Saving Money via the Public Option

| Sun Nov. 15, 2009 3:06 PM PST

As long as we're on the subject, here's another statement from the CMS report that I blogged about below:

We estimate that the public plan would have costs that were 5 percent below the average level for private plans but that the public plan premiums would be rought 4 percent higher than private as a result of antiselection by enrollees.

If this is true, it means that the public option would save the government some money but is unlikely to put pressure on private health insurers to lower their premiums.  We'd all keep paying the same prices we are today.  Bummer.

Overall, however, this is still a net positive for healthcare legislation.  Consumers might not save any money directly, but since we've apparently decided that a 10-year cost of $900 billion has been handed down on stone tablets and can't be changed, that means that saving the government some money via the public option would allow more to be spent on other things.  Like, say, higher subsidies for low-income families.

That's sort of a roundabout way of getting to higher subsidies, and as a big fat tax-and-spend liberal I'd opt for simply combining both the House and Senate tax increases and using the money directly.  But any port in a storm.  If $900 billion is untouchable, then the public option is a good way to free up a little extra dough.

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