Not surprisingly, Tom Daschle’s confirmation hearing today is expected to involve a lot of tough questions from Senate Republicans regarding the public health insurance plan that Obama and Daschle favor. In a nutshell, the public plan they’re proposing would work like Medicare, but would be available to anyone who wanted to buy into it. People who prefer to keep their current private health insurance could do so, while those who would rather have a governement run option could choose the public plan. For people who don’t have access to an employer-sponsored health insurance policy and don’t qualify for an individual health insurance policy, the public plan could be a great alternative. Of course it would depend on pricing, but the expectation is that the public plan would have lower premiums than currently available private health insurance policies. How much lower remains to be seen.
Senate Republicans and private health insurance carriers are worried that a public plan would have unfair advantages in terms of competition with private health insurance. They point to price controls that Medicare uses, and the significantly lower reimbursement rates that Medicare pays when compared with the amounts paid by private health insurance carriers for similar services.
But what’s actually stopping private health insurance carriers from setting the same reimbursement rates as Medicare? If they worked together and agreed to follow Medicare pricing across the board, they could get it done. Working individually won’t work, as hospitals and providers would be quick to drop lone health insurance carriers who decided to reduce reimbursement rates. But if the change was effective across all carriers, providers would have little choice but to go along.
Of course if we’re going to move towards a system where providers earn less money, I think we need to address the staggering cost of attending medical school and the debts that new docs carry when they enter the workforce. A federal subsidy program to help defray the cost of medical school (and nursing school!) would make it easier for medical providers to create a comfortable life on Medicare salaries.
Last summer the AMA released a health insurance report card that graded a number of private health insurance carriers – including several that we work with here in Colorado – and Medicare. Medicare scored high marks across the board. Hopefully private health insurance carriers took a long hard look at that report card and started making plans to implement systems similar to those that Medicare uses. They’ll need them if they’re going to be competing with a public health insurance program.
I like the idea of a public health insurance system operating side by side with our private system. I think that there are lots of people who would immediately opt for one or other system just on principal. But I think that there are a lot more people who would wait and see what happens. Will private health insurance figure out how to compete – even if the playing field isn’t as level as they might like? Will health care prices and health insurance premiums come down? Will the public system be able to cover all of the currently uninsured population? There’s a lot that remains to be seen about this, including whether it will happen at all. But I think it’s an idea that deserves more than a second glance, and has a chance of really bringing some change to the health care industry.
