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Why A ‘Public Option’ Will Actually Lead To Less Health Care For Everyone

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The definition of success depends on the desired outcome, and who decides what is desired. According to politicians’ preferences, Nevada’s public option for health insurance will succeed. Based on what the public wants and needs, it will fail catastrophically.

State and federal politicians assert – loudly, repeatedly, and correctly – that Americans can afford neither health care, the system, nor health care, the service. The Affordable Care Act, touted to make health insurance affordable, increased the cost of coverage by up to two-thirds. In 2020, the average American family spent $28,653 on health-care costs, most of it going to insurance companies.

Last month, Nevada passed a public option bill that has been called “an experiment in what the future of healthcare might look like across the nation.” A public option is a government-run, taxpayer-financed alternative to all other forms of insurance.

Nevada lawmakers claim their plan will offer coverage costing at least 15 percent less than currently available policies within four years. Insurance companies with Nevada Medicaid contracts would have to bid their plans to be at least competitive with public option prices.

A Success for Power-Hungry Politicians

The public option (like the Medicare-for-all plan in the U.S. House of Representatives, H.R. 1384), will achieve lower costs by paying less to doctors, hospitals, and other providers. One analysis suggested a 40 percent reduction in doctors’ compensation. As government creates new regulations and agencies, more money is diverted to bureaucracy while payments to providers go down.

There is a critical difference between public option insurance and other forms of health coverage. The latter are subject to market forces; a government insurance company is not.

Government-run insurance has a supposedly unlimited source of revenue: taxpayer dollars. Meanwhile, both private insurers and Medicaid contractors live in a world governed by market forces. They either take in more money than they spend or go out of business. If they are forced to price their policies below their business costs, they must close their doors.

This is why so many insurance carriers stopped selling health policies after the ACA was passed — their fixed expenses were greater than government-mandated revenue. This

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