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Wednesday, June 24, 2009

"Critics of a Public Option for Health Care Are Wrong"

Robert Reich addresses objections to including a public plan as part of the health care reform package:

Why the Critics of a Public Option for Health Care Are Wrong, by Robert Reich [longer version]: ...Critics say the public option is really a Trojan horse for a government takeover of all of health insurance. But nothing could be further from the truth. It's an option. No one has to choose it. ...

Private insurers say a public option would have an unfair advantage..., it will have large economies of scale that will enable it to negotiate more favorable terms with pharmaceutical companies and other providers. But why, exactly, is this unfair? ... If the public plan negotiates better terms -- thereby demonstrating that ... providers can meet them -- private plans could seek similar deals.

But, say the critics, the public plan starts off with an unfair advantage because it's likely to have lower administrative costs. That may be true -- Medicare's administrative costs per enrollee are a small fraction of typical private insurance costs -- but here again, why exactly is this unfair? Isn't one of the goals ... to lower administrative costs? If the public option pushes private plans to trim their bureaucracies and become more efficient, that's fine. ...

Critics charge that the public plan will be subsidized by the government. Here they have their facts wrong. Under every plan that's being discussed on Capitol Hill, subsidies go to individuals and families who need them in order to afford health care, not to a public plan. Individuals and families use the subsidies to shop for the best care they can find. They're free to choose the public plan, but that's only one option. ... Legislation should also make crystal clear that the public plan ... may not dip into general revenues to cover its costs. It must pay for itself. And any government entity that oversees ... health-insurance ... must not favor the public plan.

Finally, critics say that because of its breadth and national reach, the public plan will be able to collect and analyze patient information on a large scale to discover the best ways to improve care. The public plan might even allow clinicians who form accountable-care organizations to keep a portion of the savings they generate. Those opposed to a public option ask how private plans can ever compete with all this. The answer is they can and should. It's the only way we have a prayer of taming health-care costs. But here's some good news for the private plans. The information gleaned by the public plan about best practices will be made available to the private plans...

As a practical matter, the choice people make between private plans and a public one is likely to function as a check on both. Such competition will encourage private plans to do better... At the same time, it will encourage the public plan to be as flexible as possible. ... [T]he president ... should come out swinging for the public option.

    Posted by on Wednesday, June 24, 2009 at 12:30 AM in Economics, Health Care | Permalink  TrackBack (0)  Comments (27)


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