Editor’s note: Today, we are live-twittering the Senate Finance Committee’s roundtable on how to expand access to health insurance coverage.
The New York Times’ Robert Pear reports that Sen. Chuck Schumer (D-NY), who is spearheading the effort to include a public health care plan in the final health reform legislation, “has proposed that any new government-run insurance program comply with all the rules and standards that apply to private insurance”:
– The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.
– The public plan should pay doctors and hospitals more than what Medicare pays.
– The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.
– The officials who manage a public plan should be different from those who regulate the insurance market.
– The public plan should be required to establish a reserve fund, just as private insurers must maintain reserves for the payment of anticipated claims.
– The public plan should be required to provide the same minimum benefits as private insurers.
All of these seem fair enough. Leveling the playing field to allow private insurers to compete head-to-head with a public model (whether it be a Medicare-like arrangement or something that more closely resembles self-insured states) is an important pre-requisite for putting the theory of lowering insurance costs through competition into practice. But the crux of the issue is reimbursement. What Schumer doesn’t really address here is how the public plan will reimburse providers. Yes, it may pay more than Medicare does (as it should), but how will it set its rates? If the plan builds on the Medicare infrastructure, will it be able to use its negotiating clout to extract bargains or will it be required to pay something close to what private insurers (which rarely negotiate on behalf of their beneficiaries) currently compensate?
What’s troubling here however is Pear’s assertion that “one way they propose to do that [level the playing field] is by requiring the public plan to resemble private insurance as much as possible.” Remember that leveling the playing field is one thing, striping the public plan of its inherent advantages (its ability to use its size to negotiate better prices and its lower administrative costs) is another. After all, if the public option is just a clone of a private plan, then it’s pretty useless.