Health Care Solutions

One Successful Public Insurance Option Already Exists In Maryland

Can a public insurance option really work? It already does.

Models exist wherein government-created insurers compete successfully with private-sector insurers, without destroying the private market, and with the general public ultimately benefiting. One need look no further than our state's Injured Workers' Insurance Fund (IWIF) - Maryland's public insurance option for workers' compensation insurance.

IWIF was created nearly 100 years ago when the Maryland legislature passed one of the nation's first laws providing for workers' compensation benefits and required all Maryland employers to purchase workers' compensation insurance. Because this insurance was mandatory, the legislature also created the State Accident Fund, the predecessor of IWIF, whose purpose was to create a public insurance option to ensure competition and to guarantee that every employer could purchase workers' compensation insurance at a reasonable price. Similar state funds were created in a number of other states.

As with President Obama's proposed public option for health insurance, IWIF was never intended to be the sole source of workers' compensation insurance or to be the insurer of last resort only. Instead, from the beginning, IWIF was created to provide vigorous competition in the marketplace as a check on excessive pricing by the standard insurance industry.

So, how has this nearly century-long experiment in public-sponsored insurance worked out?

IWIF has not driven other insurers from the market. Indeed, compared with the health insurance market, the workers' compensation insurance market in Maryland is highly competitive.

IWIF is fully self-sustaining, pays its claims and expenses out of premiums and investment income, and makes no claim on the government's operating budget.

The national debate should be informed by the knowledge that successful public models already exist.

Dennis W. Carroll is general counsel of Maryland's Injured Workers' Insurance Fund.