Medicare: The Original ‘Public Option’?

Many are claiming that the public (read: government) option in the health-care reform debate is now pretty much off the table given public outcry and blue-dog Democrat unease. That’s a good thing given a fact-check post from PolitiFact that notes that Medicare Part B first originated as a voluntary plan.

Despite proponents’ arguments that the public option will not effectively end private insurance, the history of Medicare tells a different story. According to the post, Medicare Part B (which covers physician services) now holds close to 100 percent participation. This is despite the fact that it was at first touted as essentially an option.

The reason for this is simple: A government plan does not have to rely on balancing its budget. It gets around this by just taxing people who are not in the plan in order to subsidize it.

The post noted that an old New York Times story on the program reported the following:

The basic benefits, financed by increases in the Social Security payroll tax, would be automatically available to persons over 65. The additional coverage would be available to those over 65 who enrolled in the voluntary plan and paid premiums of $3 a month. Half of the voluntary plan’s cost would be financed by federal subsidies of about $600 million a year from general tax revenues.

Private insurers don’t have the luxury of forcing those who are not policy holders to pay for the benefits of those who are covered under their policies. Only the government can get away with that.

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One Response to Medicare: The Original ‘Public Option’?

  1. […] projections tend to understimate the costs. We know this in the case of federal goverment programs like Medicare, but state and local governments are not immune to this […]

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