Health Care Reform Needs a Public Option

01/24/2009 05:12 am ET | Updated May 25, 2011

Our broken health care system hurts everyone. Health insurance premiums are going up three times faster than pay, with many working families shouldering a growing share of those costs. They are paying more and getting less -- while being forced to fight with insurance companies to get the care they need and get their bills paid.

During the presidential campaign, President-elect Barack Obama spoke powerfully about the crisis. During his second debate with John McCain, he made it personal: "In a country as wealthy as ours, for us to have people who are going bankrupt because they can't pay their medical bills -- for my mother to die of cancer at the age of 53 and have to spend the last months of her life in the hospital room arguing with insurance companies because they're saying that this may be a pre-existing condition and they don't have to pay for her treatment, there's something fundamentally wrong about that."

America needs to guarantee quality, affordable health care for all. Americans recognize that real reform must include a public plan as an option for families looking for health care that meets their needs, so that they are not at the mercy of insurance companies. A new report, released by the Institute for America's Future and the University of California Berkeley School of Law's Center on Health, Economic & Family Security, demonstrates that a public insurance option is vital to guaranteeing quality, affordable health care to all. The study finds that a public health insurance plan that competes directly with private insurers is essential to controlling health care costs, potentially saving the nation $1 trillion over ten years and improving the quality of care.

Per the study: Medicare, a public plan that most Americans appreciate, "already shows unique quality advantages over private insurance when it comes to reliable patient access to affordable care." Because of Medicare, seniors are "half as likely as non-elderly Americans with employment-based insurance to report common access problems, such as skipping a medical test, treatment, or follow up, and failing to see a doctor when sick."

Jacob Hacker, PhD, the report's author, provides vital new information that shows how a public plan can maintain lower costs while providing broad, guaranteed and quality coverage. "Premiums with a public plan cost about three-quarters the amount private insurers charge for the same set of benefits," says Hacker. "It's an essential element to any national health care reform proposal."

Hacker documents the good track record of public plans at reining in costs, while preserving access to care. In addition, public plans have pioneered key quality and payment innovations that have often set the standard for private plans. Just as important, he points out, public plans set a standard against which private plans must compete to drive value and can be a source of stability for people.

Public plans spend less on overhead and administration, less than 3 percent compared to 15 percent for private insurers. Innovative, effective solutions for our health care problems are driven by public health insurance. Private health care plans without public competition haven't kept costs down, or provided accountability or broadened access. Instead, as this new study documents, "private insurers have passed on costs while increasing profitability."

So it should come as no surprise that America's insurance companies are launching an all out effort to stop a public option from being included in health care reform. They know that having to compete with a public option will reveal private plans to be overpriced, inefficient and exploitive.

Americans want a government that creates opportunity and prosperity, supports and protects our families, and strengthens our communities. If there is anything we've learned from our experiences with the private health insurance market, it is that private insurers put profits before people. That is why we need to work together in the coming months and insist on a public health insurance option as part of any health care reform legislation enacted in Congress. We will have to fight the insurance industry to succeed. If we fail, we won't have the kind of change that America voted for in November.