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Why The Public Option Is The Critical Component Of HCR

Via mcjoan, Jacob Hacker and Diane Archer explain:

The public plan is [. . .] critical to reform as a cost and quality benchmark, one that is particularly crucial if private premiums accelerate upwards. The insurance industry has threatened that premiums will skyrocket if an individual mandate is not tough enough. It may be an idle threat, but if a final reform bill ends up looking more like the Senate Finance bill than the House bill, it might not be. In most local markets, competition is likely to be anemic, and regulation of insurers inadequate. There will be little to prevent insurers from raising rates as they have threatened.

Having a public plan in place should also help keep down the rate of growth of health insurance premiums over time. Over the past twenty years, the public Medicare plan has had a substantially slower rate of growth than private insurance. The CBO report on the House bill states that private insurers are better at controlling utilization than a public plan would be. But, to date private insurers have failed to prove their value at cost control and demonstrated they have strong incentives to delay and deny needed care rather than drive efficiencies in the system. [MORE . . ]

And remember: If the private plans continue to misbehave, drive up costs excessively, and otherwise engage in practices that are detrimental to our health security, Congress can later decide to strengthen the public plan and give it greater leverage to rein in costs and serve as a check on private insurers. Creating a public plan down the road is not realistic; that's one reason we seriously doubt any proposal to trigger the public plan would really work. Strengthening an existing public plan would be a far more likely prospect, especially if the public plan is proving its value in the market, as we believe it will.

Whatís more, as far as payment and delivery system innovations are concerned, the public plan is really the only tool available for testing and implementing reforms in the market for the non-elderly. Private plans are notorious for keeping their innovations private--when they have them--and have little financial incentive to improve health care if it will not increase their bottom line. Yes, we can continue to rely on the public Medicare plan to test innovations. But working families have somewhat different needs, and it seems appropriate to pursue delivery and payment reforms more broadly, through both Medicare and a public plan focused on those younger than 65.

In short, itís no time to be despondent about the fate of the public insurance option. For sure, pegging rates to Medicare and obligating Medicare providers to accept these rates would be far preferable, and a public plan with negotiated rates may do less to keep the insurers honest and drive down costs. But itís still immensely valuable to give Americans an out--another choice--to let the insurers feel the heat of not being the only game in town. The fierce and continuing opposition of the insurance industry suggests that they think that a public option will prove a serious counterweight in an increasingly consolidated private market. The overwrought pessimism of the pundit class should not aid them in their cause of protecting themselves from a public-spirited competitor.

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    The Fine (5.00 / 2) (#1)
    by SOS on Fri Nov 13, 2009 at 10:56:08 AM EST
    will be the least expensive Public Option.

    Wow, talk about spin. (5.00 / 2) (#4)
    by Pacific John on Fri Nov 13, 2009 at 11:28:58 AM EST
    Creating a public plan down the road is not realistic

    Um, we already have a public plan, it's called Medicare, and the last Democratic president proposed incrementally expanding it to include non-retirees.

    The whole passage about testing innovations is pure BS, and the autors have to know it. Innovation in the 50 state laboratories was the conservative excuse to kill UHC under Clinton. How many of those results showed up in the current bills? I recall the head of Hawaii's health department practically screaming that they already had run successful experiments, and everyone was ignoring them. (Hawaii has universal healthcare funded by a modest payroll tax. Workers have the choice of an HMO, or for a modest premium, a fee for service plan. Along with Medicaid, they cover essentially everyone, for something like 10% less per capita).

    That's not spin imo (5.00 / 1) (#8)
    by Big Tent Democrat on Fri Nov 13, 2009 at 11:51:59 AM EST
    You can hold to a view that this is not the most propitious time to create a public option, but do not pretend that your opinion is "not spin" while opposing opinions are spin.

    Parent
    The part about tests and innovation (none / 0) (#11)
    by Pacific John on Fri Nov 13, 2009 at 12:04:31 PM EST
    can only be seen as spin by any of us who have been around for previous reform efforts.

    BHO had zero interest in adopting the lessons learned from previous UHC trials, and his successors are are likely to have similar motivations.

    As lambert says, legitimate reform efforts should recognize major healthcare successes, in this country and elsewhere. Since this iteration fiercely ignores public successes, it makes zero sense to think the outcome this time is designed to highlight public success.

