POLITICS: Arizona's Public Option

Sep 22, 2009 16 Comments by
Randal Serr

Randal Serr

Critics of health care reform, specifically of the public option, often point fingers at “socialized” countries and complain that they don’t want the government running their lives, both of which are logically unsound. Besides the fact that these “socialized” countries have better health care results for less money, opponents of real reform still refuse to accept that a public option is a viable solution. We have heard a lot about how we don’t want to be Canada, but we have failed to look at a public option in the United States that has been successful for decades. It’s not the universal plan initiated in liberal Massachusetts either. It is a public option plan in the conservative state of Arizona.

In 1985, the Arizona State Legislature created what is called the Healthcare Group of Arizona. It is a state-sponsored program that provides guaranteed health care to uninsured businesses (with at least 2 employees), meaning that no one can be turned down for health care based on any medical condition. Differing from other private health care plans, the Healthcare Group reports to the Arizona Legislature. The small businesses can either pay the premiums or offer the plan directly to their employees. It offers various benefit plan options to fit many needs, lifestyles and income. And yes, it covers dental and vision benefits. One of the plans offered even provides the benefit of a cafeteria service.

In short, it’s a great health care option. When the public option started in Arizona there were about 10,000 people enrolled in the plan. Total enrollment as of 2007 was over 45,000 due to word of mouth from satisfied users. The plan has reduced the number of uninsured persons in the state, since small businesses and their employees are often the most likely to lack insurance. The group’s market-based approach has prompted other private insurers to be more innovative and price-competitive as well as seen with price reductions. In other words, it “keeps them honest.”

This is not to say the plan doesn’t have its challenges. Shortly after the plan was passed by Arizona Legislators, premiums had to be raised because funding for the program was running short. There is also risk because the Healthcare Group has to meet goals of enrollment growth in order to keep price stability. Nevertheless, the group’s premiums are now less than half those of private insurers. Based on Arizona’s success story, logic would follow that a public option at the federal level is not doomed to failure and increasing debt.

It appears as though the Arizona plan is successful and that — as in the past — if a federal plan presents challenges, the necessary adjustments will be made by legislators. President Obama has repeated over and over that the public option will pay for itself in about a decade. With legislative changes, the Arizona public option has become self-sustaining without subsidies from the government and their budget is now operating in the black. Sounds like a pretty good deal to me.

Randal Serr is a liberal political columnist for Rhombus.

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  • McKay Coppins

    …”the fact that these “socialized” countries have better health care results for less money…”

    The FACT? This is a fact? Care to share the facts?

    • Steve Pierce

      When the World Health Organization last rated the world’s health systems (in 2000), the United States came in as the globe’s 37th best health care providing nation. (Link here.) France was #1. U.K. was #18. Canada was #30. At the same time, the U.S. spends far and away more money on health care as a percentage of GDP (16%) than any other nation, including twice as much as the next closest spender (Switzerland). (Link here.) It seems quite clear from these studies that we are not getting the benefit of the care we’re paying so much for. Other countries are doing it cheaper and, according to the WHO, with better results. I’d say that’s as close to a fact as you can get without it screaming in your face.

  • McKay Coppins

    Frankly, I’m tired of liberals taking the WHO report out of context. The fact is, just because France supposedly has a better health care system than us doesn’t mean that a system like theirs would work in a country like ours. We have an entirely different set of challenges here in the U.S. In fact, a whopping 70& of the money spent on health care in the U.S. is spent on health problems caused by obesity. 70 pecent! Want to know how many obese people there are in France? Not very many, according to your beloved World Health Organization. Is that because of their superior health care system? No, it’s because of their superior cultural perspective on food and eating. The “fact” is, France’s system probably works great for France. The U.S. is plagued by health issues that France doesn’t face with the same seriousness. Saying the U.S. should follow socialized countries’ example simply because it’s working for them is like saying Iraq should adopt our exact version of democracy because it works pretty well for us. I thought it was the enlightened liberals who usually point out every country is different and needs to figure out its own system.

    • Steve Pierce

      I was not at all saying that we should adopt France’s system. Nowhere in my comment was that purported. My entire point was that France (and 35 other global countries) have health care systems that have been rated better than ours. Granted, you can always take those numbers with a grain of salt. Being one of the 36 best health systems in the world isn’t too shabby. When it becomes problematic is when you look at how much we’re spending. When we’re spending far more money than any other country and not getting measurably better care, that is a problem. There is inefficiency there and the vast majority of it is not attributable to cultural differences. Something needs to be changed. That’s all anyone is saying.

      Your rabid attack on “liberals” and our love affair with France is misguided. Obviously we don’t want to be France or we would be kicking around a single-payer health care system. But we’re not. We want to maintain a regulated private insurance market, but also provide competition via a public option. That’s not what they have in France. It’s actually closer to what they have in Switzerland. Your biggest mistake comes in suggesting that liberals pointing to successes in other countries and attempting to co-opt ideas that work is equatable to being one-size-fits-all copycats. There’s no evidence for this. If this were true, we wouldn’t have spent all summer wrangling about and refining health care reform legislation. We would have sat on a single-payer system (so, again, we could be like France, as you suggest) and refused to compromise. But that’s not what we’ve done, because we’re interested in what will work for America and, yes, we think there might be some good ideas that come from beyond our borders. This is by no means a new idea; it’s an historically good idea that often leads to good policy. You should be careful before painting with such a wide brush.

  • McKay Coppins

    Ah, my friend, it seems we have a classic case of pot calling the kettle black. I should be careful before painting with such a wide brush? Re-read my comment and try to see if, at any point, I referred to liberals’ love affair with France. I didn’t at all. Perhaps you are simply associating my response to a liberal column with another common conservative taunt. That is, by definition, painting with a wide brush.

