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I see adding a public option differently. In my health care system, we are reimbursed for approximately 30% of total charges annually. Hundreds of millions of dollars of care are absorbed by the system annually. As a result, the charges for each procedure have increased to compensate. When I use that 30% number, that is not just uninsured people. That also includes negotiated contracts with the insurers to accept a lower payment for some services as "paid in full", even when it is significantly lower than what we charge. Health care systems/hospitals are railroaded into doing this because it's better than having no patients at all from an insurer. I'll use a concrete example here from when I worked on an adolescent psych day treatment program and was privvy to this info:
Our actual cost per patient was $250/day. Blue Cross negotiated with the hospital to pay certain amounts for certain services. They paid full price for cardiac care, for example, but agreed to only pay $150/day for our outpatient adolescent day treatment program. They made these kinds of arrangements for every type of service offered. Clearly, a hospital cannot exist if they don't accept Blue Cross, so they negotiate as best they can but the insurer will only go so far and the hospital is stuck then. Medicaid paid us $125/day. There was an HMO that paid full price. But guess what? Most of our patients were medicaid or were uninsured altogether. We got $50 a day from community mental health for patients who were uninsured. Our charge for full price? $450/day. We had to make up the difference for the lower payments from Blue Cross, Medicaid and the uninsured through those insurances that would pay full price. Had they all paid, we could have lowered our full charge to $250/day and the unit would still be open today. Instead, we lost a huge amount annually and the program was closed because we couldn't break even. All we needed to do was break even. If we were getting $250/day from every funding source, the HMOs costs would drop significantly and ultimately then, their premiums should drop.
So, when I say we get reimbursed at 30% of what is charged, that's probably equivalent to being reimbursed for about 70-80% of the actual cost to the hospital. Hospitals will not be able to continue to remain open if this continues.
To me, the ideal would be to move to a voucher system giving people a choice beyond what their employer decides is the best insurance plan for them. While health care benefits are a way for employers to try to attract the best, those funds could be channeled into health care vouchers or actual salary increases to compensate. I do believe costs would come down. I know for a fact that there have only been about 4 years of my 22 years in the work force where I used more health care services than the health insurance company received in premiums. That is true for most people. That is what insurance companies bank on. They have pools, currently based on employer, and work on the premise that within a given pool, there will be people who are expensive and people who cost them next to nothing and it will all balance out. This is why individual insurance is higher, because there is not a pool to balance you out if you end up being an expensive person. So, these pools, instead of being employer based, could be region based/state based, etc., like they are for home owners and auto insurances.
I see adding a public option to a system like this as a competitor to the existing insurances to make them provide real competition. I also think there would be a more competitive market with the voucher system. Ultimately, it would provide more competition among health care providers too, so you would see an increase in quality and a decrease in cost overall. I think it would be a MORE capitalistic system than the current system, at the level of the people, rather than at the level of the employer. We as individuals would have choice where we don't truly have choice now.
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