The strangest part of the “private option” is that the plan grew out of pressure from local Republican lawmakers, the very same folks who had the loudest concerns about costs of the original Medicaid expansion. That’s strange because the new “private option” is going to cost more (not necessarily for the state — see here and here — but almost certainly for the feds).
It’s going to cost a lot more. This sort of thing has been studied. There are a number of reasons that offering coverage via private insurance is costlier than offering it via Medicaid but the main one ain’t rocket science: private insurers reimburse at higher rates. Even conservatives that like the “private option” better agree that it will cost more.
Well here’s the thing. Despite a broad consensus about cost, Republicans at the forefront of advocating for a “private option” as a possible alternative to Medicaid expansion do not agree. They think that the “private option” might not be any more expensive for the feds, and could even cost less.
Rep. John Burris and Sen. David Sanders have been key players in the negotiations that have brought us the “private option.” I’ve had lengthy discussions with Burris and Sanders both individually and as a pair.
“We don’t want to do anything that will lead to higher [federal] budget deficits,” Burris said. “We want better healthcare and better outcomes in a more cost-efficient way.”
Burris conceded that “if you look at as a simple equation it would be easy to say reimbursement rates are higher, therefore it costs more.” But they don’t think it’s that simple. Both Burris and Sanders have lots of wide-ranging ideas about healthcare policy and I don’t pretend to capture of all that here. But based on those discussions, I think that I can broadly articulate three reasons that they believe that the “private option” will not necessarily cost more than Medicaid expansion. Read on after the jump.
***I’ll say this again at the end, but I want to be clear: I think there are a lot of problems with the arguments articulated below and I don’t agree with their conclusions large or small. But the point of this post is simply to try to explain the thinking of key Republicans on the “private option.” If you absolutely can’t wait to hear counter-arguments, you can read this.