What is the industry afraid of?
May 28, 2009 -- We appear to be closing in on the next generation of health care reform with expectations of action by Congress as early as this summer. One of the most contentious questions is whether the introduction of a new government run, public plan should be included. Would this be the mother of all unfunded entitlements?
Is it just a coy strategy to diminish the private sector over time as has occurred in higher education? Can government and politics be relied upon to control health care inflation? If Medicare is widely considered the untouchable “third rail of politics,” what would this new public plan be?
A few years ago, the reform work of the Oregon Health Assessment Project concluded that choice should include a public option (referred to as the "civic segment"). The same compelling reasons remain: 1) significant numbers of people want a single payer system which a public plan could satisfy; 2) Robust individual choice increases the prospects of member support for the innovative practices of any given health plan, public or private; 3) Arguably, the performance of the private system would be enhanced by this disruption; 4) Perhaps the introduction of a public option would shatter existing cost shifting practices and force all choices to float on their own bottom; 5) There would be a residual need for an organized safety net for those unable to exercise other options; and 6) In the context of alternatives and personal choice, regulation could be far more tolerant and even nurturing of outside the box innovation within all health plans.
If the intent of a public plan is to achieve single payer and ultimately “no choice,” it is a supremely wrong-headed goal. Choice and competition among rivals is usually the road to innovation, service improvement, and customer satisfaction. Choice respects that we are not a cookie cutter population with the same needs or priorities. One health plan designed to serve all can only achieve a highly compromised design with little urgent pressure to improve, outside of its own internal judgments and lethargic action.
A public plan will travel with other characteristics likely uncomfortable to some of its advocates. Demands for fairness would require competitive prices without discriminatory subsidies. Individuals of all stripes would need to be empowered to exercise personal decisions, hastening the migration from public and employer defined benefits to defined contribution, and movement from group to individual insurance. If one is to be allowed the choice of selecting a public plan, why not Kaiser or Blue Cross? Lots of bothersome and unpredictable disruptions to control about how health plans are marketed. Delicious!
Perhaps the greatest skepticism is centered on whether a public plan would be deployed on a level playing field with other private sector alternatives. New York’s Senator Charles Schumer seems to be struggling with this issue
. If this box is opened, it is not a huge leap to ask why Medicare and Medicaid as public plans should not be subjected to the same obligations. Employers, providers and private carriers have sought cost-shifting relief for decades.
With a minimum of imagination depending on intent and execution, a public plan could have profound system wide benefits far beyond the option itself. Even more so, it may be an essential provision of sustainable reform, as the oligopolistic nature of the existing private sector needs to be rattled. Without a public plan, reform may be a largely status quo system with more entitled participants --- an outcome that many vested interests seek. Envision all Americans regardless of historical categorization, equipped with the funded ability to make a health plan election consistent with personal preference -- whether it is public or private. Politically conceived entitlement categories could be rendered obsolete, being displaced by an “All American Plan." Imagine that!
Stephen Gregg is a retired hospital administrator and health plan chief of staff. He can be reached at firstname.lastname@example.org.
For related coverage on the public health plan option click here.
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