Competitive Health Care: A Public Health Insurance Plan that Delivers Market Discipline

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This is why it’s time to introduce what we at the Center for American Progress Action Fund call Public Plan Choice, which combines a public health insurance plan and a health insurance exchange to deliver real competition and real choice to all Americans. Public Plan Choice can bring doctors and patients, employees and employers, the insured and the uninsured, and hospitals and taxpayers together in support of a reformed, competitive health insurance marketplace through the creation of a health insurance exchange that includes a public health insurance plan. Public Plan Choice would create a functional health care marketplace to replace the current broken system by:

Increasing meaningful choice. In the face of tremendous consolidation in the health insurance market, employers and individuals have a shrinking set of health insurance options. Private insurers have used this market power to boost their profits. By including a public health insurance plan as another insurance option and creating a health insurance exchange that delivers transparency and accountability to the market, we can assure both viable competitors and real competition.

Promoting effective competition. Public Plan Choice will establish a new health care framework that makes sure insurers provide the best value at the best price rather than one focused on avoiding risk. Public Plan Choice can play a supportive role in effective risk management both as a “safety valve” to assure everyone gets access to needed care and as a champion of a transparent health insurance exchange. To ensure effective competition, all private and public health insurance plans would compete on a level financial and regulatory field.

Creating a publicly accountable innovation leader. Public Plan Choice will create incentives for effective performance just as today’s Medicare program promotes quality care alongside cost containment. Witness steps such as Medicare’s refusal to pay medical care providers for “never events” where a patient suffers a knowable and catastrophic mistake such as having the wrong limb removed. This is something other major insurers are now adopting. Public Plan Choice has the potential to do even more to promote effective use of purchasing power to drive improvements in the health care system through improved accountability and transparency.