There has been a lot of discussion recently about whether health care reform needs to include the option of a “public plan”. Our experience in Massachusetts has convinced me that health reform with virtually universal coverage is very achievable without the total disruption to the marketplace and our employer based system that would occur with the creation of a public plan.
The proponents for a public plan have argued that such a plan is necessary to promote competition and to keep the private plans “honest”. They seem to ignore the fact that we already have 1500 private plans being offered in the country – I fail to see how one additional plan will change the competitive landscape. Furthermore, such a plan could threaten the viability of employer sponsored coverage which is currently enjoyed by over 170 million Americans.
In Massachusetts, we chose correctly to build upon our employer sponsored system by simply filling in the gaps, most importantly by providing subsidies to low-income residents to purchase private plans offered through the Connector. This has worked extremely well. We also addressed coverage needs for another large segment of the uninsured, i.e. young adults, by offering them more affordable plans through the Connector or allowing them to stay on their parents’ plans for an additional two years after losing their dependent status.
A public plan could destabilize the insurance market as the government will be both the payer and the regulator. We all know about the massive cost shifting that currently occurs with our largest government payers, Medicare and Medicaid. These two programs which account for 50% of health care spending, simply do not reimburse providers for their full costs, resulting in much higher costs to all of the private payers. Another public payer will simply exacerbate that situation. Health care premiums for both employers and individuals would be more affordable if the government payers would simply pay their fair share.
Government health care programs have demonstrated no ability to be innovative in addressing either quality or cost issues so it is hard to imagine why we think a new public plan would be any different. I am hopeful that the discussion in Washington will shift away from this needless distraction and focus on how our nation can meaningfully address the access issues for millions of our citizens as well as creative ways to make health care more affordable.
Richard C. Lord
President & CEO, Associated Industries of Massachusetts
The country might have a lot of health insurers and lots of products but that doesn’t mean the health insurance market is competitive. For an interesting report on how little competition there actually is in the very consolidated health insurance market, see: http://healthcareforamericanow.org/site/content/new_report_private_insurers_consolidate_and_control_prices. A couple of findings:
-94 percent of insurance markets in the United States are now highly concentrated.
-Insurers are thriving in the anti-competitive marketplace. For example, profits at 10 of the country’s largest publicly traded health insurance companies rose 428 percent from 2000 to 2007.
Some healthy competition from a public plan won’t entirely fix this dysfunctional system, but it sure won’t make it any worse!
Sue
Hi Rick,
I agree with you 100% on the need to avoid a big public plan down in DC. Such moves by big government means others will have to pay through unfair cost shifting.
Case in point: our current situation in MA! The Connector is doing a great job keeping the taxpayer subsidized plans at 0-3% increases. The GIC, 3-5% increases. Yet, due to unfairness in the existing small group law, small employers continue to see 14, 16, 25% increases. That is caused by the fact that small employers and small non-profits are discriminated against under the law by the current prohibition against group buying and negotiation. Furthermore they have no flexibility to seek rate relief in exchange for implementing wellness programs which result in reduced claims due to chronic disease reduction. Rather, one could conclude that the savings created by dealing with smoking, obesity, etc., stay with the insurer to be used as additional margin to help some other big purchaser out. Thus small employers end up subsidizing the big buying groups due to an unfair state law.
The bottom line Rick is yes, we need to oppose this public plan on the federal level and work hand in hand with the insurers on that effort. BUT, it is high time for the insurers to hear loud and clear from the entire employer community that they can’t have it both ways–no federal plan competition, AND no competition and rights for small employers on the state level. Talk about wanting your cake and eating it too. Our small members are paying over $23k for a family plan here in MA while the comparable GIC plan is about $10k LESS!! What is wrong with this picture?!? What is wrong is precisely what the insurers are arguing against on the federal level, but are actively lobbying to keep on the state level. In their world free competition is only for their biggest customers–big government and big business. But only default plans with no competition, no negotiation, no group buying rights, and no savings for improving your experience and the health of your employees is right for small businesses. It is a position that seems to say that small businesses are not big enough, not smart enough, not equal enough under the law to have the rights of their big competition.
We have delivered the message down in DC to our industry organizations that yes, we need to oppose the public plan, but the insurers better start working with us on the state level and stop the opposition to premium fairness for the small employer.
Jon Hurst
Retailers Association of MA
We do not need a public plan — We need a SINGLE PAYER, Medicare For All, Everybody In–Nobody Out, not for profit plan.
But don’t take my word for it, I am a nobody to the Inside The Beltway types. Instead, listen to Arnold Relman, M.D. You’ve heard of him.
“The logical alternative would be a universal insurance plan administered by the government and funded by taxes—some sort of ’single-payer’ arrangement, which would eliminate paying for the profits and administrative expenses of private insurance middlemen….
“That solution, in fact, is one that I proposed two years ago in A Second Opinion. It would include a single public payer that guaranteed comprehensive health care for all, funded by a progressive tax whose proceeds would be dedicated to medical care. This insurance and funding plan would be combined with a delivery system, overseen by a public agency but managed entirely on a not-for-profit basis by privately organized doctors and hospitals. The delivery of care and the use of health resources would be the responsibility of organized multispecialty groups of salaried physicians and other health professionals, which would include adequate numbers of primary care doctors….
“[T]otal costs would be limited by the amount of money collected through a health tax, but I favor a progressive, income-related tax rather than a VAT. Decisions on the use of available resources would be the responsibility of physicians, who would be helped, but not controlled, by clinical guidelines and assessments of technology. Hospitals and other facilities would be not-for-profit and would be paid through the central health agency, but the choice of these facilities would be a private decision made by doctors and their patients.
“Congressman John Conyers of Michigan has introduced a single-payer proposal (HR 676) that would pro- vide universal health care through a Medicare-like public insurance system with private, nonprofit providers.”
–The Health Reform We Need And Are Not Getting</a.
by Arnold Relman, M.D.
New York Review Of Books, 02 July 2009