Further refinements of the bills in both houses revealed that the public option would have to negotiate rates with hospitals in a similar way that commercial plans do now. Fine. But nothing in the intervening time period has spelled out at what level the public plan might think is a fair reimbursement. Never mind the difficulties of negotiating with a payer that can effectively put you out of business, or, at the very least, make life very difficult for those who don't like what the government plan is offering.
So back to the question I asked in my headline. What if all your reimbursement came from Medicare? I'm guessing you wouldn't like it very much, considering that all I've heard over the years is how Medicare significantly underfunds the cost of care in its reimbursements, leaving hospitals to cross-subsidize by negotiating deals with commercial insurers that pay better. That's a hidden tax that we all currently pay for the fact that government reimburses poorly.
But if healthcare reform passes, and even if the public option pays you as much as 99% of costs, much higher than Medicare, you still come out way behind over time. And that was the crux of my friend's point.
And don't count on commercial insurers to continue making up the difference. Why should they? They haven't made a deal with the president, after all.