Public Plan Option Discussion Heats Up

By June 12, 2009Commentary

One of the controversial provisions in some health care reform proposals has been creation of a public plan, often analogized to Medicare, which would be an option offered alongside private insurance plans.  As might be expected, the concept and characteristics of such a plan concerns health insurers, but there are aspects of some proposals that might worry providers as well.  The American Medical Association has now expressed those concerns.  (AMA Statement) As the statement indicates, the AMA apparently is not opposed to all versions of a private plan; just to those that would have features such as using Medicare as the vehicle, or paying Medicare rates, or forcing physician participation.

Members of the Republican party have voiced fairly vociferous opposition to the entire concept of a public plan, partly on philosophical grounds that such a plan would represent too much of an intrusion into the private health care sector and partly on more practical grounds that such a plan would have an inherent unfair advantage over private insurers, particularly if it were able to force providers to accept Medicare rates.  It currently appears that the vast majority of Republicans will not vote for any reform containing a public plan option.  One of the fears, probably justified in some cases, is that advocates of a public plan see it as a way to ultimately get a national single-payer insurance plan.  Nancy Pelosi, on the other hand, has said that no reform bill will pass the House unless it contains a public plan option and most Democratic senators also favor a public option.

The AMA’s statement and position reflects the recognition by providers that momentum is gathering to pay for reform by restricting provider payments one way or another.  It would be reasonable to anticipate increased opposition from provider associations and lobbyists to many of the reform proposals.  Health plans and insurers, on the other hand, while they have made their opposition known, can be more discreet if providers are leading the charge against the public option.

Aside from the politics of reform bill maneuvering, there are some significant issues around the notion of a public plan.  If the ultimate goal of reform is to increase coverage and quality and limit costs to those truly appropriate to delivery of good care, a public plan might assist in meeting those goals to some extent, for example, by providing another option for persons seeking coverage.  On the other hand, neither Medicare nor Medicaid have a good record for ensuring quality of care, although the “never events” initiative and pay-for-performance are attempts at improving that record.  And other than through their ability to set provider fees that must be accepted, neither program has demonstrated any ability to control costs by ensuring appropriate utilization of services.  The biggest problem with a public plan is that, just as has been the case with Medicare, all major decisions—eligibility, service coverage, reimbursement—will become political decisions, and that is not a recipe for ensuring provision of the best health care at a fair price.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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