Public Option Question

Anonymous
saw this robert reich video:

http://www.alternet.org/rss/the_wire_provided_by_huffington_post/88962/_robert_reich_explains_the_public_option_in_70_seconds

and I have these questions -- asked of me by someone else.

If the "Public Option" won't be subsidized by the government, where will the seed money come from? And, why is HR3200 (which states ALL the government rules about this health care 'change') not going to pass if the "Public Option" isn't attached to it? (according to nearly every politician working on it)


Help me answer!
jsteele
Site Admin Online
Saying the public option won't be subsidized by the government is a bit misleading. Yes, I know that Obama said exactly that and I am supposed to treat each of his words as gospel, but I'll make an exception in this case. In theory, government-sponsored insurance can operate like any other insurance -- the insured pay premiums in exchange for the insurance. The premiums cover payouts and operating costs. Since there is no profit or outlandish executive salaries (or taxes), similar coverage can be provided at a lower cost than that provided by the private sector. In reality, there are people who won't be able to afford even those lower premiums. Therefore, subsidies will be required. What I believe Obama is doing is dividing this into two programs: 1) the "public option", which is simply government-sponsored insurance that does not receive direct payments from the government; and 2) a subsidy program, which provides subsidies to low income families and individuals which can only be used for the public option. From an accounting standpoint, these would be completely separate. So, technically, the public option doesn't have subsidies. The subsidy program would probably have some kind of accounting showing that the subsidy money was shifted from other expenditures making it deficit neutral.

As for why HR 3200 won't pass without a public option, that one's easier. The Republicans are going to vote "no". So, the vote is really between Democrats. There are enough members of the "progressive caucus" who will oppose a bill without a public option that those votes won't be there. On the other hand, there probably aren't enough conservative Dems to similarly defeat the bill. The same is not true of the Senate. Given that any House bill will likely be watered down in the Senate, the House progressives are even more eager to vote out a very strong bill. They may to eventually vote for a weaker compromise, but they want to start out from the best position possible.

Anonymous
Just wanted to make one point about subsidies. My reading/understanding of subsidies as part of HR 3200 is that they can be applied to public option or a private health plan in the Exchange. In the beginning they can only be applied to the basic benefit plan level but later years can be applied to any benefit plan level. Note: All insurers in the Exchange (including public option) will be required to offer different levels of benefit plans.

Exchange and public option will need seed money to get up and running but will eventually be self funded (public option through premiums, etc and Exchange through surcharges to plans operating within). I would need to check if seed money paid back - just don't remember.
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