During yesterday’s confirmation hearing before the Senate Finance Committee, Gov. Kathleen Sebelius (D-KS) suggested that a new public health plan could be modeled on the experiences of state governments that currently offer their employees a choice between traditional private health insurance and a self-insured plan administered by the state:
The President clearly supported a public plan option as he outlined his thoughts about health reform strategy and I think is open to a variety of opportunities to discuss it. I do think it’s important to take a look at what’s going on around the country because clearly there are very successful side-by-side competitive options, as I say, most state employee health plans right now have a public option side-by-side with private insurers. It has not destroyed the market, it has not tilted the playing field, but that’s all about the way the rules are set.
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While most critics have characterized the public option as a spin-off of Medicare — it would use Medicare prices and bargaining power — another option is to model the new plan on publicly-owned health insurance plans for state employees. In these self-funded state employee plans, available in more than 30 states, the government operates like an insurance company and competes with private insurance companies.
In their role as self-insured employers, states are responsible for containing costs, promoting quality, and assuring that employees get the benefits and the care they need. Although most states rely, as Medicare does, on third party administrators to pay claims, states are responsible for containing costs, promoting quality, and assuring that employees get the benefits and the care they need.
As the National Association of State Personnel Executives point out, “fully insured products also eliminate the need for a great deal of the customer support, transactional and other administrative functions that the state must provide when they literally become the insurance company under the self-insured model.” Self-funding provides states with greater flexibility, uniformity, and the “ability develop innovative cost containment measures such as aggressive disease management programs and centers of excellence.”
Sen. Chuck Schumer (D-NY), who is working on the public plan option for the Finance Committee, may be considering this kind of compromise. “My goal is to find a plan that would be acceptable to large numbers of senators,” Schumer said in an interview with the Associated Press. “Right now, the private insurers are totally opposed, but maybe there’s room.”
Private insurers are “taking a look at the different state employee plans to get a better understanding of how they operate” and some Republicans may also be open to the option. Responding to Sebelius’ description of an alternative public option design, Sen. Olympia Snowe (R-ME) said, “I appreciate that, and I hope we can continue to have that discussion and conversation and perhaps not solidify in our positions as we go forward on this crucial debate.”
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