A great deal of the discussion around the public option leads Wonks Anonymous to believe that people do not really understand what is going on here. this has not been aided by speeches that seem to assume that everyone knows just what a public option is and then cut directly to the spin. So here are some simple questions and answers:

• What is the public option? The public option is government provided health insurance. With a public option citizens and companies could choose to buy their health insurance from the government or from a private insurance company.

• How would the public option work? Most likely the government would extend Medicare. Benefits would be the same as Medicare and premiums would be high enough to cover the costs of the benefits plus administrative costs. The government could choose to pay doctors and hospitals the same rates as it currently pays for Medicare or it could arrange a different fee schedule.

• Would a public option be inefficient or hard to administer? Not really. Medicare is pretty good at paying claims and also at recovering overpayments. Medicare has been in the business for years. Medicare's data systems are also probably large enough to absorb a large increase in volume. Because Medicare is much simpler than most private plans the costs to doctors and hospitals would be lower.

• What could go wrong here? The most serious problem is reimbursement. Medicare pays doctors and hospitals far less than the average health insurance company and Medicare fees are set by an arbitrary legislative process. If we are going to make a serious attempt to have a publicly administered health insurance plan we will need to change this. A good start would be to have the new public option pay for services at the average rates that private insurers charge.

• But won't this make Medicare as costly as private plans? Not according to the Lewin Group which did a study of this issue quoted by Uwe Reinhardt here. If Medicare paid the average rates that private insurers pay it would still be 9% cheaper than the private plans.

• Will the public option force me to quit my private plan? The public option provides a way for people to buy simple, comprehensive health insurance which is something that very few private insurers now offer. You might well find this option more attractive than the private plan that you currently pay for. Your employer might well decide that he would rather buy insurance from the government as well. These will be voluntary choices made by you or by your employer. Like all the other changes in health insurance that you have experienced in your life.
  

• Where can I sign up? The public option has to pass first. You can communicate our support at ActBlue.