There's The Public Option...And Then There's The 'Public Option'
Taking just a moment to keep score, we now know quite a bit about three rather different health care draft bills. If reform efforts are to succeed through the regular legislative process (i.e. not through the budget reconciliation process) those proposals will have to be merged into one, and key players will have to make a number of compromises along the way.
Significantly--both on policy and political grounds--the government insurance option proposals run the gamut from the House bill, which contemplates a robust public insurance option comparable to Medicare, to the Senate Finance Committee bill, which scraps the idea of a national government-run plan in favor of a series of regional co-ops.
If bipartisanship does win the day, the action's in the Senate Finance Committee, so it's important not to assume this proposal will disappear just as the "trigger" proposal disappeared. But it's also worth remembering that the co-op proposal doesn't in practice or in spirit amount to a public option. The stated idea behind the public option is that, forced to compete with a national, not-for-profit, government-run system, private insurers will have to dramatically cut the wasteful practices that drive up the price of care. Regional co-ops would not be able to serve this function.
But it's also worth recalling that not all public options are created equal.
To oversimplify for a moment, a public option could, as in the House bill, be allowed to pay out at Medicare rates, which beat private insurance rates cost-wise by about 25 percent. Or it could be forced to operate, for all intents and purposes, as a non-profit insurance company--on a level playing field with private industry. The difference is crucial and, depending on other provisions in the bill, could be a key force in shaping America's future health care system.
Under the latter version of the public option, savings on health expenditures will fall out of administrative waste in private industry--they'll be competing with a huge, non-profit entity that doesn't have to pay private-industry salaries. Under the former, the savings will be more drastic, as private insurers have to contend with the fact that the public plan can use its buying power to lower the overall cost of care.
That difference is obviously important, but it's even more important when you factor in the possibility that private insurance companies will try to game the system. The term of art here is adverse selection: Aware that the public plan can't turn consumers away, and keenly aware that injured and ill consumers cost a lot of money, private insurers can, at least in theory, tailor and market their plans to low risk consumers, sloughing off the sick into the public option, and inflating the cost of that plan.
The effects of this can be offset if the final legislation includes a provision that forces those that insure the healthy to subsidize those that insure the unhealthy (what's known as risk adjustment). But if it does not, then the savings and efficiencies that the public option is intended to create will be diminished. And if that's the case, then the robustness of the public option--the degree to which it's allowed to force down costs--could determine whether consumers are left with an appealing government option, or a structurally compromised one.
Which do you suppose industry and its allies in Congress would prefer?
Josh
Matt
Eric
Brian
President Obama, will you veto a bill that doesn't include a strong, no-bullshit public option? (Which is to say, a bailout bill for Big Insurance which will do nothing to get us out of the health-care crisis.)
June 22, 2009 5:24 PM | Reply | Permalink
It's not just ending adverse selection and instituting a strong risk adjustment provision that's needed to cut costs and level the playing field.
To truly get cost savings we must have a strong CER that through best practice mandates will cut out a lot of the profiteering on the provider side and do away with the fee for service model that drives so much of the cost increases. Republicans like Cronyn have been demagoguing CER calling it the bureaucracy who will ration care.
An example is one of our local hospitals who give every patient admitted a chest x-ray, no matter what they are admitted for. Brings in lots of revenues but serves no purpose other than to make their radiology dept a profit center.
June 22, 2009 5:55 PM | Reply | Permalink
I prefer single payer
and if we don't have that, there should be language and policy that (as in the structure of Kerry's incomplete coverage plan) at least is expandable into single payer later, and ALSO says that states can opt into single payer systems w/no prejudice to their federal funding and support
i suspect we'll get locked into a system that isn't really all that good (similar to what is apt to happen w/energy)
June 22, 2009 7:31 PM | Reply | Permalink
Here are a few provisions I'd like to see in whatever bill passes short of single payer.
One thing that would help is a single universal health risk pool. A private insurer who operated in the Health insurance market would be required to accept any applicant, regardless of prior history, and would be forbidden to selectively rate up any applicant.
Add to that "risk adjustment" and the health insurance system would be operating pretty much on a level playing field. Everyone would be forced to make their money by paying lower health care costs. There's a lot of room for innovation in that.
Add to that a single standardized definition of the terms used in medical billing, so that physicians and hospitals would have to hire only enough clerical staff to deal with one basic system. Again, any efficiencies found in medical billing could go to physicians and hospitals or to the insurance company. That's another incentive to lower costs and streamline the billing system. It would also lower what it costs to run administration for medical billing in the physicians and hospitals.
I am assuming that insurance companies will be allowed to sell supplemental insurance policies that cover costs above what the standard benefits the new health care system will provide, but such policies should clearly be add-ons to the normal insurance, not included in as part of the normal insurance like the private insurance companies offering Medicare benefits do today. That way the purchasers would know what they were paying and could see whatever additional benefits to supplemental policy provided. Again, the cost of health care needs to be up front and transparent as much as possible.
I'd also like to see a single universal appeals board for all denials of payment, private and government. Without that standardized appeals system the patients have no real recourse usually, which is why the insurance companies have been able to get away with the rescissions.
Sweeten the pot for physicians by paying off parts of the student loans taken by them. My DO graduated from medical school with a 30-year payment schedule. For each year in the system, pay off a year of loan (up to a max each year to prevent gaming the system, perhaps. That would require research, but the date would be easy to get.)
I'm sure all of that could be gamed, but the profit in gaming it would be a lot lower that what we currently pay. Remember, the federal government already pays of half of all health care expenses in the nation.
June 22, 2009 7:37 PM | Reply | Permalink