    Parent

    What previous reform efforts? (5.00 / 1) (#14)
    by Big Tent Democrat on Fri Nov 13, 2009 at 12:21:49 PM EST
    You are spinning your opinion as fact.

    State your views and we can respectfully disagree. When you reserve for your OPINION the font of TRUTH, then we have a problem.

    Parent

    I'm quite clear (none / 0) (#16)
    by Pacific John on Fri Nov 13, 2009 at 12:39:30 PM EST
    ...that reform needs to reflect what we can learn lessons like Hawaii's and those in most industrialized countries that allow them to cover everyone at a significantly lower cost than we do on the mainland.

    But you brush on something: what about the current reform package is based on experience, and what is based on blind faith that it will provide better outcomes at lower costs?

    It doesn't seem to me that if you turn around your fact/opinion standard that supporters of the current bills look good. What answer do they and you have to the Somerby table?

    Parent

    This is deflection (5.00 / 1) (#21)
    by Big Tent Democrat on Fri Nov 13, 2009 at 01:10:50 PM EST
    The public option is the result of experience - the experience that public insurance is more efficient than private insurance.

    Parent
    True enough (5.00 / 1) (#23)
    by Pacific John on Fri Nov 13, 2009 at 02:09:31 PM EST
    But we both know the current House version has been whittled down so much that there is serious doubt that it will produce results. It may only be an excuse to make things worse.

    And since the public option is barely a shadow of what voters want, why not look to private insurance models that work better than the current system? Why not have states administer them under a payroll tax, like Hawaii, or regulate them heavily like some European countries?

    That's why I call this entire effort spin. Nothing that you look at closely makes sense, not price controls, regulation, outcomes, private options or public options. The only thing that we know will work about this is higher sales for the health industry.

    Parent

    If we wanted testing... (none / 0) (#7)
    by lambert on Fri Nov 13, 2009 at 11:37:08 AM EST
    What's wrong with going by the experience in other countries:

    Per capita health care spending (2007):

    United States: $7290
    Switzerland: $4417
    France: $3601
    United Kingdom: $2992
    Average of OECD developed nations: $2964
    Italy: $2686
    Japan: $2581

    Why do we have to do this all over again in the states? I mean, except to bill for the professional services, of course. There's that.


    Parent

    That's the reason I oppose these bills (5.00 / 3) (#10)
    by Pacific John on Fri Nov 13, 2009 at 11:57:29 AM EST
    They don't pass the bs test. Anyone who runs a company (I do) and saw clear data like that, would fire anyone who tried to present incomprehensible mishmash instead.

    The starting point for reform should make the sort of common sense we've seen from the public who want the benefits of current private insurance, with the option of buying it from Medicare at a reduced price.

    The reason this has been such a struggle for the administration is its voters are sitting back saying, wtf?, along with everyone else who isn't operating purely on faith.

    Parent

    So, are you subscribing in total (5.00 / 1) (#12)
    by Anne on Fri Nov 13, 2009 at 12:06:26 PM EST
    to what Hacker and Archer are saying?  IS there anything about it that you question?

    Because I, as you might guess, question opinions based on a pre-House vote public option that might enroll only 2% of the under-65 population.  Do you wonder, as I do, how downward pressure on premiums can be brought to bear across the board by the existence of a very small and very weak pool?

    I mean, this statement:

    But it's still immensely valuable to give Americans an out--another choice--to let the insurers feel the heat of not being the only game in town

    just seems beyond silly to me, when we already know that the vast majority of people will not have that choice?  Are they really suggesting that private insurance is quaking with fear over "heat" from this little tiny group that might be the equivalent of that from a lone kitchen match?  Any pushback or grumbling from the private sector is not because they are running scared, but because they are not finished pressuring Congress to further weaken the final legislation.

    Does this:

    It should be emphasized that if the public plan has higher premiums primarily because it's attracting less healthy enrollees, then it is still reducing average premiums and hence federal subsidies for premiums. That's because average premiums would be even higher if the people enrolled in the public plan enrolled in private plans. That's what the CBO's more recent letter discussing "downward pressure" on private premiums implies.

    really make sense?  

    Finally, the date on the Hacker/Archer piece is two days prior to the House vote on their version, and we still do not have a bill in the Senate.  Will Hacker and Archer be singing the same song if what we end up with is something even more watered-down than the Senate Finance Committee bill?


