(Cartoon by Mikhaela Reid.)
In comments, I wrote, “if the House bill becomes law, no one will be forced to be on the public option — everyone’s free to choose a private plan, if they don’t like the public plan.”
Robert Hayes replied “not for long,” pointing to this post on his own blog. Here’s the heart of Bob’s argument:
If the public option is in place, employers all over the country will jump at the chance to move their employees out of costly benefit plans and into the public system. [...] Unless the plan is punitive towards employers who do that – and it won’t be, because that would be politically suicidal for Democrats – there will be an inevitable tidal wade into the public system, not by choice, but by expulsion.
Bob’s wrong; in fact, the proposed health insurance plan provides three layers of protection, to keep people from being unwillingly forced onto the public option.
First, contrary to what Bob says, the plan is punitive towards large employers who don’t provide health insurance for their employees.1 From a New York Times report on how the proposed Health Insurance Exchange would work:
In general, there’s no strong incentive to drop coverage, because businesses are required to contribute to the cost of coverage or pay a penalty. The play-or-pay requirement is designed to create a relatively balanced choice between providing coverage directly or going into the exchange. The experience in Massachusetts and San Francisco, the only two places in the country that currently have a play-or-pay arrangement, is that firms largely keep doing what they were doing. If they’ve been providing coverage, they keep providing coverage. If not, they pay a penalty.
So that’s the first level of protection against being involuntarily forced onto the public option.
So what if a large employer does choose to dump employee health care — something that could happen under the status quo, as well as under the proposed changes, and is likely to be rare in either case? Wouldn’t that mean that those employees would be forced to take the public option?
No, it wouldn’t. Here’s where the second level of protection comes into play — people could simply buy insurance on the private market, contracting directly with the insurance companies.
But what if they can’t find a deal that’s worth taking on the private market? It generally sucks buying insurance as an individual, rather than as part of some big group plan. Wouldn’t people then be forced to buy into the public option?
No, they woudln’t, because that’s where the health insurance exchange — the third level of protection — comes into play.
Because the health insurance exchange, which uses the same model for health insurance used by members of Congress, would give people the choice between several competing health insurance plans. (That’s what a health insurance exchange is.) And only one of those plans would be the public option.
The difference is, under the status quo, someone in that situation might find that no insurance company is willing to cover them, because of age or a pre-existing condition. Under the proposed health insurance reform, everyone can get health insurance. And that health insurance will contain consumer protections that the status quo lacks — so insurance can’t drop people because they become sick, or cut them off from assistance.
To make up for the extra costs of forcing insurance companies to cover anyone, everyone — including the young and the healthy — will be required to get health insurance. Of course, paying for health insurance wouldn’t be cheap — but it’s not cheap under the status quo, either. At least under the proposed health insurance reform, people who make up to 3 or 4 times the poverty line can get assistance in paying for their health insurance.
- Small employers get assistance to help them insure employees more cheaply than they’d otherwise be able to. Or they can pay part of the cost of having their employees join the public plan — but they pay less than large employers would. [↩]