Some things I don’t understand!
I just don’t quite get the “public plan option” idea.
I read Jacob Hacker’s proposal for a public plan option again. Professor Hacker is a scholar with his heart in the right place, a rare combination. He gained my immense respect after I heard him speak about his book, The Great Risk Shift, a couple of years ago.
Professor Hacker makes a compelling case that a public plan is not only administratively more efficient than private plans, but that they have a convincing record of introducing large scale quality initiatives and payment reforms into the marketplace.
He then goes on to describe the dismal record of private insurers in comparison to public plans.
So why are the private plans an option if the public plans are superior?
That’s what I don’t get!
Don’t get me wrong. I am not a knee jerk enemy of the insurance companies. They perform a vital role as intermediaries in the public plans that Professor Hacker and the single payer advocates extol. I think they bring some capabilities to the table that would be useful in a future health care system.
There are some aspects of this “public plan option” idea that I have not seen adequately explained.
For example, how will providers be paid? Any reformed system that perpetuates the disparate payments based on who the patient is unacceptable. We now have a system that pays providers little for poor people (Medicaid), a bit more for old people (Medicare), and even more if they are working. And even then it depends on the insurance they have.
The “negotiating power” that Professor Hacker extols is really a method of cost shifting under the current system. That is inherently unfair. And form of equitable payment reform should not depend on the power of individual purchasers. I would propose the equivalent of industry bargaining to set prices. Those “prices” would be the reimbursement rates for all intermediaries (insurance companies). Disparities in payment should be explained by disparities in performance not by disparities in bargaining power.
How does this proposal guarantee that the private plans have benefit designs that:
- Provide real coverage
- Are comprehensible to the average person?
How will this “public plan option” eliminate the waste inherent in the marketing costs of a competitive insurance market?
Why should the public plans be exempt from the rules that govern the private plans?
The public plan option promises affordable premiums and affordable co-pays and deductibles. In today’s marketplace, affordable premiums are inherently incompatible with affordable out of pocket expenses (lumping together co-pays, deductibles, and non-covered expenses). That only works with government subsidies – an idea incompatible with a competitive market. Or the public plan is more affordable because it negotiates below market reimbursement rates – the provider community’s worst fear.
According to Professor Hacker:
“The main reason that the public plan in these proposals can promise such benefits, as the next section makes clear, is that public insurance has the proven capacity to provide the same level of benefits for less than private insurance, as well as to better restrain the increase in spending over time.”
If this is true, why bother with the private plans?