I started writing this as a comment to k charles weeda's excellent diary, but it quickly became clear that this will be a bit too lengthly to be a comment.
I'm finding myself gradually coming to a few conclusions both about what a public option would look like and about the necessity of one:
- I don't believe that a "public insurance option" is a sine qua non of health care reform.
- A public insurance option would likely result in significant changes to the insurance market; it wouldn't simply be another competitor that keeps the private insurers honest.
- There are forms of "public option" other than an insurance program that we should be open to.
I've been a proponent of a public option since the topic of health care reform came up, although I've never considered either it or a single payer system to be truly necessary to deliver quality health care at a reasonable price to everyone, which I believe to be the real goal of health care reform. Looking at health care systems elsewhere in the world, there are quite a few different models, everywhere from the fully government operated NHS in Great Britain to the single payer system in Canada to the heavily regulated private models in most of the continental European countries. Either single payer or public option (depending upon whose opinion is under consideration) is being seen by large elements of the progressive community as necessary to rein in the insurance companies. I've posted elsewhere why I believe that a public system isn't actually necessary to achieve universal health care; I think reining in the private insurers is a secondary goal to universal health care. However, in this diary I want to share some thoughts I've been having on public health care options.
Prof. Jacob Hacker's concept of a public option, as expanded by the Economic Policy Institute, has three core elements:
- Public plan open to any legal US resident without good workplace coverage
- Employer mandate to provide comparable coverage or pay a 6% payroll tax
- Individual mandate to purchase private or public coverage
(see this piece in CNS News for more). Prof. Hacker admits that he sees this as a step in the direction of a universal Medicare-like plan, which not surprisingly has created a lot of resistance on the right and equally unsurprisingly attracts plaudits from our side of the house. From my point of view that would be a reasonable outcome, but not if it were to potentially take 250 years.
I suspect that what will happen will be somewhat different. Insurers will try to cherry pick the best risks using the same bag of tricks that they currently do, leaving high risks to the public insurance plan. Unless the public plan is directly subsidized -- which I don't think is politically feasible at this time -- the result will be that the public plan will be disproportionately pricey. Even though the public plan will have a much higher "medical loss ratio" than private plans, the difference in the insured pools may well be great enough that the public plan will have a higher price than the private plans. That will simply result in a two tier system.
Is that good or bad? I'm really not sure, but I don't think it would be nearly as good as a single payer system -- or, for that matter, as good as a regulated, guaranteed issue, community rating public system. It would result in (or perhaps I should say, perpetuate) a stratification along wealth and health lines -- if you're wealthy and/or young and healthy, you have your pick of the best of everything; if you're not, you have much less choice. Especially if reimbursement rates weren't competitive, it might be hard to find a good doctor. And I suspect that a lot of doctors would opt for only private patients if the reimbursement rates were sufficiently off kilter. A single payer system wouldn't have these same incentives; an appropriately regulated private system would have a more level playing field.
What else might happen? I could see the system evolving toward a hybrid single payer system where private insurers sell riders for things not covered under the public plan, as happens in Great Britain. This would result in fewer and/or smaller private insurers, but depending upon exactly what the universal system covered, they would have a market. This would be somewhat like aftermarket car warranties. This looks like a better outcome than the stratified outcome I described above.
The one thing I don't see happening is private insurers attempting to compete head-on in price with a public option while offering guaranteed issue and commnunity rating. They simply won't be able to because of their need to earn profits; the public plan doesn't have that limitation. That isn't a problem per se for me; I don't care if the insurance companies live or die. But they will certainly be looking for alternative business models, perhaps the ones I outlined above or perhaps something else altogether.
Another thing to consider about a public option is it might be something entirely different from insurance. While we talk a lot about the need to reform health care, not just insurance, we're so used to thinking about problems with insurance that we miss other possibilities. Suppose the public option referred to health care provision rather than the payment system, for example?
The provision of health care in this country is woefully inefficient. Vets74 wrote an excellent diary about this problem from the perspective of chronic care. I've seen other examples; when my wife was treated for breast cancer, we were supposed to have an interdisciplinary meeting with all of the specialists. This sounded like a fine idea to me -- have everyone in a room together to discuss her case and arrive at a plan. Well, that isn't at all what happened; we met with each specialist individually and nobody had a clue what the others were doing. As a software engineer and project manager, that was laughable.
Suppose the "public option" were to attack that problem?
We already have that model, if vets74's diary is any indication, with the VHA. Suppose we took Sen. Sanders's idea of community health centers, and built them up from scratch with electronic patient information systems to make it easier for doctors to work together, and expanded it vertically to cover more than just basics? We could add additional collaboration systems so that doctors with questions could seek out other doctors with specific expertise for consultation, and teach and learn from other doctors. Medicine in this country is heavily siloed; doctors tend to stay within their own institutions. When my sister in law had cancer, one reason she picked the hospital she did was due to where her preferred surgeon was (or maybe it was vice versa, I don't remember, but both hospitals are within 5 miles of each other).
What's in all of this for doctors? Aren't they going to be paid less than under the current private piecework system? Maybe, maybe not. I suspect some of the "stars" would be paid less, but a lot of very good doctors would be paid more. They would also have less bureaucracy and administration to deal with; their concerns would be with patient care rather than spending time dealing with non-medical issues. I believe that most doctors really do want to provide good patient care; an institutional arrangement optimizing that would be very attractive to people like that.
Would this evolve into an NHS, where the doctors work directly for the government? Not necessarily. The health centers could be franchised, for example -- franchisees would have to meet certain standards but would have freedom to innovate. There might be other doctors who prefer to work in private practice or for private institutions who could stay there.
This is every bit as much of a "public option", even if it isn't what we customarily think of when we hear the expression. I think it is important to be open minded about what a public option could be, in addition to whether there must be a public option in health care legislation, and we need to take a closer look at the possible outcomes of different provisions.