies canceled the old plans anyway, setting off a round of recriminations about how the law had caused people to lose coverage that they liked. President Obama had promised Americans they could keep their existing coverage under the Affordable Care Act, a vow that became Politifact’s lie of the year in 2013.

A very competitive public option could have a similar effect: If it took a lot of market share from private insurers, some might decide to stop selling certain lines of coverage. Private insurance could disappear from some places, or exist largely to fill certain niches, like high-deductible plans.

The health care industry tends not to like public-option plans for this reason. A competitive public option would probably take business away from private insurers. And it would almost guarantee that doctors and hospitals would be paid less for their work. The effects might be less dramatic than under “Medicare for all,” but they would tilt in the same direction.

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