A Public Option Is Still the Wrong Way to Reform Health Care


There’s nothing ‘moderate’ about the suffering that will result from the supposed ‘middle ground’ between the status quo and a single-payer system.

California officials have recently fined L.A. Care, America’s largest publicly operated health-insurance program, $55 million for letting poor Angelenos suffer and die as they waited months to see specialist doctors. And if advocates for a national “public option” in health care get their way, millions of Americans could soon face similar fates.

Created by the state of California and administered as an independent, local public agency, L.A. Care insures more than 2 million low-income people, including many eligible for Medi-Cal, the state’s Medicaid program. Unfortunately, the program’s beneficiaries don’t appear to get timely care.

The average wait time for an L.A. Care enrollee to see a specialist at an L.A. County Department of Health Services facility is 89 days, despite health plans’ being required by law to offer such appointments within 15 days. And wait times stretch even longer for some. In one case documented by the Los Angeles Times, a 61-year-old woman with bladder and kidney disease was told she’d have to wait ten months for an appointment with a specialist. All the while she suffered, even repeatedly soiling herself in public. By the time her ailments killed her, she still hadn’t gotten an appointment.

L.A. Care isn’t the only public plan that has struggled to meet the needs of patients. Last year, Washington state launched a public option — the first such statewide scheme in the country. But the program had trouble convincing hospitals to participate, given its low reimbursement rates — it offers only a maximum of 160 percent of Medicare’s rate, which in turn is lower than what private plans pay. At the beginning of this year, participating providers were available in under two-thirds of the state’s 39 counties. Lawmakers have responded not by making the plan more appealing to providers, but by ordering them to participate.

Despite these well-documented failures in Los Angeles and Washington, Nevada and Colorado have enacted legislation that will soon create public options within their borders, and lawmakers in 16 other states are considering similar efforts. Federal lawmakers have not given up their fight for a nationwide public option, either: Four Democratic senators pressed President Biden to include such an option in his 2023 budget, a request he denied.

These developments are all worrying enough. But it’s important to remember that progressives are ultimately working toward a much more ambitious goal: a single-payer health-care system. The supposed “middle ground” of a public option that competes against private plans is merely a step along the way to that goal.

With cut-rate premiums and a legal requirement for hospitals to participate, customers are incentivized to flock to a public option. And because any government plan will reimburse doctors and hospitals at much lower rates than private insurers, providers are forced to charge private plans more. This, in turn, further increases premiums for privately insured people, pushing them, too, toward the public option.

As this vicious cycle continues, private insurance plans will disappear. Thirty years after adopting a federal public option, nearly 70 percent of state health-insurance markets wouldn’t offer a single private plan, according to a report from FTI Consulting.

The only way for a health-care provider to stay in business when forced to take all comers at below-market rates is to lower the quality of care and ration it. That is the true promise of a public option, and there is nothing moderate about the suffering it will cause.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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