    The question is the same one (5.00 / 1) (#13)
    by Big Tent Democrat on Fri Nov 13, 2009 at 12:20:43 PM EST
    you never answer - if you believe this is it - then oppose it.

    If you do not believe in the camel's nose under the tent, then oppose it.

    Neither Hacker nor I believe that.

    That is the question you avoid.

    Parent

    I think I've answered that question (5.00 / 6) (#17)
    by Anne on Fri Nov 13, 2009 at 12:39:33 PM EST
    more than once, and specifically, just the other day.

    Theory is all well and good, but before I can agree that it applies in this instance, I have to know that it actually is a camel's nose, that what is outside the tent is the rest of the camel and not some monster hybrid, and that the "camel" does not have some suspect friends it wants to bring into the tent.

    But, just so you will stop with your boilerplate, response-number-4, let me be clear:

    I do not believe this Rube Goldberg-esque creation is the camel's nose.  I do not believe this effort will advance and expand access to and affordability of health care.  I do not believe it will work to rein in the insurance companies.

    I recognize that the "camel's nose under the tent" is a bona fide theory, but I do not believe that theory can be applied to this train wreck of a reform effort.

    Parent

    You can read the bill (none / 0) (#20)
    by Big Tent Democrat on Fri Nov 13, 2009 at 01:09:40 PM EST
    What is it that you do not understand?

    Avoidance.

    Parent

    Hmmm...I do not understand why (5.00 / 5) (#24)
    by Anne on Fri Nov 13, 2009 at 02:31:49 PM EST
    the only comeback you ever seem to have to specific questions about what is being written about the legislation, what the legislation actually does and does not provide for, how it will work within the framework being proposed, is along the lines of the two comments you have made to me here.

    As for avoidance - are you kidding, or was that a note to yourself?  I wouldn't ask, except the only avoidance I'm seeing is yours.  

    I've hated how this entire process has been handled, from Obama's Health Care Summit, to the backdoor meetings and deals, to the lobbyists and industry honchos being allowed to set the agenda and steer the legislation, to the dealing-from-weakness approach of the Democrats, to Pelosi's caving to anti-choice House members doing the bidding of the Catholic Church, to the refusal of the Democratic leadership to bring single-payer advocates to the table, or to consider Medicare for All, to Obama's wishy-washy, say-one-thing-leak-another, total failure of leadership: it's been an insult to the American people, to their great need and right to basic health care that won't break them, and there is no way on God's green earth that this is a camel's nose under the tent.  It's a whole lot more like a t**d in the punchbowl.

    Cheers!

    Parent

    While I've supported the PO, (5.00 / 3) (#18)
    by ChiTownDenny on Fri Nov 13, 2009 at 01:03:34 PM EST
    incremental and otherwise, and pragmatism has led me to believe any PO would be incremental, I fail to see how the application of a PO in the House bill will reduce costs.  The math indicates approximately 6 million people will be eligible.  That number doesn't seem sufficient to influence market forces.  

    Yep (none / 0) (#2)
    by lambert on Fri Nov 13, 2009 at 11:13:03 AM EST
    Nice to see Hacker still out there. Even after he helped sell a plan that was going to have 130 million enrollees and ended up having less than 10 million at some undetermined point in the future.

    But still! I'm happy for those 10 million, and especially that they'll be there as guinea pigs for more "progressive" social experimentation!

    I think Hacker makes clear (5.00 / 1) (#3)
    by Big Tent Democrat on Fri Nov 13, 2009 at 11:15:28 AM EST
    that he sees this as a beginning point, not an end.

    It would be helpful, imo, if you addressed why you disagree with that assessment.

    It would also be helpful if you addressed the reality that single payer can not even garner 100 votes in the House or 5 votes in the Senate and what you do with that reality.  

    Parent

    The point was to change reality... (none / 0) (#5)
    by lambert on Fri Nov 13, 2009 at 11:35:04 AM EST
    ... not to accept it, especially as defined by Democratic insiders at some point in 2008.

    What we're seeing now is the sorry consequence of decisions made then. Can we just declare victory and get this over with?

    Parent

    this is part of chagning reality (5.00 / 1) (#9)
    by Big Tent Democrat on Fri Nov 13, 2009 at 11:52:45 AM EST
    The idea that single payer was possible this year was not "changing reality," it is delusion.

