public plan

Is Compromised Health Care Reform Still Worth It?

Isaiah J. Poole — Tue, 15 Dec 2009 15:58:14 -0500

Our bloggers Terrance Heath and Bill Scher dive into the question that is now dominating progressive political debate: Has the health care reform bill been so seriously compromised—first with the dilution and ultimate elimination of the public option and now with the capitulation to the demands of two senators to not even allow persons 55 and over to buy in to the Medicare program—that it's not worth passing? Watch this video, and then you decide.

Bill says he understands the frustration of progressives who defined meaningful health care reform as a robust public option, but ultimately progressives have to ask "what constitutes sitting on your hands and what constitutes moving the ball forward." Terrance, though says that by not moving the ball forward far enough, we're asking millions of people who do not have access to affordable, quality health care "to live with that injustice indefinitely."

Leading progressives have been on all sides of this issue in the past 24 hours. What do you think? You're invited to weigh in with your own view by clicking the "discuss" link at the end of the post.

The House Public Plan: Yes, It's Worth It

Jacob S. Hacker — Fri, 06 Nov 2009 12:54:28 -0500

with Diane Archer

How short memories are in Washington. A few weeks ago, when it looked possible that Nancy Pelosi could marshal enough Democratic support to create a “robust” public insurance option with rates tied to Medicare’s, everyone was talking about the big savings and reduced premiums that a series of estimates by the CBO showed this option could create. Then, the concern was that the public insurance plan would put private insurers out of business by using the government’s bargaining power to drive too hard a bargain with providers, creating an “un-level” playing field.

Now, however, the punditocracy is abuzz about the latest CBO estimates that show that the public plan eventually embraced by Pelosi--one that would negotiate rates with providers, rather than base them on Medicare’s--might actually charge higher premiums than the average private plan. No matter that the CBO estimates clearly state that the higher projected premiums reflect its expectation that the public plan will disproportionately enroll less healthy Americans--which might be seen as a virtue, since these are folks private insurance tends to serve most poorly. And no matter that a subsequent CBO letter to the House stated that even a public plan with negotiated rates would still place “downward pressure on the premiums of private plans.” Suddenly, in the commentariat, the public plan isn’t a fearsome predator. It’s a complacent kitten. Initially not worth having because it would be too strong, it’s now, according to critics, not worth having because it would be too weak.

In truth, both the initial fears and current dismissals are overblown. The CBO’s declining estimates of savings certainly make a strong case for having the public plan use modified Medicare rates, as we have long argued. It’s a shame the House will not be considering a bill that shows how substantially a public plan can contribute to freeing up federal dollars to help Americans afford coverage. But we should keep in mind that the prime argument for the public plan has never been about a particular payment formula. It has been that a public insurance plan is vital as an institutional check on private plans, its role evolving to reflect the emerging weaknesses (or strengths) of regulated private competition. Put simply, health reform is much more likely to succeed with a public health insurance option, even one with negotiated rates, than if private insurers are left to run the show.

Let us start with the obvious: No one knows for sure the exact role that the public option will play. CBO may be correct that the public plan will attract a less healthy pool of enrollees, and that risk-adjustment (paying plans with higher-cost patients more) will not fully compensate for this. And it is surely correct that the public plan will have lower administrative costs than private plans. (It should be emphasized that if the public plan has higher premiums primarily because it’s attracting less healthy enrollees, then it is still reducing average premiums and hence federal subsidies for premiums. That’s because average premiums would be even higher if the people enrolled in the public plan enrolled in private plans. That’s what the CBO’s more recent letter discussing “downward pressure” on private premiums implies.) But while the CBO estimates are rightly the authoritative source for Congress, they are by no means infallible. CBO has made clear that an unusually high level of uncertainty attaches to its analysis of the public plan.

Take the CBO’s projections that the public plan would pay the same rates as the private sector. Nothing in the bill requires this. The Secretary of Health and Human Services, empowered to negotiate rates for the public plan, is simply barred from paying more than private plans do. The Secretary may end up being able to negotiate lower rates than the CBO projects. (When this issue was being debated in the House Energy and Commerce Committee, Secretary Kathleen Sebelius actually suggested that she could get better rates than Medicare, which raised more than a few eyebrows.) If the public plan is able to obtain more favorable rates, it will not only lower its premiums and increase its membership. It will also, through competition, bring down private plan rates. Private insurers overpay preferred providers at least in part because it’s a way for the insurers to keep competitors out of the market. But if a public plan is now in the mix, the game changes, and insurers may finally feel pressure to drive greater efficiencies.

