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Is the Public Option Still an Option for the Healthcare Overhaul? Posted: January 18th, 2010

By Sanford Ellowitz

Sanford Ellowitz is a New York State licensed insurance agent. He is also a Certified Financial Planner and a Certified Employee Benefit Specialist. He has over 25 years experience in the insurance and financial services industries.

Is the Public Option Still an Option in the Healthcare Overhaul?

In the ongoing debate about reforming America's healthcare system, the public option, presented by President Obama, remains a major sticking point.

While the public option is not meant to provide free health insurance, supporters argue that it would keep costs down by keeping private health insurance companies honest and ensuring competition. Detractors say that it would represent a large scale expansion of government.

Other Proposals

One measure that the Senate Finance Committee is due to vote on doesn't have a public option, but would instead create a network of non-profit cooperatives.

Sen. Tom Carper has introduced a new proposal. There would be government run plans, but at the state, not the federal, level. All of the states already have experience with healthcare, as Medicaid is administered on the state level.

Healthcare Exchanges

Senator Max Baucus envisions establishing Web-accessible marketplaces as an alternative to the public option. They would allow individuals and small groups to compare and shop for private health insurance, state-by-state. A bill proposed by the House would establish a national exchange

Whatever the outcome, the final bill will have a major impact on all sectors of the economy, both public and private.

Impact of Either Bill on the States

Both the House and Senate bills propose expanding Medicaid. This could be a budgetary problem since most states are already facing problems due to the recession.

In addition, some states could do better than others in implementing a new plan. Massachusetts, for example, already has universal coverage and would most likely experience less start up problems than other states.

How Hospitals Would Fare

Either a public option or some form of compulsory insurance could help or hurt hospitals, the backbone of the healthcare industry.

Currently, treating individuals without insurance represents a major drain on hospitals' finance. If previously uninsured individuals obtain insurance hospitals stand to be reimbursed for care that was frequently never paid for. However, if many individuals who currently have private insurance switch to the public option, since it may be the cheapest health insurance, hospitals may still not be able to meet their costs if its reimbursement rates are too low.

Sanford Ellowitz

Sanford Ellowitz is a New York State licensed insurance agent. He is also a Certified Financial Planner and a Certified Employee Benefit Specialist. He has over 25 years experience in the insurance and financial services industries. His experience includes financial analysis, product development and marketing. He provides insurance planning and product sales.