    Parent
    Which, of course, is not responsive (5.00 / 1) (#25)
    by lambert on Fri Nov 13, 2009 at 02:44:13 PM EST
    Since 2008 (that would be last year, not this year) was when the decisions that are playing out now were taken.

    Now, you can argue that this was delusional in 2008 (like abolition and women's suffrage were delusional, until they weren't). But we'll never know, because our genius negotiators decided to make what they hoped to be their end point for negotiations rather than the starting point. The latest piece of intellectual dishonesty --from 130-to-10 million Hacker is of a piece with the whole effort.

    Hilariously, Hacker's experiments can't include single payer, even as an object of study in a thumbsucker in TNR! Too bad, since it's the only policy on offer that can be shown to save money and lives. Then again, our brave progressives negotiators helped the Dem leadership take it off the table in 2008, and helped maintain the media and administration blackout in 2009. So, we'll never know.

    "Impossible"? Perhaps. Certainly the Dem leadership, the administration and progressives did everything in their power to make it so -- and, as Hacker's omission shows, are continuing and will continue to do so.

    Parent

    Keep the devil down in the hole (none / 0) (#6)
    by hookfan on Fri Nov 13, 2009 at 11:35:29 AM EST
    seems to be the theme of congress and Obama.
       Is 15% premium price increase per year excessive? Who decides? And if current practice (status quo ya know) is any guide it's a bargain. Nevertheless at 15% per year who'll be able to afford it in 5 years let alone ten? Especially poignant with the predicted delay in jobs recovery for what at least 5 years or more?
       Second, if a pretend public option is so limited in scope by numbers (it is) how will it have any power to "negotiate" (negotiate? hahahaha, yeah right) any real limitation on premium increase?
       Third, the only faint hope is for congress, in the future, to vote in regulatory reform or increase the power of the bargaining position for the pretend public option. Is that realistic considering: 1) the difficulties this congress, with strong democratic majorities in both branches,  have had in even getting anything even called (let alone functioning as) "public option" in the bill, 2) the insurance companies will be hugely financially strengthened to determine who succeeds as a candidate in getting elected, and effectively lobbying any senator or congressperson on the bill of their choice. They can fight as well to further weaken any pretend public option or attempted regulation and will be vastly strengthened to do so, 3)the public option, if it expands, may become a dumping ground for the high risk and the non-monied threatening its viability and negotiating power further. Any or all of the above would likely increase its potential for becoming the poster boy for the perceived failure of any real and viable public option proposals in the future. I wonder if that's not the real plan anyway.
      I don't see the viability of the rose colored scenario being painted for the future of the camel's nose unless there is real campaign financing reform. That's not likely to happen soon so. . .

    Unless they are just putting (none / 0) (#19)
    by Radix on Fri Nov 13, 2009 at 01:07:37 PM EST
    something in place now, essentially, to exist until the Health Care CEO's drive their industry over the cliff, with there rate increases. Eventually, these increases are going to shrink the participant pool to such an extent, that these businesses aren't going to be able to sustain themselves.

    Parent
    And then (5.00 / 4) (#22)
    by hookfan on Fri Nov 13, 2009 at 02:08:14 PM EST

      When things go blooey this travesty excuse for a public option is the set up for the future perception that any public option is part of the problem, rather than the solution.Time will tell. . .

    Parent
    spin (none / 0) (#15)
    by diogenes on Fri Nov 13, 2009 at 12:24:16 PM EST
    "...the public Medicare plan has had a substantially slower rate of growth than private insurance."

    That's because Medicare pays providers much less; basically private insurance has been subsidizing the low medicare rates.  As far as utilization goes, private insurere do MUCH more to manage care (Kaiser, even Blue Cross) than Medicare does; Medicare is just a check-writing machine.

    I believe you mean (5.00 / 1) (#26)
    by BDB on Fri Nov 13, 2009 at 04:44:57 PM EST
    deny care rather than manage it.

    Parent
    The answer is simple (none / 0) (#27)
    by pluege on Fri Nov 13, 2009 at 08:17:00 PM EST
    Why The Public Option Is The Critical Component Of HCR

    Because, and this is why its so vehemently opposed across the corporatist political spectrum, the public option is the road to single payer. Enact a public option and private insurance will be out of the health care business in 20 years. Don't enact it now and they another 50 years to rape, pillage and terrorize Americans with their health care avoidance/ profit max system.