The same uncertainties surround the CBO’s prediction that the public plan will attract just one in five Americans within the health insurance exchange because of its higher projected premiums (down from earlier estimates of one in three). After all, the price of coverage is only one reason why people choose a health plan. The vast majority of older and disabled Americans enroll in the public Medicare plan--even though by choosing (excessively subsidized) private Medicare private plans, many can get broader benefits for less than they pay for Medicare plus supplemental insurance. By the same token, nonelderly Americans--even healthy non-elderly Americans--might be willing to pay a little more for a public plan if it offers the same transparency and accountability the public Medicare plan offers. Healthy people might choose the public plan because they will have the security of knowing that if they get sick or injured and need costly care, their plan will not be conjuring up ways to deny them needed coverage. (To be sure, if the private plans were required to be transparent about the services they covered and the rates they paid, it might be a different story. But the current congressional bills do little to require they disclose this data to enrollees.) And, of course, the more healthy people join the public plan, the more bargaining power the public plan will have and the more public plan rates will come down.

The public plan is also critical to reform as a cost and quality benchmark, one that is particularly crucial if private premiums accelerate upwards. The insurance industry has threatened that premiums will skyrocket if an individual mandate is not tough enough. It may be an idle threat, but if a final reform bill ends up looking more like the Senate Finance bill than the House bill, it might not be. In most local markets, competition is likely to be anemic, and regulation of insurers inadequate. There will be little to prevent insurers from raising rates as they have threatened.

Having a public plan in place should also help keep down the rate of growth of health insurance premiums over time. Over the past twenty years, the public Medicare plan has had a substantially slower rate of growth than private insurance. The CBO report on the House bill states that private insurers are better at controlling utilization than a public plan would be. But, to date private insurers have failed to prove their value at cost control and demonstrated they have strong incentives to delay and deny needed care rather than drive efficiencies in the system.

And remember: If the private plans continue to misbehave, drive up costs excessively, and otherwise engage in practices that are detrimental to our health security, Congress can later decide to strengthen the public plan and give it greater leverage to rein in costs and serve as a check on private insurers. Creating a public plan down the road is not realistic; that's one reason we seriously doubt any proposal to trigger the public plan would really work. Strengthening an existing public plan would be a far more likely prospect, especially if the public plan is proving its value in the market, as we believe it will.

What’s more, as far as payment and delivery system innovations are concerned, the public plan is really the only tool available for testing and implementing reforms in the market for the non-elderly. Private plans are notorious for keeping their innovations private--when they have them--and have little financial incentive to improve health care if it will not increase their bottom line. Yes, we can continue to rely on the public Medicare plan to test innovations. But working families have somewhat different needs, and it seems appropriate to pursue delivery and payment reforms more broadly, through both Medicare and a public plan focused on those younger than 65.

In short, it’s no time to be despondent about the fate of the public insurance option. For sure, pegging rates to Medicare and obligating Medicare providers to accept these rates would be far preferable, and a public plan with negotiated rates may do less to keep the insurers honest and drive down costs. But it’s still immensely valuable to give Americans an out--another choice--to let the insurers feel the heat of not being the only game in town. The fierce and continuing opposition of the insurance industry suggests that they think that a public option will prove a serious counterweight in an increasingly consolidated private market. The overwrought pessimism of the pundit class should not aid them in their cause of protecting themselves from a public-spirited competitor.

This article originally appeared in The New Republic.

Trigger Troubles—And Why the Senate Can’t Fix Them

Jacob S. Hacker — Thu, 22 Oct 2009 14:03:25 -0400

Jacob S. Hacker, Ph.D.
Stanley B. Resor Professor of Political Science, Yale University

A persistent bad idea in the debate over the public health insurance option is the so-called trigger. In theory, a trigger would make a public health insurance plan available to Americans receiving coverage through a health insurance exchange if private health plans did not sufficiently hold down costs. In practice, however, a trigger inserted into either of the two Senate bills now being merged (the Senate Finance Committee bill and the Senate HELP bill) would not be able to work.

