NYT: A Public Health Plan

[OhioChick]

June 20, 2009

As the debate on health care reform unfolds, no issue has caused such partisan rancor — and spawned such misleading rhetoric — as whether to create a new public insurance plan to compete with private plans.

The nation already has several huge public plans, including Medicare for the elderly (once reviled by conservatives, it is now only short of the flag in its popularity) and Medicaid for the poor.

Now the issue is whether to establish a new public plan to encourage more competition among health insurers and provide Americans with an alternative.

Most Democrats and some Republicans have already accepted the need to create one or more health insurance exchanges where individuals without group coverage and possibly small businesses could buy insurance policies. Some proponents hope that big businesses could enroll their workers as well.

An exchange would give the government (federal or state) a lot more power over insurers that choose to participate in order to tap a vast new market of previously uninsured people. It would determine the range of benefits that all participating plans would have to offer. It would presumably require those plans to accept all applicants, regardless of “pre-existing conditions.”

What Republicans are adamantly opposed to is the idea of adding a public plan to that exchange. They portray it as a “government takeover” of the health care system, or even as socialized medicine. Those are egregious mischaracterizations.

There is no serious consideration in Congress of a single-payer governmental program that would enroll virtually everyone. Nor is there any talk of extending the veterans health care system, a stellar example of “socialized medicine,” to the general public.

The debate is really over whether to open the door a crack for a new public plan to compete with the private plans. Most Democrats see this as an important element in any health care reform, and so do we.

A public plan would have lower administrative expenses than private plans, no need to generate big profits, and stronger bargaining power to obtain discounts from providers. That should enable it to charge lower premiums than many private plans.

It would also provide an alternative for individuals who either can’t get adequate insurance from private insurers or don’t trust the private insurance industry to treat them fairly. And it could serve as a yardstick for comparing the performance of private plans and for testing innovative coverage schemes.

Unfortunately, many Senate Democrats are so desperate to find a political compromise with Republicans — or so bullied by the rhetoric — that they are in danger of gravely weakening a public plan, or eliminating it entirely. That would be a mistake.

Here is a look at the main proposals now under consideration:

THE MOST ROBUST This approach, favored by many analysts, would allow the new public plan to piggy-back on the rate-setting powers of Medicare. As a result, it is the one most feared by Republicans, the insurance industry and doctors and hospitals. Any doctors who wanted to participate in Medicare, as virtually all do, would also have to participate in this plan and would have to accept the same payment rates as Medicare provides.

With lower costs, it would be cheaper for consumers, charging its members premiums as much as 20 to 30 percent lower than premiums for comparable private coverage, a boon to hard-pressed families.

It would also shave hundreds of billions of dollars from the amount needed to cover the uninsured — a crucial advantage as Congress scrambles to finance the reform effort.

The risk is that if this plan, given its power, were too stingy, it might drive some financially stressed hospitals into bankruptcy. The hope is that the downward pressure on reimbursements might force them to innovate and find big savings.

Republicans and private insurers fear, with some reason, that such an inexpensive public plan would entice or drive tens of millions of Americans away from private insurance, especially if big employers were allowed to enroll their workers in an exchange. The challenge is to craft rules to discourage employers from simply dropping their own subsidies entirely.

More: http://www.nytimes.com/2009/06/21/opinion/21sun1.html?_r=2&pagewanted=1

[sharesunited]

1. Where are the Blue Dogs on this?

Is a Democratic majority just an illusion if you need to include the Blue Dogs in any whip count?