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How Public Health Insurance May Be Subsidized

Public health insurance subsidy

Creating a government run public health insurance option is a sticking point in President Obama's plans to reform the nation's health care. Democratic and Republican lawmakers have been debating how such a plan would be implemented and the consequences of rolling out the plan. Last week the American Medical Association and a number of private health insurance companies expressed strong concern over a government-run public option.

More questions were raised this week following the Congressional Budget Office's release of their cost-estimate of the Senate's version of the bill. The CBO estimate put a price tag of $1 trillion on the plan. That number is more distressing when considering the public health insurance option was not included in the estimate.

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During the Presidential campaign last year President Obama criticized GOP Presidential candidate Senator John McCain (R-AZ) for suggesting taxing U.S. workers' health benefits. Now reporters have questioned Vice President Biden, White House Press Secretary Robert Gibbs, and Democratic lawmakers concerning the possibility of taxing such benefits being part of any reform plan. While they have all declared it's not what the President wants in the plan, when directly asked, none have denied that taxing those benefits may end up in the final version of the bill. These leaders have been most adamant in floating the idea of the public health insurance plan.

Increased taxes on tobacco and taxes on foods and drinks high in sugar are another consideration in helping to fund a public health insurance option. Some GOP members have expressed concern over this possibility for a number of reasons. Those lawmakers are worried about smokers cutting back on tobacco purchases with higher costs and the subsequent loss of revenue.

President Obama claims reform to Medicare will help fund much of the cost the legislation, including the health insurance plan. The CBO reported that White House predictions are overly optimistic at the least. The AMA also expressed concern over how much money could actually be saved by attempts at Medicare reform.

Private health insurers are also worried over the public health insurance plans. Leaders of those companies and other industry experts fear rates will be too low on government-run plans and will drive these private insurers out of business and weaken competition. Mandating employers private for at least some of the cost to their workers health insurance, or face a fine, is another road block between what GOP and Democratic lawmakers each want. The debate over health care reform in Washington is just heating up.