Public Plan Option Debate

Will a public option be included in the final health care reform bill passed by Congress?

It seems the $64 million question in the health care reform debate centers on President Obama’s fondness for the Public Plan option.

Is the public plan option a Trojan horse disguising a government takeover of healthcare as some suggest? The best answer to that may be “not really, but”….

It’s perhaps the issue that has received the most attention and involves the most spin from both sides of the political aisle. Let’s tackle this from a Pros and Cons perspective.

Public Plan Option -- Pro
The U.S. Government currently pays for more than 30% of all health care expenditures in the U.S. through Medicare and Medicaid. In fact many seniors have been heard to say, “I don’t want the government to touch my Medicare!” Hmmm, I guess they don't realize that for the most part Medicare IS the Government.

Although in dire need of a benefit redesign, payment restructuring, and adjustments to 21st century realities Medicare really has served its initial role exceptionally well over the years. Medicaid, administered as a federal/ state partnership has also performed decently in providing coverage to our most vulnerable populations. Despite their size and impact on the health care landscape, many Americans understand little of how these programs are administered and who there participants are.

Therein lies the misperception perhaps of what a public plan option is exactly.


Public Plan Option -- Con
As described above Medicare and Medicaid have performed admirably considering the programs’ longevity and size. So of course it makes sense to expand them and build on their successes and have an expanded Medicare program run by a pseudo government entity, perhaps a Connector. The devil however is in the details. President Obama says a public plan option competing against private plans will keep them honest and keep costs down. That’s the administration’s argument, which you may have heard once or twice.

Let’s address the details. Private plans are sold by insurance agents and brokers and have marketing costs, commissions, advertising, etc. Would the public plan option have those costs as well? Not likely. If not, is the playing field level? It may be easy therefore for a public plan to compete very favorably against the private plans.

Then let’s add consumer choice into the mix. Would you choose the public plan option offered through a government program or website that included your doctors, your pharmacy, and your child’s pediatrician, the same as another private plan with equal benefits? What if the commission and advertising costs caused the private plan to price out at 15% more? Do you think reform could be implemented this way without a level playing field and be sustainable?

That’s why the public plan naysayers have a point, that the playing field will not be level and the majority of the public would flock to the public option putting the private plans in dire financial straits. Would that be a Trojan horse leading to nationalized healthcare? It depends on what the public plan administration costs include…. and more importantly... what they might not include.


Forecasting a Solution
So is there a compromise, endgame solution after the pundits and politicians say their piece? Will the dust settle in to something that a majority of Congress can live with and the public might actually understand? See this article (http://www.npr.org/templates/story/story.php?storyId=111441399) for more about the current debate’s confusing nature and why the message has been messed up. More on that topic later this week. But I digress…

Is there a compromise solution? Yes, I believe there is and it could be modeled in some part on the Medicare Advantage program. Through this program the feds contract with Medicare HMOs and Medicare Part D prescription drug plans in every region of the country. Revising Medicare Advantage is also part of the larger health care reform debate and I’ll address that specific topic next week. These Medicare HMO contracts could be used as a model to incorporate evidence-based quality care that includes provider incentives and could even easily incorporate payment reforms. We touched on that issue in the blog yesterday in case you missed it when I addressed the subject of cost. In that blog entry I suggested that payment reforms geared to “episodes of care” should be considered as the means to cut health care expenditures while improving health outcomes.

In short, Congress has a model for the compromise solution; it may take a lot more rhetoric, hand wringing, and frustration to get there, however. In the end, I believe if health reform is passed this fall the final package will include plan options built very similarly to the Medicare Advantage plans currently in existence.