Our Existing Public Option

09/19/2009 05:12 am ET | Updated May 25, 2011

Why is it universally accepted that we provide all our citizens a college education but "socialist" to universally provide health care? Why hasn't UMass, the "public option," driven its immediate neighbors Amherst and Hampshire out of business with its lower tuition?

Before abandoning the notion of a "public option" in health, can we at least look at public higher education, the closest possible analogy to the original Obama health plan?

In most of Europe, Canada, and Oceana, higher education (with a few notable exceptions, mostly business schools) is closely analogous to a single-pay health system. Institutions like the Sorbonne, Oxford, Cambridge, Trinity, and McGill were subsumed into the public system where they have low (if any) tuition and a merit-based admission system.

In America, private institutions remained private, even those (like Cornell, Stanford, and RPI) that were founded on the "service" model of our public universities.

Although we think of our public universities today as belonging to the states, they were actually the result of federal action. The Morrill Act of 1862, otherwise known as the "Land Grant College Act," provided for the sale of federal land in order to fund state universities. Fifteen years later, the Hatch Act provided federal money to fund state-university agricultural experimental stations.

Just as the Democratic health plan is the result of a perceived urgent need, so the federal government's creation of state universities was a response to a crisis -- in that case, the need for education to fund the country's agricultural and industrial expansion.

Unlike what later happened in most of the rest of the industrialized world, private universities remained private, with their governance and fee structure intact. Over the course of a century, the two systems, for better or worse, actually began to resemble each other more: certain public universities (Ann Arbor, Berkeley, UCLA, Chapel Hill) became elite institutions; many private universities became practically oriented.

Yet even the presence of extremely elite public universities did not drive private ones out of business, despite a radical difference in tuition.

The reason is simple and resonates with what should happen if the public option were adopted: private universities provided benefits that public universities did not. Some (Harvard and Yale being the most obvious examples) conferred a prestigious pedigree along with the degree. Others offered small classes and/or campuses. Others touted more individualized attention while some provided a religious-based education that is barred at public schools.

Having found that they could successfully compete for students, private and public universities settled into such comfortable cohabitation that they could actually collaborate. (Indeed, the public and private schools centered around Amherst all tout their interconnection as a selling point.)

In health today, the need for a public option is at least as great as the need for public universities in the latter part of the 19th century. And the potential for the survival of private insurance is also fairly great -- if private insurers are willing to innovate and provide a service that the public plan does not.

This is, of course, the rub; the reason private insurance companies are spending millions to defeat the public option. Private insurance companies don't want to be good capitalists and innovate. They fear competition because they are in a position where they don't need to provide a better service.

There are plenty of roles that private insurance could play. As in Great Britain, they could sell supplemental insurance, capitalizing on precisely the limitations of a public plan they currently criticize. Or they could offer plans with a broader pharmacology than a public plan might offer. They might be willing to pay for services that fall outside the public plan's purview.

But to do this, they would have to give up their current business plan: rather than denying coverage at every opportunity, they would have to find ways of providing more or better or different coverage, just as private universities did.

No analogy is precisely congruent. Most private universities are not-for-profit institutions while insurance companies are not. That does not mean, of course, that private plans could not be competitive in a blended market. Private insurers would prefer to deny coverage to anyone with a pre-existing condition, but faced with tax breaks, they are more than happy to include everyone in a union or employer-based plan. They still make money (as do those supplemental British plans, which wouldn't exist if they weren't profitable).

Even those of us who prefer a single-pay option have to admit that the public/private higher education system in the United States works pretty damn well.

Before we abandon the public option, let's remember that.

The public university system was built by the federal government in the best civic spirit. The same spirit can transform the country with a public/private health system as transformative and essential as public higher education.