The motive of the trigger is political—to find a compromise in the Senate that will attract the support of the small number of conservative Democrats who have expressed reservations about the public health insurance option, as well as Republican Olympia Snowe, who has proposed a trigger. This is obviously a crucial goal. But to be a compromise between such skeptics and the majority of Senators who support a public plan, a trigger must have some prospect of working.

A workable trigger would, at a minimum, need to achieve three goals: (1) establish a reasonable and measurable standard for private plan performance that sets out clear affordability and cost-containment goals for a specifically defined package of benefits, (2) assess this standard in a timely fashion with information available to policymakers after reform legislation passes, and (3) if this standard were met, quickly create a public health insurance plan that would effectively remedy the situation.

The modifier “quickly” in the third goal is crucial: Runaway health costs are a grave and growing threat to federal and state budgets and to the health security of workers, their families, and their employers. Waiting longer than absolutely necessary for affordable coverage is certain to cause great harm. Indeed, it might actually compound the current crisis. Without an imminent threat of public plan competition, private insurers are likely to raise premiums in anticipation of the implementation of reform—as suggested by AHIP’s recent prediction of big premium increases if reform passes. Delaying a public plan may also jeopardize the cause of reform itself, because requiring Americans to buy unaffordable coverage has the potential to provoke a political backlash. (Polls show that Americans are more supportive of a mandate when they know they will have the choice of a public plan.)

In short, we cannot wait for a public plan—and one of the biggest problems with a trigger is that it virtually guarantees we will have to.

The problems, however, do not end there. Consider just a few of the other serious difficulties:

None of the trigger proposals that have been floated contains criteria for triggering the creation of a public plan that concern both affordability of coverage and the growth of premiums over time. It is simply not enough for coverage to be defined as “affordable” for a given share of the population. To judge private insurance successful in restraining costs, premium inflation would also need to be restrained—but the triggers on the table do nothing on this score.
The proposals on the table also assess affordability based on the price people pay after receiving assistance from the federal government. This means that efforts to help people afford coverage, perversely, reduce the chance of a public plan that will rein in costs for individuals and taxpayers.
The triggers under discussion assess whether affordability standards are met at an aggregate level, such as within states. Yet local markets vary greatly even within states. If some markets have very high premiums or runaway costs, a trigger might not be pulled if other markets in the state have lower premiums or experience more modest growth. Residents of a high-cost, low-competition area would, in effect, be held hostage by an overly aggregated measure.
The triggers being discussed all focus on the premiums people pay, rather than their total out-of-pocket costs. As problematic, they are vague with regard to what is affordable—that is, what package of benefits is required. Within the exchange, the Senate bills create new rules for coverage that are relatively strict, though still leave too much room for tailoring benefits to shift costs to high-risk patients. But outside the exchange, in the employment-based market from which most Americans will continue to receive coverage, the bills are much more lax. The Finance Committee bill, for example, sets a standard for minimum coverage that is substantially less generous than the typical employment-based plan today. There is every reason to think plans will simply cover less or shift more costs onto patients to meet the affordability standard, since, again, the standard concerns only the individual premium, not total costs.
None of the trigger ideas under discussion envision the creation of a national plan built on Medicare’s infrastructure, the only public plan option that has been shown by the Congressional Budget Office to produce substantial savings.

All this is not surprising in light of the history of trigger proposals in health care and other policy areas: As is well recognized, triggers are generally designed to create political cover, not effective policy.

Less well understood is that some of the key difficulties with triggers are intrinsic to central characteristics of the Senate health bills. In particular, the Senate bills, unlike their House counterparts, leave an enormous amount of responsibility for the regulation of private insurance to the states—which for the most part have not had the wherewithal or will to take on large private insurers. The Senate bills also have much weaker regulations of private insurance plans outside of the exchange—the plans on which most Americans will rely after reform. At the same time, the Senate bills lack strong requirements on private insurers to provide data that could be used to assess whether a trigger should be pulled. At the same time, the Senate bills lack strong requirements on private insurers to provide data that could be used to assess whether a trigger should be pulled. Ironically, these characteristics make a public plan without a trigger especially vital in the Senate, where, of course, the public plan has also been more controversial.

