The Public Option: Creating True Competition

Over the past several months, Americans have taken part in an expansive debate over health insurance reform. And while we’ve heard views from across the political gamut, the undeniable fact remains that our health care system is in the midst of a serious crisis. Millions of people are left uninsured, and many who are covered are forced to pay backbreaking premiums for sub-standard care.

It is time for comprehensive reform.

I am fighting for a bill that reflects the core mission of reform: quality coverage for all Americans at a reasonable and sustainable cost. And I am convinced that in order to realize these goals, a public option must be included in any reform package passed by the United States Senate.

Rising healthcare costs are spiraling out of control. Between 2000 and 2007, health insurance premiums for Illinois families increased by an astounding 73%, rising 5.6 times faster than the mere 13% increase seen in median earnings. And while in the current economic climate, insurance costs and medical bills have forced far too many American families into bankruptcy, others have been left completely behind.

45,000 Americans die every year because they don’t have health insurance and cannot get quality care, according to a Harvard Medical School study. That’s one death every twelve minutes.

According to the UN Human Development Report, while the United States leads the world in spending on health care, “countries spending substantially less than the US have healthier populations” and the U.S. leads industrialized nations in preventable deaths each year.

Insurance markets throughout the country are currently dominated by a small number of insurers. Without options, consumers have no leverage against exorbitant premiums and poor coverage, and insurers are able to reap record profits without delivering quality services.

Over 400 insurance company mergers in the past decade have led to markets controlled by just a few large health insurance providers. An American Medical Association Survey found that in Illinois, just two insurers control 69% of the market.

Even more alarming is that this trend persists everywhere in the region, regardless of an area‘s geographic or cultural make-up. All one has to do is take a look at the combined market share of the two leading health insurance companies in various areas throughout the region.

In St. Louis, a bustling urban center, two companies serve 78% of the market; in the small, rural town of Danville, Illinois, it’s 76%; and in the midsize area of Urbana-Champaign, home to the University of Illinois’ flagship campus, 83% of the insurance market is dominated by just two companies.

As competition shrinks, profits skyrocket. If we compare 10 of the country’s largest insurers between 2000 and 2007, we discover that profits have increased by an average of 428% (based on information filed with the Securities and Exchange Commission). Rather than engaging in costly competition for customers, naturally ensuring lower premiums and high quality, the largest insurance providers have divvied up the country, creating captive monopolies where consumers are stuck with high costs and poor coverage.

The reality of today’s health insurance market is unacceptable and any bill that merely maintains the status quo is a deal-breaker.

In order to achieve the goals of insurance reform, we must restore choice to the marketplace. A public option will force competition by giving people an immediate alternative to existing plans, thus lowering premiums while increasing quality.

Competition in business has always been the driving principle of the American economy. Why should the health insurance industry play by different rules than everyone else? A public plan would set its premiums based on the market. Just like any other business, it would need to be initially capitalized, but would subsequently rely on the premiums it collects to remain self-sufficient.

Through increased competition, a public option would actually strengthen the private health insurance industry by requiring increased employer responsibility that would increase the number of people who receive private insurance from their jobs.

Simply put, a public option makes the most sense. It will increase access to health insurance, rein in the exorbitant costs of insurance for American consumers, and provide the competition necessary to ensure quality coverage by insurers.

That sounds like a good deal to me.