Article John Baackes The Hill

From Confusion to Solution in Health Care — The Public Option in Los Angeles

The health-care battlefield is burning brighter than ever. Eight years after the passage of the Affordable Care Act (ACA), conservatives think that the ACA is an overreach of government authority and should be repealed. Progressives, on the other hand, believe that the ACA should be replaced by a single-payer system operated with public funds, guaranteeing universal coverage for all citizens.

The truth may lie somewhere in the middle.

Nowhere is this debate more spirited than in California, where in 2017, the California State Senate passed SB 562, which calls for the creation of a statewide single-payer system.

The Senate bill was sent to the assembly, where the measure was referred to committee for further review and consideration about how the projected $400 billion annual expense would be financed. The debate continues, and single-payer is certain to be a hotly contested issue in the 2018 gubernatorial campaign.

It’s hard to see how the current bill could be adopted considering its staggering cost and the lack of a detailed funding plan. Nevertheless, there’s an understandably strong desire for universal access and a less expensive health care system.

When the prospect of paying for a single-payer system is analyzed, an alternative is generally thrown into consideration — the “public option.”

What is the public option? While there is currently no consensus, in essence, the public option is an entity created by the federal or state governments to operate a health plan and compete with the private sector for customers. It is held to the same quality standards as a commercial health plan and assumes that, with no shareholders, it could operate on lower margins than private insurers — thereby offering a lower, cost-competitive option.

During the debate that culminated in the adoption of the ACA, a public option was a consideration until it was jettisoned at the very end due to concerns it would negatively impact the commercial market.

When the ACA was being considered in 2009, President Obama said, “I continue to believe that a public option within the basket of insurance choices would help improve quality and bring down costs.” Obama further expressed “no interest in putting insurance companies out of business.” Obama said the public option would “have to be self-sufficient” and succeed by reducing overhead costs and profit motives.

As the public option is reconsidered during California’s debate about a single-payer system, Los Angeles County could serve as a testbed for assessing the viability of a public option as envisioned in the ACA debate nearly a decade ago. That’s because the county has a public plan that is competing against private companies in the ACA exchange.

Without a profit motive, the plan successfully operates on a margin of two to three percent. Net operating funds are retained for reserves to stabilize operations and to support safety-net providers through a community investment fund.

There is a 13-member stakeholder and consumer board, all of whom are approved by the County Board of Supervisors. All board and board committee meetings are open to the public.

L.A. Care was established more than 20 years ago to serve Medi-Cal patients, and it decided to participate in Covered California as an extension of its original mission — to provide access to quality care for vulnerable populations of L.A. County.

The members can now go back and forth from Medi-Cal to the exchange as their financial situations change, all while keeping the same health plan and doctor. And without a profit motive, the plan is able to offer some of the most affordable options.

There is no question that this style of a public option is a viable solution to the health care chaos that has the nation in its grips. It would not be a matter of starting over from scratch, but rather an expansion of something that is working — a plan that is providing access to quality health care at an affordable price to a greater number of people.

About John Baackes

John Baackes is the CEO of L.A. Care Health Plan. The organization is dedicated to providing access to quality and affordable health care for Los Angeles County residents through a variety of health coverage programs, including Medicaid, L.A. Care Covered (California Health Benefit Exchange), L.A. Care Cal MediConnect Plan and PASC-SEIU Homecare Workers Health Care Plan.

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