Added to the Senate bills, a trigger would represent a backdoor way of killing the public health insurance option that a majority of Americans (and U.S. Senators) support. It is well past time to trigger real competition for private plans that have failed to ensure affordability or cost restraint for decades.

Trigger Troubles—And Why the Senate Can’t Fix Them

Jacob S. Hacker — Thu, 22 Oct 2009 13:54:16 -0400

As closed-door discussions continue in the Senate, the resilient bad idea of triggering the public plan is once again on the table. Advocates of the trigger cast it as a compromise that will attract the support of the small number of conservative Democrats who have expressed reservations about the public option, as well as Republican Olympia Snowe, who has proposed a trigger.

But to be a compromise between public-plan skeptics and the majority of senators who support a public plan because it is central to ensuring affordable coverage while limiting the budgetary costs of reform, a trigger must have some prospect of working—and a trigger inserted into the two Senate bills now being merged would not.

A trigger would mean significantly less cost savings than a public health insurance option, and less affordable health care.

Private insurers are likely to raise premiums in anticipation of the implementation of reform without an imminent threat of public-plan competition.

Delaying a public plan may also jeopardize the cause of reform itself, because requiring Americans to buy unaffordable coverage has the potential to provoke a political backlash.

Trigger proposals demonstrate the futility of designing a workable trigger

Criteria for triggering the creation of a public plan must concern both affordability of coverage and the growth of premiums over time—yet the triggers on the table concern only the former.
They are all focused on the individual premiums people pay, rather than their total out-of-pocket costs. As problematic, they are vague with regard to what is affordable. Private plans could cover less or shift more costs onto patients to meet the affordability standard.
They assess affordability based on the price people pay after receiving assistance from the federal government. This means that efforts to help people afford coverage reduce the chance of a public plan that will rein in costs for individuals and taxpayers.
They assess whether affordability standards are met at an aggregate level, such as within states. Yet local markets vary greatly. If some markets have very high cost-growth, a trigger might not be pulled if other markets have lower cost-growth. Residents of a high-cost, low-competition area would, in effect, be held hostage by an overly aggregated measure.
They envision a weak public plan that cannot drive competition or rein in costs.

Key characteristics of the Senate health bills keep a trigger from working and make a public plan without a trigger especially vital in the Senate.

They leave an enormous responsibility for the regulation of private insurance to the states—which for the most part have not had the wherewithal or will to take on large private insurers.
They have much weaker regulations of private insurance plans outside of the exchange—the plans on which most Americans will rely after reform.
They lack strong requirements on private insurers to provide data that could be used to assess whether a trigger should be pulled.

Added to the Senate bills, a trigger would represent a backdoor way of killing the public health insurance option that a majority of Americans (and U.S. senators) support. It is past time to trigger real competition for private plans that have failed to ensure affordability or cost restraint for decades.

A longer version of this post appears today on The Treatment at The New Republic. There are also more details in this issue brief.

The Mugging of the Common Good

Robert Borosage — Tue, 15 Sep 2009 12:03:58 -0400

Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
....The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand

-- William Butler Yeats

President Obama traveled to Wall Street on the anniversary of the collapse of Lehman Brothers that triggered the worst financial debacle since the Great Depression. His purpose was to challenge Wall Street's barons, telling them:

"We will not go back to the days of reckless behavior and unchecked excess..where too many were motivated only by the appetite for quick kills and bloated bonuses"

Those days are over, the president said. It's time for comprehensive legislation. Taxpayers won't cover your bets or your bonuses. And we know once more the threat that financial holdings can pose to the nation.

The president invoked country and the common good. "Instead of learning the lessons...of the crisis, [some in the financial industry] are choosing to ignore them. They do so not just at their own peril, but our nation's." Obama called on Wall Street to act on its own, to overhaul pay systems, to level with consumers, to join with him in defining reform, but his tone was almost wistful. As he knows all too well, for much of Wall Street, patriotism is for suckers. And in Washington, private interests are rolling over the common good.

