What the Public Gets Wrong About the Public Option
Nearly seven in 10 voters, including more than half of Republicans, support a public health insurance option, according to new polling from Morning Consult.
Medicare for All is less popular. Some 55 percent of voters embrace the idea.
Americans might see the public option as a moderate alternative to the explicit government takeover of the health insurance system promised by Medicare for All. But it won’t take long for a public option to devolve into a scheme functionally equivalent to Medicare for All.
Government-run, single-payer health care becomes even less popular than Morning Consult reports after people learn what it would entail.
An October poll from the Kaiser Family Foundation, for instance, found that support for Medicare for All dropped from 53 percent to 37 percent once respondents learned that it would outlaw private insurance coverage.
That makes sense.
For most of the 220 million Americans with private coverage, the current system is working pretty well.
Consider a Gallup poll from December, which showed that 67 percent of the country was happy with the cost of their health coverage—the biggest share on record. In that same survey, 63 percent of those with private coverage reported being satisfied with their plan.
Those data help explain why 68 percent of the country say they’d rather build on our current healthcare system than overhaul it completely, according to survey research from the Partnership for America’s Healthcare Future.
That was part of Joe Biden’s pitch to voters during the 2020 presidential campaign. He promised “to build on the Affordable Care Act by giving Americans more choice.”
A public option might seem like a reasonable way to provide affordable coverage to the country’s 26 million uninsured—or those who struggle to pay for private plans now— without disrupting the status quo.
Morning Consult’s polling data seem to indicate that’s how most Americans view a public option. Practicing physicians appear to feel the same way. In a recent survey by the Physician’s Foundation, two-thirds of doctors approved of a public option. Four in ten were on board with Medicare for All.
But as a practical matter, there is little difference between a public option and Medicare for All in the long run.
The federal government has deeper pockets than any private insurer and can run massive deficits. In addition, a public plan would be able to significantly underpay providers, just as Medicare and Medicaid have for decades.
Because of these advantages, the public option would be able to set its premiums and deductibles far lower than private insurers. An analysis by FTI Consulting estimates that premiums for a public option would be 25 percent below those of private alternatives.
In short order, this price disparity would result in a massive transition of patients from private plans to the low-cost public option. As private insurance companies lost customers, their revenues would plummet.
Many would exit the health insurance market altogether. FTI estimates that, by 2028, one in five state marketplaces would no longer offer any private options if a public option were introduced. By 2050, 70 percent of states would have no private exchange plans.
Eventually, private insurance would either disappear entirely or become a niche product reserved for a wealthy few. Either way, the government would effectively be the only insurer available to most Americans.
Still, the public option’s low premiums and deductibles would seem to be a good deal for the average person.
But that ignores the tax hikes that would be required to fund the new program. By one estimate, a public option would raise the average American family’s tax bill by $2,500 a year.
And that’s on top of what they’d have to pay in premiums and out-pocket health expenses.
The public option’s popularity has less to do with the actual merits of the reform than the pervasive belief that it would be less disruptive than Medicare for All.
Both approaches would result in the same outcome—a government takeover of health insurance. And that would lead to long waits, rationed care, and a shortage of doctors—just as our neighbors in Canada experience under their single-payer system.