Key Facts
What Is the Public Option?
As private health insurance becomes more expensive, many people are looking for alternatives. One idea, called the public option, is an insurance plan run by the federal government that would compete directly against other plans on the market.
Could a Public Option Work?
Supporters of the public option say it would offer lower premiums. But that's because it would pay doctors and hospitals considerably less than what private insurers must pay. Supporters also say that it would incur no additional federal spending, since the public option is supposed to charge premiums that would cover all the costs of the plan. But if history is any guide, the plan will cost more than advertised.
Identifying the Cost of Public Option.
Federal health programs like Medicare and Medicaid began with similar promises about what they would cost. When Medicare Part B was created, the government was supposed to pay for only half of its costs. But political pressure eventually led Congress to break its promises. In a few short years, the government increased its contribution to 75 percent, increasing the cost to taxpayers.
Staying Skeptical
If the public option follows in the footsteps of Medicare and Medicaid, Congress will succumb to political pressure and subsidize enrollees and medical providers. The result would be a costly new program. Finding ways to make insurance more affordable is a worthy goal, but we should be skeptical of plans that claim to offer affordable insurance to more Americans without increasing federal spending.