A recent journal article and a recent editorial provide good arguments for including a public option in the health care reform. The logic is clear but will Congress and the administration support it or succumb to the lobbying of the health insurance industry and its invested (and well rewarded) defenders? The New York Times editorial “The Public Plan, Continued” (10/17,/2009) states that,
[…] we strongly support inclusion of a public option — the bigger and stronger the better. That is the best way to give consumers more choices, inject more competition into insurance markets, hold down the cost of insurance policies, and save money for the federal budget. Here are some of the basic issues to consider, and the current legislative state of play:
WHO COULD ENROLL? While critics rail against a government takeover of health care, the reality is that the vast majority of Americans — those who have access to health insurance offered by large employers — would not be eligible to enroll in a public plan. […]
DOES IT MAKE INSURANCE MORE AFFORDABLE? Most experts agree that a public plan should be able to provide insurance at a lower cost because it would have no need to earn a profit and could either demand or bargain for lower prices from health care providers. That should spur private insurers, eager to attract millions of new customers on the exchanges, to find ways to hold down their premiums as well, at least on the exchanges. […]
WHAT’S THE STRONGEST PUBLIC PLAN? That is apt to emerge from the House, where the Democrats need only a majority to pass legislation and are constrained only by the need to satisfy conservatives in their own party. […]
A PUBLIC PLAN FOR EVERYBODY? Too often insurance markets are dominated by one or two big companies. We believe that, after a break-in period, the insurance exchanges, with a public option, should be opened to virtually everyone covered by large employer-based plans. That would give the vast majority of Americans a bigger choice of insurance options than they now have at most workplaces — and a greater stake in pushing Congress to approve a strong public plan.
In his piece “Poor Substitutes — Why Cooperatives and Triggers Can’t Achieve the Goals of a Public Option” (The New England Journal of Medicine, 09/23/2009), Jacob S. Hacker writes that,
According to a recent survey, a majority of U.S. physicians support health care reform that includes a new national public health insurance plan, which would compete with private plans. Polls have shown that a substantial majority of Americans support the public option as well.
[…] Senate Finance Committee chairman Max Baucus (D-MT) recently unveiled his draft bill […], which contains no competing public plan. Instead, it substitutes the largely untested idea of providing federal loans and start-up funds to encourage the creation of decentralized, member-run health care “cooperatives.” Another prominent senator on the Finance Committee, Olympia Snowe (R-ME), has indicated that she would support a public plan only in the event that private health plans failed to offer affordable coverage in a particular region, “triggering” the creation of a public option. President Barack Obama — while reiterating his support for a public plan — has said that he could support both these alternatives if they could create accountability and competition for private insurance.
Could they? Both proposals lack adequate specificity to make the answer clear […]. But analysis of existing outlines of both ideas and similar initiatives in prior legislation suggest that they could not.
The “public option” is meant to bring greater competition, choice, accountability, and cost restraint to U.S. health insurance. It would do so by offering the choice of a new national, public, nonprofit insurance plan modeled after Medicare to those who lack employer-sponsored coverage or work for very small firms that decide to buy coverage through a proposed national insurance “exchange.” This plan would be subject to the same rules as private health plans and would be wholly self-financing, with revenues derived entirely from premiums, employer contributions, and the same government subsidy payments for lower-income Americans that would be available to private plans. […]
As envisioned, cooperatives almost certainly could not achieve the key aims of the public plan. Although they might offer a backup option in some regions, they would have little chance of offering the broad choice of providers and portable, standardized, nation-spanning coverage that a national public plan offers. Moreover, as is the case with any private health plan entering a local market, decentralized cooperatives would find it difficult to get off the ground and expand, much less attain the reach or authority required to drive widespread delivery and payment reforms or compete strongly with private insurers. The history of consumer health cooperatives supports this pessimism.[…]
Any new federally authorized health plan must be able to counterbalance the leverage of dominant insurers and providers, in part by constructing its own competitive provider networks. Otherwise, it will have neither the market share nor the bargaining power necessary to become established and serve as a check on those entities. Alas, cooperatives have no real prospect of garnering the requisite market power. The Congressional Budget Office, which has said that the competing public plan could achieve substantial savings if it paid rates linked to Medicare’s payment schedule, has concluded that cooperatives would have “very little effect” on health care spending.[…]
In short, neither the cooperative nor the trigger represents an acceptable substitute for the immediate creation of a national public plan. Rather than developing fig leaves to provide political cover, congressional leaders and the President should push for a national public plan that competes on a level playing field with private insurance to provide coverage to people who are uninsured and workers in the smallest firms. Such competition is the key to creating greater choice and accountability in increasingly consolidated insurance markets.
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