If you follow national politics, you’ve heard a lot about the so-called public option in the Democratic presidential primary. It’s a government-controlled health plan designed to undercut private insurance.
Most discussion of the public option is focused on the federal government, but in Colorado, a state version is being pushed too. It could get a vote in the state legislature within weeks.
Supporters say the public option is easier to sell to voters than single-payer health care, because it would abolish private health care coverage over time, not immediately. Democratic presidential candidate Pete Buttigieg, for example, says the public option would create “a very natural glide path to a single-payer environment.”
In Colorado, however, almost 80 percent of voters rejected single-payer health care in 2016. So public-option supporters developed a different sales pitch for the Centennial State.
It goes like this: Colorado pays some of the highest insurance premiums in the country, those premiums continue to climb, they won’t come down on their own, and more government control – via the public option – will lower everyone’s costs.
Simple. Powerful, even. But is it true?
No, it’s not.
Let’s start with premiums. Almost 90 percent of Coloradans with private health insurance have employer-provided coverage. In this area, we have some of the lowest premiums in the country.
Colorado is also one of the few states where premiums actually fell in 2018, the most recent year of data. We saw a 5.3 percent reduction for employer-provided family coverage and 3.1 percent for single coverage, compared to a nationwide increase of five percent.
These reductions happened one year before the public option was even under consideration in Colorado.
Now, what about the public option lowering everyone’s costs?
The public option initially targets the individual market, which covers just over 10 percent of Coloradans with private health insurance. Supporters say it will reduce those premiums by 9 to 18 percent, citing a state report published in November.
Here’s what they left out: According to the same report, most households in the individual market will face higher costs with a public option.
“[S]ubsidized members who choose to remain in their current plan, rather than switching to the public option would see an increase in their net premium after subsidy,” the report predicts.
The vast majority of households in Colorado’s individual marketplace – four out of every five – are “subsidized members.” They receive federal tax credits to reduce their premiums, because they make less than 400 percent of the federal poverty line – $103,000 per year for a family of four and $49,960 for a single person.
Reducing the tax credit for private insurance means these low- to middle-income households won’t pay less. They’ll pay more, as predicted by the state report. This is no accident.
“The state option is made for those at 400 percent of the poverty level and over that don’t get subsidies,” Kim Bimestefer, executive director of the Department of Health Care Policy and Financing, told the Voices of Rural Colorado conference recently. “That’s actually how we designed it.”
Just let that settle in: The public option was designed to help a small number of wealthier households in the individual health insurance market at the expense of poorer households.
So much for that sales pitch.
In fairness to public-option supporters, I’m a former financial news reporter who works with free-enterprise groups and business coalitions in a number of sectors, including health care. I’m biased towards private-sector solutions, and through my work, I’ve spoken to scores of business leaders and healthcare professionals with concerns about government overreach in healthcare.
The Common Sense Policy Roundtable, where I’m a fellow, has also observed the public option “stands to benefit a few … at the expense of every other stakeholder.”
Clearly, I have a dog in the hunt. But the facts are the facts, regardless of my feelings.
To be sure, the facts show our health care system is far from perfect. Years of chaotic federal regulation have made a mess of the national health insurance market. We need more choice, more competition and lower prices.
But Colorado is dealing with these national challenges better than most states, and the facts show a state version of the public option will increase costs for many families, not lower them.
We shouldn’t settle for the status quo. But to make things better, we should follow the facts. Deceptive sales pitches will only make things worse.