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Public Option Health Insurance Pros and Cons

An Explanation for the Debate Over the Value of a Public Option

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Updated March 26, 2010

A public option means the government would provide a form of health insurance that citizens can purchase, to pay for their healthcare. It would operate like the Medicare program operates for seniors, or the VA system operates for veterans. No public option was included in the healthcare reform law of March 2010, but some experts believe that it will become part of the payment system eventually.

Most Americans have an opinion on whether a public option should exist, and often those opinions are made without truly understanding how a public option would work. Here is some clarification on terminology and concepts.

How would the public option be run?

A public option health insurance program would be run by the government, but could be implemented just like private health insurance.

One option is to require a public insurance be self-sustaining; that is, paid for only by the premiums paid in by those who "belong" to that program. Another option would be for premiums to be subsidized by the government, through taxes. Another approach is that the public option might not be handled solely by the federal government; instead, it could be administered by individual states, and states would set their own requirements. One more idea is that the public option is not a part of reform to begin with, but if private insurers did not manage to keep pricing fair, and keep those with pre-existing conditions covered, it would trigger implementation of a public option.

Who would be included in a public option health insurance plan?

There are two groups who are challenged by health insurance coverage who would find easier, or more complete access to health insurance than they have now.

First: People who cannot afford expensive, private insurance plans, particularly those who work for employers who don't offer health insurance as a benefit, would find a more affordable option with a public payer option.

Second: A public option would also help those with pre-existing conditions purchase more affordable insurance. Currently, most people with pre-existing conditions can't find an insurer who will allow them to participate. Even if they can, the cost is usually so prohibitive that they can't afford it anyway.

Another group -- young, healthy people -- would be served by a public option, even though they have little trouble getting health insurance anyway.

The way health insurance works now is that no one is required to participate; whether you want to have health insurance is up to you. In practice, that means that the people who participate in insurance are those people who use healthcare services the most, too.

Many professionals and politicians agree that whether or not a public option is implemented, everyone who works should be required to purchase coverage, either through public or private insurance, in order to control costs. In order to bring the cost down for everyone, younger, healthier people must pay into the system to alleviate the financial strain on others. The benefits to the younger, healthier people who don't use much of their coverage would be that later, when they get older or if they get sicker, the coverage would be available to them less expensively than it would be otherwise.

Think of the public option like you think of social security. You pay in when you are younger, in order to reap its benefits when you are older or become disabled.

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