United Electrical workers comments, May 14:
For the first time in decades, the country has an Administration and a Congress that are working for a major overhaul of the U.S. health care system. We are disappointed that the broadly-outlined plan by the Obama administration and Congress is not a single payer plan, we note that it includes the creation of a public insurance system. We welcome the national discussion of the need for an alternative to profit-driven health insurance.
Even a limited public plan, set up in competition with private insurers, would have a major cost-reducing effect. Premiums for public plans like Medicare are only about 3%, compared with up to 30% for private plans.
Healthy Competition: How to Structure Public Health Insurance Plan Choice to Ensure Risk-Sharing, Cost Control, and Quality Improvement Jacob Hacker, April 9, 2009
The debate over health care reform has increasingly centered on the issue of “public plan choice”—whether Americans younger than 65 who lack employment-based coverage should have the choice of enrolling in a newpublic health insurance plan modeled after Medicare. The central argument for public plan choice is that such a plan, offered as a choice within a new national insurance “exchange,” provides an essential set of securityguarantees, ensuring that Americans without insurance from their place of work can find a plan that offers them quality, affordable health care through a broad choice of providers in all parts of the country.
Giving the public plan the authority to bargain for reasonable rates is an
essential item on the menu of cost control—and one that the Congressional Budget Office (CBO) and other budget watchdogs are likely to “score” as producing savings (in contrast with many other currently favored cost-control strategies). Nonetheless, there are reasonable
concerns about how the new public plan will use its bargaining power—concerns reflected in current proposals for a price-taking (rather than price-making) public plan that would have limited ability to secure fair rates. However, a watered-down public plan would be a grave mistake. Instead, the public plan should include safeguards designed to ensure that
providers are fairly represented and that bargaining for lower prices does not negatively affect patients’ access to care or shift costs onto private insurers. Indeed, a better alternative to a public plan without price-setting authority would be allowing private fee-for-service style plans to piggyback on the public plan in setting their own prices.
Click here to read Healthy Competition
Click here for original Hacker paper: Public Plan Choice
Don McCanne of PNHP Critiques Hacker
Comment: This is a very important paper because addresses one of the most controversial issues in the current health care reform debate: Should a Medicare-like plan be offered in competition with a market of private health plans? UC Berkeley Professor Jacob Hacker adds to his previous contributions on the private plan/public option model of reform by describing in detail what a properly-designed Medicare -like option would look like.
To understand this fairly complex model, you really need to read this 31 page report. But looking at just a few of the problems that he addresses can give you an idea of where this approach is headed.
Click here for McCanne critique
A Modest Proposal for a Competing Public Health Plan
Len M. Nichols, John M. Bertko New America Foundation
We believe the type of public plan we describe can achieve many
of the goals of public plan advocates, while preserving fair and
effective market competition, negating the risk of excess cost-shift, and
avoiding an inevitable drift to a single payer health system.
The key to achieving fair competition is to set and enforce
the rules of the insurance marketplace (or exchange) in
such a way that they apply to all participants, public and
private alike. All rules must apply to all plans.
Our approach to cost-containment would be more systemic
and utilize combinations of information, incentives, and
Medicare as a catalytic value-based purchaser.
There is widespread agreement that the main
source of health care cost growth in the long run is not
provider price inflation, but rather inappropriate use of new
technology. This fact suggests that the key to controlling health care cost growth over time is system-wide value based
purchasing, which is the most likely result of better
aligned incentives between hospitals, physicians, payers,
and patients. Thus, we think payment reform and best practice
information is more likely to enable sustainable
cost growth reduction than price controls from public plan
market power alone.
Click here to read NAF analysis