FixHealthCarePolicy

Public Plan: Bad Option No Matter What Version

Different versions of a “public plan” for health insurance have been proposed. In “Why a New Public Plan Will Not Improve American Health Care,” Walton J. Francis dissects the most prominent proposals and explains the pitfalls in each.

Two especially troubling elements of many proposals are government price controls—which are payment rates set by law rather than emerging from a competitive market—and mandatory provider participation requirements—which demand that doctors accept patients with public plan coverage. If a public plan included these regulations, it would not be on a level playing field with private plans.

A public plan proposal by Dr. Jacob Hacker of the University of California-Berkley includes these two elements, calling for “expanding a benefit-enriched variant of Original Medicare to Americans of all ages.” A similar plan from Dr. Karen Davis and colleagues of The Commonwealth Fund also preserves “government-dictated payment rates.”

Dr. John Holahan and Dr. Linda Blumberg of the Urban Institute have designed a public plan while remaining vague on whether it includes price controls and mandatory provider participation. However, “implicit in [Holahan and Blumberg’s] proposal is that the core requirements for a public plan are the ability of the government to compel provider participation and to dictate the prices of medical goods and services provided.”

Although these three plans are put forth with the goals of boosting choice and competition, they would actually undermine these important values. They would “displace most private sector health plan enrollment,” and their enactment would lead America towards a “single-payer system with private plans tolerated as second-rate alternatives.”

Arguments that these plans could contain costs or boost quality by modeling themselves on Medicare overlook the fraud and lack of managed care in traditional Medicare and the quality deficiencies in an existing public health insurance program— Medicaid.

Francis concluded, “No governmental entity in the United States actually administers a true health insurance plan,” so there is little preparation for this type of program. Finally, “Congress will not let the public plan fail,” so “competition and choice” in health care markets would become a memory.

Tags: Medicaid, Medicare, pitfalls, public plan, single-payer system