In other words, the public option would compete with the entire private health insurance market. And the public option would win. Not because it provides better coverage but because the competition is rigged. The government wouldnāt have to play by the same rules as private insurers.
Public insurance already underpays doctors and hospitals. Private health plans pay 143% of what Medicare pays for physician services. Underpayments are even more pronounced at hospitals, where private plans pay an average of 241% of what Medicare does, according to work from the RAND Corporation.
Bidenās public option would do likewise. Underpaying providers would allow the program to charge artificially low prices to patients. People would, understandably, flock to health coverage with lower premiums and deductibles, and the government would steadily take customers from private insurers. Bidenās plan even envisions a version of the public option for some low-income individuals that has no deductible or premium.
Conservative estimates have 40 million Americans signing up for a public option within its first year of operation. That number would only climb in the years that follow, as providers hike what they charge private insurers to make up for underpayments from the public option. Yet more people would flee to the public plan, and the cycle would repeat.
The Democrats are indeed unified behind a government takeover of the health insurance market. While their nominee may not explicitly endorse Medicare for All, thatās exactly what his administration would deliver.