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The Public Option is a public healthcare insurance agency that would still charge premiums like any other insurance agency, and would survive on it's own profits.

It was originally part of the Affordable Care Act, but it got cut before the act was passed.

What was the rationale for cutting the Public Option?

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    I believe the health insurance industry lobbied heavily against it, as this would put the government in direct competition with private industry. Damn shame, if you ask me... once that was taken off the table, they should have shelved the whole thing. That was really the only way to make health care better. – Jeremy Holovacs Apr 19 '13 at 18:27
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    @JeremyHolovacs - cite please (re: only way). – user4012 Apr 19 '13 at 20:29
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    Not sure if it was ever a stated reason by any politico, but the fact that "it would survive on its own profits" was also a promise for both USPS and Freddie Mac may have something to do with the fact that some people are highly skeptical of any "would survive on it's own profits" assertion for a government program. – user4012 Apr 19 '13 at 20:31
  • @DVK, the second part of that comment was personal opinion. – Jeremy Holovacs Apr 19 '13 at 23:42
  • @DVK, I can't help but wonder if we're talking about the same thing. Your previous comment to me seemed to ask me to cite a reference for my "only way to make health care better" comment. I can't cite a reference; it's an opinion. Were you referring to something else? – Jeremy Holovacs Apr 20 '13 at 4:14
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I'm merely summarizing the info in the Wikipedia article that was linked to (anyone please edit my summary if you feel I misinterpreted some points):

http://en.wikipedia.org/wiki/Public_health_insurance_option#Criticism

Some of the issues (real or perceived) were:

  • having the government compete with the private sector but also regulating said sector was a conflict of interest

  • It's unfair for government to compete directly with private insurance

  • Because the public option didn't necessarily allow for things like the government to negotiate prices with the pharmaceutical industry, it wouldn't be an affordable solution.

  • It appears there was some abortion-related language in the bill (which is always controversial)

  • In the end, the public option would end up with a disproportionately large number of elderly and otherwise 'uninsurable'.

While the article goes on to show that a majority of the public supported a public option, it appear that there was simply too much controversy in congress for it to stay in with any hopes of passing health care reform.

Short answer: Because "politics". ;)

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  • when you said private option next to your bullet points, did you actually mean public option? because as it stands, your answer is confusing – Sam I am says Reinstate Monica Apr 19 '13 at 21:17
  • @SamIam oops. Typos galore! I've fixed them. Thanks for catching it. – user1530 Apr 19 '13 at 21:19
  • If you are listing the issues, you should list ALL of them. Including "worry this would end up being yet another taxpayer funded social service" and "there are constitutional worries about whether it's a job of a federal government to run an insurance company". – user4012 Apr 20 '13 at 4:10
  • @dvk as stated, I'm merely paraphrasing the wikipedia article. As for it being a taxpayer funded social service, I think that was one of the primary arguments for public health care (single payer system) as a whole, not the public/private solution we ended up with. – user1530 Apr 20 '13 at 4:46
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It was cut in order to entice the for-profit hospitals, whose support Obama and the White House believed was necessary to pass the ACA. A public option would reimburse them at lower rates than private insurers, and so was a threat to their bottom lines.

Daschle: Public Option ‘Taken Off The Table’ In July Due To ‘Understanding People Had With Hospitals’

In his book, Daschle reveals that after the Senate Finance Committee and the White House convinced hospitals to to accept $155 billion in payment reductions over ten years on July 8, the hospitals and Democrats operated under two “working assumptions.” “One was that the Senate would aim for health coverage of at least 94 percent of Americans,” Daschle writes. “The other was that it would contain no public health plan,” which would have reimbursed hospitals at a lower rate than private insurers.

Obama Is Taking an Active Role in Talks on Health Care Plan

Several hospital lobbyists involved in the White House deals said it was understood as a condition of their support that the final legislation would not include a government-run health plan paying Medicare rates — generally 80 percent of private sector rates — or controlled by the secretary of health and human services.

“We have an agreement with the White House that I’m very confident will be seen all the way through conference,” one of the industry lobbyists, Chip Kahn, director of the Federation of American Hospitals, told a Capitol Hill newsletter..

It should further be noted that this was done in secret, while Obama was still promising the public option to the public.

Several bloggers and reporters compiled the evidence but my search started with this post by Glenn Greenwald, which has a comprehensive compilation of evidence, or links to compilations of evidence, or links to links: Truth about the public option momentarily emerges, quickly scampers back into hiding.

(I don't know whether it is faux pas to respond to really old questions but I think this answer is more direct and accurate than all the rest.)

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Short version - because too many congresscritters objected to it either due to disagreeing with the idea or simply as a political liability. It was cut it out or risk not having enough votes for ACA.

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  • Good answer. Could be even shorter, though: "Because: politics". ;) – user1530 Apr 19 '13 at 21:09
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    @DA. - 30 character minimum answer limit :) – user4012 Apr 19 '13 at 21:10
  • Okay, but then this just raises a question as to which politicians or group thereof wanted to vote against the public option and why? – Avi Apr 24 '13 at 23:36
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    Specifically, Joe Lieberman, who threatened to withdraw is "yes" vote for Obamacare if it included a public option. – Curt May 30 '17 at 22:54
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The public option wasn't included in the Senate bill because some moderate Democrats in the Senate, particularly Ben Nelson and Joe Lieberman, were against it because they saw it as being too liberal or government-centric. And the Democrats in the Senate had a bare filibuster-proof majority at the time, so if even a single Senate Democrat opposed the bill, it wouldn't get past the filibuster. They tried to replace the public option with a Medicare buy-in, but Lieberman was against that too. So finally, as a compromise solution, they didn't include a federal public option, but they did allow states to make their own public options (which is how Vermont was able to institute a single-payer healthcare program).

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