WELL, TO BE FAIR, OBAMACARE ITSELF WAS NEVER DEFENSIBLE: Obamacare’s Public Option Is No Longer Defensible.

Could a “public option” fix the problems on the exchanges? More precisely, the question is: What problem would a public option solve?

Way back in 2010, when the idea of a government-run nonprofit health insurance option was hotly debated, supporters gave three answers to that question:

A public option does not need profits, so it can sell insurance cheaper than an insurer that wants to mark up coverage for profit margin.
A public option will have lower administrative costs than a private insurer.
A public option can force providers to accept below-market reimbursements for their services.

The first argument turns out to be irrelevant, because with the exception of Medicaid managed-care plans, few insurers seem to be taking sizeable profits out of the exchanges. Indeed, since the public option was conceived as self-funding (meaning it covers its costs out of premiums, with no subsidies), there’s a high risk that the public option would prove as doomed as the co-ops, because it would have neither the experience in caseload management to make money nor the other lines of business to subsidize losses on the exchanges.

However, supporters argue that a public option would have competitive advantages that would allow it to break even where others are currently losing money. One of those competitive advantages is lower administrative overhead — in theory, at least. I’ve already outlined, however, why I’m skeptical of this: While Medicare does have lower administrative costs than insurers, a lot of that benefit lies either in outsourcing normal administrative costs to other parts of the government (where they are still costly, but not on Medicare’s books) or in not doing things that insurers have to do, like all the boring customer service and billing that comes with selling to the public, rather than enrolling every citizen over the age of 65.

The notion that one reduces overhead by putting the government in charge of something is itself pretty indefensible.