Tuesday, June 16, 2009

Health Care Reform: Why Should A Public Plan Cost the Government Money?

I'm baffled by the assumption that a public plan must be paid for by the Federal government.

If private insurance companies are forbidden to "cherry pick" insurees, then a public plan should be able, theoretically at least, to fully fund itself from the fees paid by the people it insures.

In other words, aren't we talking about a non-profit insurance option? Yes, such a plan will probably undercut private insurance companies. It, after all, will have no shareholders to consider, probably won't pay its executives multi-multi-million dollar salaries and won't have an army of employees whose only job is to deny coverage.

But that's a problem for private insurance companies to solve - not a problem for the federal budget.

Obviously, this won't work if private insurance companies are allowed to choose to insure only the young and healthy while all the rest of us flock to the public plan - but if no plan can discriminate against people based on pre-existing conditions (not just in providing insurance but in the cost of that insurance), then a public option should pretty much be able to fund itself with, perhaps, some government backstop for those citizens who simply can't afford health insurance at any price but are not eligible for Medicaid.

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