How can the United States better control its health care costs and quality and still achieve universal coverage? The strongest choice is not Medicare for All, which would eliminate private insurance; it’s the public option, which would allow people to choose from Medicare or private insurers.
What the United States needs, and Americans want, are lower premiums and out-of-pocket costs for health care, a sufficient number of competitive private insurers to honor the promise “if you like your plan or doctor, you can keep it” and, as surveys reveal, no exclusion for preexisting conditions, no lifetime limits on benefits and coverage for children up to age 26 on parents’ insurance.
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The Medicare component of the public option is wildly popular. Beneficiaries pay only a fraction of the cost, passing the rest onto future generations. Yet Medicare’s enormous scale confers genuine administrative and purchasing efficiencies. The public option can take advantage of these efficiencies, but only if it is implemented without the financing gimmicks that have artificially lowered the costs of Medicare at the expense of our progeny and that would allow it to unfairly compete with private insurers.
To assure that all insurers play on a level playing field, public-financing principles must conform to those of private insurers. For one, the public option’s expenses must be financed by current users, not future generations. The public option’s accounting also should include all its expenses, such as the unfunded liability for Medicare employees’ post-retirement benefits, which are often buried in some fund other than Medicare’s. It must also account for the cost of the money that American taxpayers and debt-holders have invested in building Medicare’s infrastructure, including its buildings, equipment and workers.
Private insurers will be forced to compete with the public option’s lower costs through improved pricing, service and quality. Americans generally like both private insurance and Medicare but universally deplore their costs. Medicare for All eliminates private insurers and increases taxpayers’ burden. The public option keeps private insurers and controls health care costs.
(Regina Herzlinger is a professor at Harvard Business School. Richard Boxer is a clinical professor at UCLA’s David Geffen School of Medicine.)
