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Mandate + No Public Option = Unpopular taxpayer bailout of private insurance

The Los Angeles Times has a must-read piece today on the problems of an individual mandate without cost controls attached (emphasis added):

In the drive to bring health coverage to almost every American, lawmakers have largely rejected restrictions on how much insurers can charge, sparking fears that consumers will continue to face the skyrocketing premium increases of recent years.

The legislators’ reluctance to control premium costs comes despite the fact that they intend to require virtually all Americans to get health insurance, an unprecedented mandate — long sought by insurance companies — that would mark the first time the federal government has compelled consumers to buy a single industry’s product, effectively creating a captive market.

"We are about to force at least 30 million people into an insurance market where the sharks are circling," said California Lt. Gov. John Garamendi, a Democrat who served as the state’s insurance commissioner for eight years. "Without effective protections, they will be eaten alive."

Soaring premiums coupled with millions of new customers forced to buy policies would likely mean higher costs for taxpayers to cover government subsidies for lower-income families and individuals.

"If the government is going to require people to buy an insurance policy, they have to guarantee it is affordable," said Jamie Court, president of Consumer Watchdog. "It is unconscionable not to."

The Baucus bill is a mandate with no price controls, because it lacks a public health insurance option to increase competition with private insurance.

What will make a mandate work? First, health insurance must be affordable. For people who get insurance through work, it means their employers must be asked to share responsibility and provide good insurance to their employees at an affordable price. For people who don’t, it means government must provide subsidies high enough to make purchasing insurance on your own within reach for everybody. It’s only fair – if we’re forcing people to buy insurance, they have to be able to afford it. Second, you need price controls to make sure insurance rates don’t keep rising as they have been over the last decade. The best way to control prices is competition with a public health insurance option.

The Baucus bill gives us none of that – its subsidies are too stingy to make insurance affordable, it requires no employer responsibility, and it has no public health insurance option. The Baucus bill also caps expenses for people who buy health insurance in the new "Exchange" marketplace, like every other bill being proposed. However, with no public health insurance option to control costs, what happens when private insurers continue raising their prices at double-digit rates and people hit and exceed their caps? Government and families have to make up the difference.

Without a public health insurance option to control costs, the Baucus bill gives private insurers license to raise their rates as much as they want. Families and taxpayers will have to keep up. Given the way private insurers raise their rates, this isn’t right or sustainable.

The American people, I suspect, get this. The other day, Health Care for America Now released a Lake Research poll of likely voters in Maine. In it, we asked if these voters favored or opposed a statement. We gave one statement to one half of our survey, one to another half. Here are the two statements and the results:

  1. Do strongly favor, somewhat favor, somewhat oppose, or strongly oppose requiring everyone to buy and be covered by a private health insurance plan?

    16% strongly favor, 19% somewhat favor, 21% somewhat oppose, 34% strongly oppose

  2. Do strongly favor, somewhat favor, somewhat oppose, or strongly oppose requiring everyone to buy and be covered by a health insurance plan, with a choice between a public option and private insurance plans?

    31% strongly favor, 24% somewhat favor, 13% somewhat oppose, 27% strongly oppose

The only thing changed about the wording between the two statements was the addition of the choice of a public health insurance option. By a 55% to 35% margin, Maine voters want a public health insurance option if they are required to buy insurance.

The addition of a public health insurance option results in a 20 point swing in the popularity of a mandate. The public health insurance option makes the mandate popular, at least in Maine, though I can’t imagine the number nation-wide would be too different.

I think Americans understand the policy. They get that if the Baucus bill passes unchanged, we will be bailing out the private insurance companies that have screwed us for years, and we all will be forced to buy insurance that we can’t afford. They get that without a the choice of public health insurance option to keep the insurance companies honest and keep prices down, and without decent subsidies and an employer mandate, an individual mandate is unconscionable.

Members of the Senate Finance Committee, America is watching. America understands the issues on the table and understands the consequences of an insurance industry bailout bill. America wants a public health insurance option by large margins, and, at least in Maine, they only want a mandate when they get choice.

Senate Finance Committee, we’re counting on you to fix the Baucus bill and give the American people what they want – affordable coverage and a public health insurance option that’s available everywhere on day one.

(also posted at the NOW! blog)

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Jason Rosenbaum

Jason Rosenbaum

Writer, musician, activist. Currently consulting for Bill Halter for U.S. Senate and a fellow at the New Organizing Institute.