The public option is essential to health care reform

By Senator Mark DeSaulnier

The introduction of health care cooperatives into the reform debate is a dangerous distraction. Health care co-ops will not increase competition in a business dominated by giant insurance companies, but rather fail in the most critical need of health care reform: cost control.

Co-ops have been around for a long time in the United States and have been successful in some industries-grocery stores, community credit unions and electricity. However health care co-ops have a very different record.

Conservatives herald co-ops because, during the 1930s and 40s, health insurance co-ops covered hundreds of thousands of Americans, in large part due to the financial support of the federal Farm Security Administration (FSA).  But this and other health care co-ops have a history of failure without tight federal regulation and significant taxpayer investment.

A local health insurance co-op, as described by many conservatives in Congress and the media could not grow large enough or quickly enough to compete with health insurance industry behemoths and near-monopolies that control the majority of the market.

The only entity large enough to create an organization capable of introducing competition into the health insurance market is the federal government.

A public option capable of competing with Big Insurance will force insurance companies to lower premiums and improve quality of service.  

The public option will provide an affordable, basic coverage plan to all who want it. For those who prefer to buy insurance from a private plan, competition from the public option will aid in lowering the costs of coverage.

Claims that the public option will simply overrun the health insurance market and eliminate private companies are absurd. The Congressional Budget Office (CBO) estimates that, even among those with incomes that make them eligible for assistance that will aid in paying for a public option, just one-third would chose that public option. Moreover, under the reform proposal in Congress, three million more people would have primary medical coverage through an employer than under current law, according to the CBO.

The public option creates competition in a market dominated by a few massive conglomerates.  It lowers health insurance premiums across the board and increases quality of care. As the debate in Congress and throughout our nation rages on, we must be a clear for voice advocating for the public option. It the only true reform that can control costs and provide health care insurance for a greater number of Americans.

4 thoughts on “The public option is essential to health care reform”

  1. The only entity large enough to create an organization capable of introducing competition into the health insurance market is the federal government.

    Thank you, Senator Desaulnier, and best of luck in the final stretch of the campaign.

  2. Great ideas benefit from heroes and from sponsors. The individual reforms that have been proposed in the health insurance reform and the health care reform are great. And they will be trashed over time without an institutional base.

    As President Obama has alluded (and not stated explicitly) we are all formulating the American Plan. Morally we are committed to insuring that all of us who wish it have access to high quality, affordable health care throughout our lives. The experiment of assuring that through private insurance only has failed! Just look around and ask anyone. The experiment of involving the public is just starting. Insurance company bureaucrats have had too much control and governance of each of our health care decisions. If a bureaucrat is to have any say, I prefer it to be a public one, dedicated to the common wealth rather than a corporate one dedicated to enriching the already rich.

    So, three cheers for the American Plan.

  3. It was great getting a chance to speak with you at the CDP convention this year, and you impressed me with the depth of your knowledge not just of day-to-day policy issues, but of broader sociological and economic issues as well that very few talk about.

    Best of luck in your campaign as election day nears; it is my sincerest hope that whoever wins this race in the end will demonstrate themselves as firmly committed to progressive principles as you have demonstrated here.

  4. I agree, the public option is essential.  

    On a mailing list, I pointed out the following (Quoting from that list):

    There are two key generalities that come into play:


    public option

    Within the current framework, we’re not going to get single payer (the least expensive, and best option) or single provider (the form of medicine in the UK, and the Veterans Administration.)

    So, we essentially have a four by four grid of outcomes:

    No Public Option Public Option
    No Mandates This would be tweaks on what we have now.  Maybe it will include provisions that make it more difficult for insurance companies to deny claims based on previously existing conditions, and make it a requirement to accept clients.  The insurance industry will certainly respond with jacking up insurance rates, probably beyond affordable levels for all but the wealthiest Americans. The insurance industry will scream. (If they did their business ethically, I might say the screams were justified.)  This won’t get to universal coverage, as people are not required to purchase insurance until it is required.  This may make premiums higher for those who do purchase, and when the non-purchasers are injured, they end up as free-riders.  This is sub-optimal.
    Mandates This is what I feel is the worst possible result.  You will be required to purchase insurance (with some subsidies for low incomes) from one of the insurance companies. There will be no public option to provide competition to force down costs, so these policies will be expensive.  Essentially, it will be a mandated transfer of money from the American people to the insurance industry, a massively regressive tax. This is the current solution for which progressives are pushing.  The mandates will get us to universal coverage, and the public option will control costs.  Within this solution there are still problems, such as subsidies for the costs for “low” incomes (up to 400% of FPL, in the House bill, and as I showed a while back, even that may be too low.)  But it is probably the best step for the nation.

    Based on this brief analysis, I concluded that any health care reform without a public option is not going to be of benefit.  The biggest weakness with reform without a public option is that the only mechanism left for managing costs, whether or not there are mandates, is stricter regulation of the insurance industry. Some pundits like to point out that there are places that have universal coverage through mandates, but without a public insurance option.  What they don’t mention is that these places have the insurance companies by law as non-profits (France is an example of this) or very tightly regulated on profits and prices  (Switzerland is an example of this.)  Even with that, Switzerland has very high per-person medical costs compared to the rest of


    Do you see a Congress that rejects a public option agreeing to this level of regulation on the insurance industry?  And even if it did, how long until there is regulatory capture of this mechanism by the insurance industry, like the regulatory capture we’ve seen in the FDIC and SEC?

    This is why I am of the opinion that a public option is mandatory for successful reform of the health care industry in the United States.

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