New Report Highlights the Need for Public Health Insurance Plan Option

by Lesley Politi on December 23, 2008

New Report Highlights the Need for Public Health Insurance Plan Option

by Astrid Fiano, Writer
House Ways and Means Health Subcommittee Chairman Rep. Peter Stark (D-CA), health care expert and U.C. Berkeley professor Jacob Hacker and Institute for America’s Future co-director Roger Hickey held a press teleconference, which DOTmed attended, in order to announce the release of a policy brief on public insurance options as a critical element of President-elect Obama’s health care reforms. The new brief is entitled “The Case for Public Plan Choice in National Health Reform,” and is authored by Hacker. The Report was published jointly by the Institute (a non-partisan research and education organization) and the Center on Health, Economic and Family Security from the U.C. Berkeley Law School.

According to the Institute, the insurance industry is opposing key elements of reform embraced by President-elect Obama, Obama’s health care point person Tom Daschle and Senate Finance Committee chairman Sen. Max Baucus (D-MT). However, the Institute says, the new brief shows that “a public insurance option is crucial to controlling health care costs and achieving quality coverage.”

During the teleconference, Prof. Hacker explained that a core and controversial part of President-Elect Obama’s proposed health care reform is to offer a public insurance option to Americans who lack employment-based coverage. The option would be similar to conventional Medicare, managed by the Government, and paying private providers for the care. The proposed public plan would be offered through a national insurance exchange, competing with private plans “on a level playing field.” Prof. Hacker said the new policy brief being released sets out an argument for a public plan choice–that public and private insurance have distinct strengths and should be able to compete with each other so that public insurance can serve as a benchmark for private insurance, and private insurance can remedy some of the weaknesses of public insurance. According to Prof. Hacker, the plan is a hybrid approach, building upon the best elements of the present systems, while putting in place new means by which those without access to secure workplace insurance can choose among plans for affordable coverage. For those without workplace coverage, Hacker emphasized, any menu of options must include a public plan to achieve the broad goals of health care reform, namely universal insurance and improved quality.

Three-Point Plan

Prof. Hacker then briefly explained the three points of the plan discussed in the brief: cost containment, quality improvement and value. Rep. Stark then commented that the primary reason for a safety net program was to ensure care for the approximately 47 million persons who can’t afford insurance and medical care, and don’t qualify for Medicare.

In response to reporters’ questions, Rep. Stark said that any plan without a public plan option would not be supported by him, as he did not see any viable alternative. Rep. Stark also refuted the idea that Medicare was currently underpaying health care providers. Rep. Stark said that the timetable for voting on a plan would take at least a year, likely to be early 2010.

To an inquiry on how, if the government was creating the rules of the public plan, it would ensure fairness in the playing field, Prof. Hacker responded that an important element in the public plan would be that the Medicare would not be in charge of managing the plans, but run a higher-level administrative body, which would administer enrollment and competition between the public and private plans.

Parity Issues a Continuing Concern

Following the teleconference, Prof. Hacker further commented to DOTmed News on two inquires. Asked if a public plan option would address issues that might otherwise escape oversight in regulation, such as gender and racial/ethnic inequities in accessing care, treatment and prevention, and also lack of coverage for mental health treatment, Prof. Hacker responded: “I believe so. First, I would argue for true parity in mental health treatment in the public plan (a feature of my 2007 proposal: http://www.sharedprosperity.org/topics-health-care.html). Second, the evidence is clear that public insurance provides broader access, especially to more vulnerable patients. Elderly Americans with Medicare report, for example, that they have greater access to physicians for routine care and in cases of injury or illness than do the privately insured. They are also half as likely as non-elderly Americans with employment-based insurance to report common access problems, such as skipping a medical test, treatment, or follow up, and failing to see a doctor when sick. Third, the public plan, working with Medicare and private plans, could spearhead the testing and evaluation of potential delivery-system and payment reform; the collection, reporting, and use of ongoing performance data; and the streamlining of paperwork and administration in ways that would not be possible without a core role for public insurance for non-elderly Americans. I see addressing the broader disparities in care as central to this mission.”

Long-Term Care: The Next Great Challenge

Prof. Hacker was also asked if in the future, the proposed plan could be built upon to extend to disability or long-term care insurance, a major concern for those of low-income. Prof. Hacker responded, “This, to me, is the next great challenge we face in health care. Medicaid simply cannot be the way in which we handle long-term care, and private insurance is ill suited to deal with protection for long-term health costs. Commercial insurance works well to protect people against risks, such as car accidents, that vary among individuals but average out across a large population. As Harvard economist David Cutler has explained, long-term healthcare is different: It is almost impossible to predict how costly the care will be in 2040. Insurers face equally serious uncertainties about how much they must put aside to pay future bills. Because the private [long-term care] market doesn’t work well, efforts to reduce Medicaid spending by shifting the burden onto private markets won’t work well either. Tightening Medicaid rules might reduce public spending slightly. It won’t eliminate underlying costs. It certainly won’t distribute the burdens with greater dignity or fairness. The alternative is as obvious as it is difficult: The federal government should pay for long-term care through Medicare and the new public plan I propose, openly, for every American. That would staunch the fiscal bleeding that forces states to cut important services. It would also protect everyone from one of life’s most frightening risks. But this is an agenda for the future.”

Regarding healthcare legislation, Stark said that it may have to wait till 2010, due to other pressing priorities for the incoming administration and legislators.

The report may be accessed at: institute.ourfuture.org/hacker

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