In the wake of the worst economic downturn since the 1930s, the president has called for fundamental reforms vital to the country's future. Put aside whether he's been too bold or too timid, whether he has pushed hard enough or too hard; there isn't any question he is calling the nation to its senses.

Our health care system is broken and unsustainable. Comprehensive reform is unavoidable. We can't continue to rely on fossil fuels; sustainable energy is a security imperative, not a choice. We need to shackle Wall Street, to shrink the size and excess profits of finance, and force it away from its addiction to gambling and back to the essential business of investing in the real economy. We have to reduce the crony capitalist subsidies that get squandered on agribusiness and Cold War weapons systems and top-end tax cuts, and use that money to invest in education, in a modern infrastructure, in research and development vital to a vibrant, high-road economy.

This really shouldn't be controversial. Yes, disagreements about how to get this done are to be expected, but the status quo is simply indefensible. Despite all the fantasies of the rabid right, Obama is moderate by temperament, creative at compromise. He is, as one of his White House staff members described him, a "raging minimalist." He really does believe you put everyone around a table, have a "civil conversation," find areas of agreement and move forward. He does believe that everyone—from billionaire hedge-fund operators to insurance company CEOS to conservative legislators—will in a crisis put the country first.

But he and his reform program are getting mugged. He's taken on the most powerful private interests in America—Big Oil, Wall Street, the insurance and drug lobbies—and they are winning. Republicans, despite the shattering of their conservative shibboleths, have chosen, with lockstep unity, obstruction over compromise. And too many Democrats have shown themselves more beholden to the private interests that pay for their campaigns than the public interest the president of their own party invokes.

We are witnessing a harrowing test of our democracy. America is a big, bustling and entrepreneurial country. We pursue our own passions and pursuits, are jealous of our freedoms, and begrudge governmental intrusions. But in a crisis—faced with depression or war, our history tells us many become one. We join together for the common good.

Well, it is hard to imagine a greater crisis than the one this country has faced over the last years. A middle class that has suffered a lost decade. Two wars. The Great Recession. Gilded Age inequality. Catastrophic climate change accelerating faster than most predictions.

Yet, we haven't come together. Wall Street lobbies against reform. Derivative traders will ante up hundreds of millions to block regulation of credit default swaps. Goldman Sachs is back to computerized gambling and billions in bonuses. The insurance companies are spending over a million-and-a-half dollars a day against comprehensive health-care reform.

The president's preemptive compromises only feed their appetites. He offers polluters a good portion of the revenue generated by "cap and trade." They lobby to weaken the cap.

He bails out banks rather than taking them over and reorganizing them. They lobby against his financial reforms. He doesn't try to push for Medicare for All, accepting the role of employment-based private insurance, and he's accused of a government takeover of health care.

The teabaggers were in Washington this past weekend. Despite their racial furies and right-wing fantasies, they shouldn't be dismissed. Many are working people, losing ground in an economy that isn't working for them. They are angry at a government that seems to take their taxes to bail out billionaire bankers, while they are left to swim or sink. They have every good reason to believe Washington caters to the wealthy and the connected, and not to them. And it is all too easy to deflect that anger to "them" —illegal immigrants, poor minorities, foreign aid recipients.

This is the test for Democrats. With the White House and majorities in both houses of Congress, Democrats have to produce. If they are too cautious or too compromised, they will feed what could be an ugly populist backlash.

Take health care reform. Sen. Max Baucus has produced a draft for the Finance Committee, making concessions as far anyone can see not for Republican votes, but for insurance lobby approval. He's produced that lobby's dream bill, mandating coverage for everyone without subsidies to make it affordable. His bill would drive people to take the high-deductible, low-coverage plans that are the industry's cash cows. It is hard to imagine a greater disservice to the country or to the party. Take young Americans who vote Democratic in large numbers, force them to buy health insurance that they don't want and can't afford, make them pay for policies that don't cover their health-care costs—and reap the whirlwind that you deserve.

These next months are the reckoning. The president and the Congress will step up to the reforms the country needs—or they will fail the nation in a time of peril. For citizens, now is the time to get engaged. The only way legislators in both parties will rise above partisan politics and private interests is if their constituents allow them no choice.

