The Pros and Cons of the Public Option

>> Now the public option has been the most contentious issue in this debate. There's a lot of confusion about what it might mean and how it would work. So, tonight we give you the pros and the cons and a user's guide to health care. First, here's Kelly Cobiella.

>> Marcia Wagschal assumed spelling and her husband say they need help. They run a small accounting firm, yet there's one figure Marcia can't get her head around.

>> I pay $2,000 a month for health assurance, for myself, my husband and my two sons. And when I tell people that, they just don't believe me.

>> That's one fourth of the family income. Why so high? They're small business owners, they are both in their 50's.

>> This is my son Corey assumed spelling.

>> And they have a son with a chronic illness. Three factors that put affordable insurance out of reach. The problem is they don't have many options. In Florida, two private companies control almost half the market.

>> I can't afford to hire a full time employee because I'm paying $24,000 a year for health insurance. That's a salary.

>> Is this your most recent bill?

>> This my bill.

>> And they say the cost jumps 30 to 40 percent each year.

>> If we keep going the way we're going, we are going to go bankrupt.

>> Wagschal and her friends campaigned for President Obama. They all believe the only solution to rising costs is a public option, a government run non-profit health insurance provider.

>> Is the public option the only way to get there?

>> I think it's the only way to compete and to really truly bring cost down.

>> I'm not the first president to pick up this cause, but I am determined to be the last.

>> Yeah.

>> Alright.

>> Kelly Cobiella, CBS News, Wellington, Florida.

>> This is Mark Strassmann in Tennessee, a state that saw a need and started a public option called TennCare back in 1994. Tangela Henderson's assumed spelling family --

>> It gives me a great peace of mind.

>> Was one of the reasons why. At her income, TennCare is their only option. TennCare added coverage for 500,000 uninsured Tennesseans, but cost exploded, tripling in ten years to $8.5 billion becoming one third of Tennessee's annual budget.

>> TennCare is a cautionary tale for us all. TennCare's lesson is control costs, control costs, control costs.

>> TennCare serve the poorest and sickest, but the problem was that it paid providers less than the cost of services and many people dumped private plans for the cheaper TennCare premiums.

>> Some health care providers losing money bailed out of TennCare, so the state agreed to cover the losses of remaining providers, which drove its costs even higher.

>> By 2004, the state faced insolvency. The solution: Slash coverage for nearly 200,000 people. Tennessee Representative Phil Roe, also an obstetrician says TennCare proved health care should be left to the free market.

>> Then what happened to the government back plan it couldn't pay for what it'd promised.

>> At its peak, TennCare helped cover 94 percent of people here, but nearly put the state on financial life support, a reason many here will never trust any government option again. Mark Strassmann, CBS News, Nashville.

>> As the debate goes on over insuring the uninsured, their numbers are growing. A new report today from the Census Bureau puts the figure at 46.3 million, an increase of more than half a million. And could the insurance companies do more to solve the problem. Anthony Mason continues our user's guide to health care.

>> In the heated debate over health care reform --

>> We will hold the insurance companies accountable.

>> The insurance companies have been made the villains.

>> There is no business in America that makes more money than the insurance industry.

>> The reality, that simply not true. The health insurance companies made $11 billion in profits in 2008, but other medical industries made far more. The top five drug companies for example made $35 billion.

>> In fact overall, health insurance ranks as only the 86th most profitable industry in the country, earning little more than 3 cents profit on every dollar.

>> The insurance companies are not the major drivers of cost inflation.

>> But they have been fairly targeted for denying coverage.

>> More and more Americans worried that if you move, lose your job, or change your job, you lose your health insurance too.

>> The insurers are aggressively fighting a so called public option because they're afraid government competition will put them out of business, but Karen Agnane assumed spelling says the industry has offered its own remedy that would insure everyone.

>> No one would be discriminated against for pre-existing condition. Everyone would get health care.

>> Insurers would guarantee coverage for the poorest and the sickest provided everyone especially the young and healthy is required to take out coverage.

>> If you provide incentives for people not to participate, or wait only until the house is on fire before they purchase insurance, then what you are doing is increasing the cost substantially for people who are in the system.

>> Spreading the cost like that could save as much as a thousand dollars a year per family.

>> Because the premiums paid by the healthier people are used to pay for the care incurred by the sicker people.

>> But it's a solution that only works if everyone pays. Anthony Mason, CBS News, New York.

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