My brain can’t comprehend what this would do and how it would work. Also, does this lower health care costs? How? Why?
What is this “public option”?
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I’ll answer the lower healthcare costs bit.
Most people, most of the time are healthy. It’s only the relative few that have serious health problems. Insurance companies take the money that the healthy pay and don’t provide them with any services (since they’re healthy and don’t need any) and they use a lot of that money to pay for the really sick people (and pocket the rest as profit).
If you increase the pool of people then they can make more money based on the larger demand and economies of scale.
Here’s a working example, let’s say you’re selling widgets that cost you $75 to make and you’re selling them at $100 each. You have customers where you sell 100 widgets per year. So your profit is: 100 widgets * ($100 selling price – $75 production price) = $2,500/year.
Now let’s say someone increases how many widgets you sell and you now sell 500 widgets per year. The same math applies just changing the number: 500 widgets * ($100 selling price – $75 production price) = $12,500/year. That’s a lot of profit but the person buying all those widgets wants a discount because they’re giving you so much business and say they want that selling price to drop to $85. The math is now: 500 widgets * ($85 selling price – $75 production price) = $5,000/year. Your profits have doubled – since you made $2,500 before – so you’re in better shape even if the individual price has dropped 15%.
This is a bit more simplistic since economies of scale means your $75 will drop in price too but just to give you an idea. Add above lesson to healthcare where your healthcare costs would drop 15% but you still get the same service with the increased pool of people. Since you have this large pool, you can better negotiate prices for individual healthcare plans.
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