More years ago than I would like to remember, I was the Deputy Director of Medical Assistance and Health Services (Medicaid) in New Jersey. At the time the State owned a managed care plan--Garden State Health Plan. New Jersey built the Garden State Health Plan, because no commercial/private plans were willing to enroll Medicaid members at that time.
As private plans moved into the Medicaid market, New Jersey chose to move all of the AFDC/TANF members(at the time this was the Aid to Families with Dependent Children populations, now known as Temporary Assistance to Needy Families)into managed care. At that time, the State faced a bit of a dilemma. The Health Care Financing Administration (HCFA), now Centers for Medicare and Medicaid Services (CMS, yes I know it is missing an M) questioned how private plans could compete with a state-owned plan. Further, they questioned the incentive to assign members who failed to choose a plan fairly amongst plans when the State had an ownership stake in one of the competitors.
Even in 1997, it was common knowledge that you can't make the rules, regulate an industry, and not at least have the appearance of bias. What industry would we trust to police itself...other than the legislative branch of government. Ok, it not that we trust them to do it, but they make the rules, so we can't stop them.
By definition, a public option, that is owned and operated by those who make the rules for all of the competitors can not even give appearance of fair competition. Let alone actually compete fairly. No health plan or insurance company can levy taxes or print money when it fails to meet its capital requirements.
Competitive Option--not so much. Oh, and New Jersey sold the members of the Garden State Health Plan to a private plan for $15 million. The reason for the sale noted in the New York Times and attributed to Governor Whitman was "privately run health maintenance organizations could operate it more efficiently."
Hold that thought!
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