Health Business Blog - Fears of the public option are overblown

by David E. Williams

Revival of the so-called public option in health reform legislation has big business in a big tizzy. I listened in on a Business Roundtable briefing yesterday where two talking points were hammered on repeatedly:

* The public plan will result in cost shifting to the private market, raising costs for businesses that provide insurance
* The public plan will stifle innovation (e.g., in new treatments) by focusing on cost above all else

I’m slightly puzzled about why the Roundtable (which represents large businesses) feels so strongly about this. First, it is far from inevitable that a public plan would result in cost shifting. Second, the innovation argument is at best a mixed bag. Maybe a public plan would reduce the introduction of costly new technologies (and maybe not). But it might bring innovations in another area where they’re needed: cost control.

Big employers assume that the public option would undercut commercial premiums. Let’s examine that notion a bit.

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