As the healthcare reform debate has sharpened in recent months, few issues have become more pointed than the public optionmandating some form of government health plan as part of a revamped system.
Reform, not status quo
Public plan could be just the competition needed to drive down health system costs
The insurance lobby, notably Americas Health Insurance Plans, has called the inclusion of such a plan a deal-breaker in its support of reform, saying it would create an unfair playing field in favor of the public plan. It presumes lower payment rates that would harm providers and would be the first step toward a single-payer system.
When examining the public option, emphasis needs to be placed on the word option. This is about providing one more choice for struggling Americans in an unquestionably troubled healthcare system. Without a public option, any systemic healthcare restructuring will be more status quo than reform.
This page has always been an advocate of competition. Nothing has changed here because this isnt a matter of government-run healthcareits about a government-run alternative in a market where the current options havent worked out so well.
A large majority of Americans do indeed have health insurance coverage, but, as were all fully aware, that coverage has become increasingly unaffordable, impeding our nations competitiveness. And coverage has become increasingly unavailable. Since we have the tradition of employment-based health insurance coverageand will continue to do soas millions of jobs have vanished, so has the insurance coverage those jobs provided.
Private plans have long been out of reach. As we reported last week, COBRA benefitsallowing continued coverage for families under their former employers planhave become somewhat affordable only because the federal government is now providing a 65% subsidy.
According to a Kaiser Family Foundation survey published late last month, 67% of those surveyed strongly or somewhat favor creating a public option similar to Medicare. Thats quite a change from the last serious debate over healthcare reform in the 1990s when any form of government plan was vilified.
Those numbers vary significantly when broken down by Democrats, Republicans and independents. And the survey does show that support for a public plan plummets when presented with differing arguments such as the contention that such a plan could hold an unfair pricing advantage. However, as the survey analysis states, the fact that the arguments can be made does not make them accurate.
Any unfair advantages would depend on the design of the public plan. Such biases would not be inherent or automatic. That was a point made recently by Sen. Charles Schumer (D-N.Y.), who has proposed that any public plan be subject to the same rules as private plans.
Among his proposals: the plan would have to be self-sustaining, paying claims from premium revenue and copayments, not tax dollars; and it would have to offer the same minimum benefits. So maybe the plan, because of lower overhead, would be able to operate more efficiently and drive down costs for the entire healthcare system. Or, more likely, employers would stay with their established private plans because they will compete harder to offer a better deal.
Are the private plans afraid of unfair competition or just any competition? AHIP is one of the signatories to the pledge from a healthcare coalition that has voluntarily promised to erase $2 trillion in healthcare spending over 10 years. Health plans also have expressed a willingness to make concessions on pre-existing conditions and rating based on gender.
Could it be that just the notion of this new competitor is altering the behavior of an industry that not so long ago was passing along double-digit premium hikes year after year? Why couldnt insurersand other healthcare playersvow to wring out trillions in savings decades ago?
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