Middle-income Americans lost income over the last decade, for the first time since we began keeping records. Financial speculation drove the economy off the cliff. Catastrophic climate change is already melting the ice caps. We cannot afford another lost decade. If reason cannot prevail, angry people will increasingly look for a strong man to get something done. And that could make the teabaggers look like a tea party.

Co-Op Proposal An Effort To Kill The Public Plan

Jacob S. Hacker — Thu, 06 Aug 2009 12:35:18 -0400

The Senate Finance Committee today has unveiled a health care reform plan that does not include a public health insurance option. It instead proposes the creation of health co-operatives. At a media teleconference, I explain why this will not work and should be seen for what it is: an effort to kill what would be an effective competitor to the private insurance market.

A public health insurance option would provide a cost and quality benchmark for private insurers, a backup for people who could not get access to private insurers and a cost-control backstop that would drive innovation and efficiencies that private insuers could use. A co-operative would not have the reach necessary to fulfill these functions successfully in a market dominated by a a few large players.

CBO: Public Plan Would Increase Tax Revenue and Workers' Wages

Jonathan Walker — Sun, 26 Jul 2009 21:05:30 -0400

A new report from the Congressional Budget Office shows that a strong public plan would increase the federal government's tax revenue and wages for some workers. The CBO concludes:

if more employers purchased coverage through the exchanges than we anticipate and purchased somewhat less expensive insurance via the public plan, the principal effect on federal deficits is that those employers would end up increasing their workers’ taxable compensation and thereby would generate slightly higher tax revenues.

This is in addition to reducing the cost of insurance for individuals, reducing the cost of employer provided insurance for small businesses, and reducing the amount in subsidies the government will give to individuals help to buy insurance.

The public option would not cost the federal government money. It would, in fact, save the government money and increase revenue from taxes.

Crossposted on The Walker Report

Hip-Hop For Health Care Reform

Isaiah J. Poole — Thu, 09 Jul 2009 14:42:57 -0400

Hip-hop artists are being mobilized in the battle for health care reform, and in this video the mother of rapper and producer J Dilla, Maureen Yancey, explains how health care for her son overwhelmed her with medical bills after his private insurance expired.

Hip-Hop Caucus CEO Rev. Lennox Yearwood Jr. equates the health care reform fight to the battle against Jim Crow segregation, arguing that a "Jennifer Crow MD" is pushing policies that reinforce health care disparities among communities of color.

A member of the pioneering group A Tribe Called Quest, Malik Taylor, discusses his illness and how he managed to cope.

The Campaign for America's Future is a member of the Health Care for America Now coalition, which advocates a health care reform plan that includes a public plan choice, which would make health insurance more widely available and more affordable.

Voices For Health Care At Capitol Rally

Isaiah J. Poole — Fri, 26 Jun 2009 12:08:37 -0400

Several thousand people rallied in front of the U.S. Capitol June 25 in support of health care reform and heard key Democratic members of Congress vow that they would fight for a public health insurance option as part of that reform.

The rally was the centerpiece of the "Health Care '09: We Can't Wait" lobby day organized by Health Care for America Now! Sens. Sherrod Brown, Robert Menendez and Barbara Mikulski are featured in this video, along with interviews of some rally participants. Several other members of Congress, including Sen. Charles Schumer and Rep. Charles Rangel, participated in the rally.

Former Vermont Gov. Howard Dean, who recently launched a nationwide petition campaign supported by more than 350,000 people in support of a public health insurance option, was a key speaker at the rally.

Why We Need a Public Health-Care Plan

OurFuture.org Staff — Thu, 25 Jun 2009 11:42:08 -0400

public plan

Is Compromised Health Care Reform Still Worth It?

The House Public Plan: Yes, It's Worth It

Trigger Troubles—And Why the Senate Can’t Fix Them

Further Reading

Trigger Troubles—And Why the Senate Can’t Fix Them

The Mugging of the Common Good

Co-Op Proposal An Effort To Kill The Public Plan

CBO: Public Plan Would Increase Tax Revenue and Workers' Wages

Hip-Hop For Health Care Reform

Voices For Health Care At Capitol Rally

Why We Need a Public Health-Care Plan