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Much of this year's campaign is likely to revolve around the health care law signed by President Obama. The battle over that law included raucous debate over whether to include a so-called public option. Instead of buying coverage from a private health insurance company, the idea is that one could buy a policy directly from the government. The public option died in the Congress, but a version of it's alive on the state level in California. Sarah Varney from member station KQED explains.
SARAH VARNEY, BYLINE: In a cavernous room, in a non-descript office park in Alameda, just east of San Francisco, an army of phone operators fields calls from their customers. A large computer screen blinks the number of people on hold. Right now, it's just two, and the average wait time: one minute and 12 seconds.
UNIDENTIFIED WOMAN: Do you live with your mother? Are you a dependent of your mother?
VARNEY: These phone operators work for a large health insurance plan, and they're willing to go the extra mile for their customers. They'll schedule a doctor to come to your home, a pharmacist to drop off a prescription, and they'll even help you fill out an application for food stamps.
INGRID LAMIRAULT: We do things for them that a traditional, commercial health plan doesn't do.
VARNEY: Ingrid Lamirault is CEO of the Alameda Alliance for Health. The Alliance is just like a private insurance plan with a network of doctors and hospitals, except that it's run by the local county government. It covers some 200,000 people in Oakland and the East Bay. Some are on Medicaid. Others work for the county.
But in 2014, under the federal Affordable Care Act, millions of Americans will be able to buy coverage through new, state-based insurance exchanges. And in California, government-run public plans, like the one headed by Lamirault, will get the chance to compete on the exchange for all those new customers.
LAMIRAULT: I think that when some people get to make a choice, having local offices that they can walk into and get help with things and get their questions answered, and when they call customer service someone answers within two minutes, those kinds of things are important to them.
VARNEY: California is unique in the nation for having public health insurance plans that are run by counties. The plans stretch from San Francisco to the Mexican border and cover some two-and-a-half million residents. Their members largely go to public health clinics and county hospitals, but most counties also contract with private physicians and top-notch research hospitals. They even share the same lobbying group as the big insurance companies. Some of those companies don't have a lot of love for their public brethren.
Anthony Wright, a public plan booster, is with the consumer advocacy group Health Access.
ANTHONY WRIGHT: Certainly, there are some health plans that didn't like the idea of having to compete with these public plans, especially ones that have coming out of the Medicaid program are used to providing care at cheaper rate.
VARNEY: Last year, when California lawmakers were writing the rules for the state's exchange, Anthem Blue Cross tried to bar public plans from the new marketplace. In a letter, the company said Congress soundly rejected the notion that the government should sell coverage in the private market, and California should not follow suit.
But Wright and others argued successfully that almost half of those expected to buy insurance through the exchange will be low- and moderate-income consumers.
WRIGHT: Some of these folks who are close to the poverty line may have already been in these public plans previously. And so, it made sense that this might be actually a good environment for them to be an option and for people to continue their care with them, even as they move up the income ladder.
VARNEY: As the public plans try to attract new customers, one of their biggest advantages may simply be consumer disgust with well-known health insurance brands.
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VARNEY: I met Kim Burke at a cafe in San Francisco's hip SOMA district. She's 50-ish with fiery red hair and funky green glasses, and teaches at an art school nearby. It's a job that doesn't come with health insurance.
KIM BURKE: I think insurance companies have made a bad name for themselves, deservedly so.
VARNEY: For the last several yeas, Burke has paid a low-monthly premium for coverage in San Francisco's public health plan. She says when the exchange opens - and she can't be denied for pre-existing conditions - she'll hold on to her public plan and her grudge.
BURKE: I applied to four different insurance companies all of which denied me for pre-existing conditions. So I'm not really too keen on purchasing their product, since they've already denied me care when I really wanted it.
VARNEY: For many customers though, the ultimate selling point may simply be who has the cheapest product. Insurance companies here say they'll happily compete on price so long as the public plans don't get preferential treatment. Today, doctors and hospitals accept dirt cheap reimbursement rates from public plans as part of their charity care, which keeps premiums low. But private plans don't get the same deal.
Sumi Souza, of the San Francisco Health Plan, says when the exchange opens in 2014 to people with higher incomes, the public plans will have to pay providers more than they do now.
SUMI SOUZA: It's important to remember that in 2014, I think it's not going to necessarily be the case that we'll be paying these low rates.
VARNEY: Sousa says the Utopian belief that public plans always cost less just doesn't pencil out.
SOUZA: Some commercial providers, because they're so large, they're able to spread their cost over a much broader network because they have a lot more commercial business. So it's a little bit different for a smaller plan like us.
VARNEY: Still, says Sousa, the public plans do have low overhead. Executives like her earn a fraction of the salary paid to the big CEOs, and they never make pay-outs to stockholders.
For NPR News, I'm Sarah Varney.
WERTHEIMER: This story is part of a reporting partnership that includes NPR, Kaiser Health News and KQED.
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