A Robust Public Option Would Mean No New Taxes

Let's make it clear that a robust public option is about more than offering the choice of a non-profit option. Including a robust public option would save the government a huge amount of money and eliminate the need to create a massive new tax increase.

The CBO found that the original strong public option in the House would save the federal government around $60 billion. The House's original public option would also cost about, “10 percent lower than that of a typical private plan offered in the insurance exchanges.” That means choosing the public option would save an average family roughly $1,300 a year.

If the public option were allowed to piggy back on Medicare's provider network, as progressives would prefer, it would save an additional $91 billion (for a total of $150 billion). The House public option pays Medicare rates plus 5%. Simply allowing everyone using a health care exchange to buy into Medicare (with actuarially sound deficit neutral premiums) would create even more savings. Based on calculations using CBO data a Medicare buy-in robust public option should reduce the price tag of health care reform by just over $200 billion. A Medicare buy-in would be around 15% cheaper than a typical private plan.

The CBO also found having access to a robust public option would increase wages and therefore increase tax revenue. Money saved on health insurance would be returned to employees in the form of increased salaries. Currently the public option is restricted to only individuals and small businesses using a health care exchange.

There are several ways to expand access to the public option. You could increase the maximum size of businesses that would be allowed to use the exchange. You could also adopt something like the Wyden Free Choice Proposal. It would allow employees to take the amount being spent by their employer for their health insurance and use it to select their own plan on an exchange. Depending how and how many Americans would have the option of selecting the public plan, it could increase tax revenue by $100 billion as a result of increased wages.

Health care reform is going to currently cost between $900 billion and $1 trillion. Obama has demanded that it be budget neutral. Around $600 billion of that will come from savings in current government programs. That last $300-400 billion would need to come from a massive new tax increase. Including a robust public option would eliminate or dramatically reduce the need for any new taxes. When progressives fight for a robust public option they are also fighting to prevent a massive new tax increase.

The Benefits of a Medicare buy-in style robust public option open to all:

1)It would reduce the cost of health care reform by around $200 billion.
2)It would reduce the cost of offering health insurance to employees for businesses.
3)It would increase wages and as a result could increase tax revenue by billions without a tax increase.
4)It would provide competition and a benchmark in the health insurance market.
5)It would offer Americans the choice of a public option that could save them 15% or around $2,000 in premiums a year.
5)It would eliminate or dramatically reduce the need for a $300-400 billion tax increase.

If you are truly against tax increases you should be for a very robust public option. If you don't support a robust public option you are not a fiscal conservative.

PS. I agree with experts like the Urban Institute and believe that a public option would saving dramatically more money than I outlined here, but these numbers should be fully scorable by the very conservative CBO.