Here’s a video of healthcare czar Nancy-Ann DeParle at a Kaiser Family Foundation forum in which she points to the possibility of a compromise on a public health plan for the uninsured and small business—a plan that would compete side-by-side with private insurance through a national health insurance exchange.
But she wouldn’t say outright during a Q&A with reporters that President Obama would sign reform legislation that didn’t include a public plan.
Stephen Langel, Roll Call: “If the President was presented with legislation that had no public plan option, if that was what he needed to take to sign a bill into law, would he be willing to do it?”
DeParle: “Again, I’d answer this the way the President did, which is that he has a couple of goals when he put the public plan in….He wanted to make sure that he could keep costs low, and the public plan is one way of doing that, and he wanted to make sure there was competition and choice for consumers…But as he said, if there are other ways of doing that, he’d be open to talking about them.”
The health insurance industry opposes the public plan, fearing it would steal away business and shift costs to the private sector. A public plan could use the government’s bargaining power to drive down payments to providers (i.e., pay Medicare rates) and offer more attractive premiums.
“There are policy ways of getting around some of the objections,” DeParle said. “You don’t have to use Medicare prices, you can use something else….Now if it’s a philosophical disagreement, ‘I just don’t want the government offering a plan,’ that’s a different thing.”
Far be it from me to imply that a ”philosophical disagreement” over big government versus the free market has stood in the way of meaningful healthcare reform in the past. But let’s try to be optimistic.
By using market rates to pay providers (as opposed to Medicare rates), the public plan would lose a key competitive advantage. That would protect the health insurance industry, but it would also mean higher costs for plans participating in the exchange.
Another option (which DeParle didn’t mention) is to let the government set payment rates, and then let private plans use those same rates. There would still be a risk of cost-shifting to the private sector, but presumably there would also be an offset: universal coverage means less uncompensated care given by providers.
If I had to choose, I’d probably go with the latter compromise. The public plan would still have the advantage of lower administrative costs, and the private plans could use payment savings to innovate around benefit design and care management.
It’s all getting very interesting, and very complicated.