    You said that if liberals wanted to adopt a France-style health care system, you wouldn’t have spent all summer “wrangling about and refining health care reform legislation.” You said liberals would have refused to compromise. But come on, Steve, you’re very intelligent and have a political mind. You and I both know that Democrats spent the summer “wrangling about” because they didn’t have a proposal that would get enough votes. This is a basic political reality, end of story. You’re right that within the liberal world, there is a variety of opinions when it comes to health care, and that’s exactly the point. You couldn’t get enough people to agree to get a bill passed. Does that mean that there aren’t liberals who support a single-payer system. Of course not.

    Also, when Randal wrote, “Besides the fact that these ‘socialized’ countries have better health care results for less money, opponents of real reform still refuse to accept that a public option is a viable solution,’ he seemed to be implying that modeling our health care system after theirs wouldn’t be such a bad idea. I think it would. Now, it’s entirely possible that he didn’t mean that, and I suspect, having read his article, that his opinion is far more advanced. But that statement in the very beginning of his column could easily be interpreted the way I interpreted it, and I thought it was worth responding to.

    And lest I be accused of attacking other opinions without offering my own, let me say this: I actually don’t think a co-opt is a bad idea. Considering my penchant for free enterprise, the public option scares me because I simply don’t think companies that aren’t government-funded will be able to compete. Even the president has acknowledged that this is a real concern. But I realize that some of these companies are out of control and a co-opt seems like a reasonable way to promote competition. Also, needless to say, I hate the idea of charging all Americans without health insurance a fee. Save your snide Daily Show comparisons to auto insurance; they’re completely different, and everyone knows it.

    On a lighter note, I’m still lovin’ the Rhombus, and have been posting links from my Twitter and Facebook accounts. When are you going to start advertising?

  • Daniel Anderson

    Yeah, I think it’s important not to bury Randal’s lead here because of one snarky sentence in the piece. The point is that we have an example of a public option doing just what it’s supporters say it will (provide competition to keep insurers honest), all the while avoiding the dreaded fear of the right which says it’ll undercut the market and put all other competitors out of business until we are left with nothing but socialized medicine. To my knowledge private insurance companies still exist in the state, and (admittedly I don’t have any facts to back this up, but still I’m gonna assert my opinion without losing any sleep on this) there are probably obese people in Arizona. Killer piece, Randal. I want to buy you some Taco Bell.

  • Daniel Anderson

    PS, my above comment was supposed to follow Steve’s, but by the time I could get it finished and posted McKay submitted his, and the conversation seems to have taken a turn…I promise my comment was relevant when I wrote it. My mom thinks I’m cool. But anyway, to your concern McKay, which is a very solid one, I would argue that today in many other markets, there are low-cost alternatives. “Generic” brands of cereal have not put General Mills and Post out of business. Now, obviously, health care is not breakfast cereal, but a government option would not bankrupt other health care providers, just force them to be more competitive. People that could afford to go to the Cleveland Clinic for health care could still go there for the world’s best care for heart disease. And I think Arizona is an interesting case study that perhaps supports this idea. Will profits for health care providers go down? Definitely. Will wages for doctors go down? Probably, yes. But in any economic decision there are winners and losers. Right now a very very very small percentage of people in the health care business are winning, and many Americans (even those with insurance, in an increasing number) are losing in catastrophic ways. Think of it in a micro or macro sense. Someone who went bankrupt when they found out they needed major surgery probably doesn’t have the funds to invest back in the economy. Yes, health care reform would be a BIG change to the established order. Whether it’s worth it to go through the trauma of such a change to our health system all boils down to individual opinion and what is important to that person. Definitely the debate of our generation, I would say. Oh and McKay, the Universe rocks man. Love the changes. Hasn’t been this readable and interesting in as long as I can remember. Keep up the great work.

    • Steve Pierce

      All great arguments from my various friends and I don’t think I really have much to add to that. Daniel basically said everything I would want to say a lot better than I would have. Despite the argument over one sentence in Randal’s piece, I think his article as a whole is a great example of one state where a public option has worked for 20+ years without destroying competition. In its essence, that was what this piece was about: that there is evidence that the public option can work in keeping the free market honest and not destroy competition. Nevertheless, I know you are a free-market-type guy, McKay, and I found this video yesterday that I thought was really interesting. The vlogger shown here is kind of quirky, but he makes some interesting points. He is a self-proclaimed fiscal conservative, but believes a public option is the best health care reform option for conservative concerns. Very interesting. I’d love to get your (both McKay and Daniel and anybody else who happens to be reading) opinion on it. You can view it here.

  • http://www.jonblogden.com Jon Ogden

    Arizona’s situation is an interesting one. I still wonder about the estimates Obama gave in his health care speech to congress, though. His estimated cost of $900 billion only works if 5% of people join his public optio. It seems from Randal’s comments that more people joined the Arizona option than they’d originally intended, and that it ended up costing more than they originally intended. I’m guessing we’ll see the same thing when the government option starts.

    I think the public option would have some benefits but I think Obama’s half-baked math doesn’t help his cause. He forever dodges the “who will you say ‘no’ to?” question, and I think it will bite him eventually.

    McKay is keen to bring up the obesity comment and the difficulties inherent in lifting the French system. We certainly need reform, and a public/private option like the one France or Arizona has may very well be the answer, but we need some more honesty about the cost. It’s the hearty stimulus package and the fact that it was rushed through the system without the promised five day wait that I think makes Americans nervous.

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