Supporters of the public option, a government run health insurance plan to compete with private insurers, say that it will make everyone better off by forcing private firms to provide health insurance for less. But if that is the case, why not allow already existing public plan options to compete with the private sector?
Give people in Medicare, state Medicaid plans, the Veterans Administration, and state SCHIP plans the choice of staying in the government run program or taking an equivalent voucher for the purchase of private health insurance and private medical care, perhaps with a health savings account option for any leftover funds.
For example, in Colorado, the state SCHIP plan is projected to cost $1,776 per child per year in FY 2009-10. According to eHealthInsurance.com, available private health insurance plans range from $420 a year to $3,002 a year. Letting the state SCHIP plan compete with private insurers would give parents a number of new plan choices, allowing them to tailor their financial protection to their needs. Plus, unlike the government plan, most of the private plans pay commercial rates. This means that parents would have a much wider choice of providers for their children.
When people pay cash, providers typically charge less. Letting people choose between first dollar coverage and health savings account cash could also help them save money for things that government plans don't cover.
Isn't it time for an evidence-based comparative effectiveness approach to health care policy? Let the competition begin.