Business Support For The Public Health Plan Option

competition2.jpgThe Institute for America’s Future has released another report about the role of a public health insurance plan in reducing health care costs and improving care quality. During the presidential election, all of the major Democratic candidates proposed some kind of public plan that would directly compete with private insurers within a new health insurance exchange.

Their theory was this: Insurer and hospital markets are increasingly dominated by large insurers and provider systems. These private insurers do not use their market power to “drive hard bargains with providers” and have no need to bargain with providers. A public plan would bring competition back to the health insurance business and force private insurers and hospitals to adopt the highest efficiency standards.

In other words, allowing patients the choice of a private plan or a public plan would re-invigorate the very same kind of free market principles of competition that conservatives traditionally champion. Private and public plans would have to deliver the highest quality at the lowest possible cost to attract patients, while the public plan will have the resources, market power, and incentive to “reshape the market practices to promote quality and cost effectiveness.”

This approach would not only bring us closer to universal coverage but it will also put us on the road towards a more efficient health care system (read: lower health care costs and premiums). But the idea isn’t very popular with the insurers. At last week’s Health Action Conference, Families USA President Ron Pollack suggested that health insurance companies are not willing to accept the pay cut that will come with the increased competition and that a public plan option (and how we pay for it) could become a sticking point in the health care debate.

In fact, some may establish a false dialectic that pits reformers/Democrats against the business community and insurers. But insurers or trade associations are not the voice of the business community (there is no monolithic business position). Many smaller firms, who are buckling under high insurance costs, believe that a public health plan would lower their health care costs . It will be important for progressives to highlight their voices in the larger health debate.