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Public Health Plan Option Touted by Sebelius and Obama

Posted Aug 27 2009 11:37pm

Should the U.S. government create a new public health plan that competes with independent insurance companies? That’s probably the most hotly debated issue in the current health care reform negotiations on Capital Hill, and last week both President Obama and Health and Human Services Secretary Kathleen Sebelius said “yes.”  According to a Wall Street Journa l report, Sebelius says that in “many areas in the country, the private market is monopolized by one carrier…You don’t have a choice for consumers. And what we know in any kind of market is a monopoly doesn’t give much incentive for other innovation or for cost-effective strategies.” President Obama also strongly backed the public option. Not surprisingly, the health insurance industry is vigorously opposed to this option. They say the public plan would have unfair advantages and would put them out of business.  The industry has offered an alternative “fix”: Health insurance companies would to stop denying coverage to people with pre-existing conditions and stop charging women higher premiums, but only if all Americans are required to buy insurance. That’s called the “individual mandate” option.  They argue that only if everyone buys insurance can we put enough money in the system to pay for all the health care needed.

One big problem is that thanks to the Massachusetts experience with requiring everyone to purchase insurance, we now know that strategy actually raises overall costs considerably.  It’s hard to figure out how the country could pay for that.

The problem is that health care delivery in the U.S. is convoluted and easy to game.  As Marcia Angell, the former editor-in-chief of the New England Journal of Medicinerecently wrote “we provide much of our medical care in investor-owned health facilities that profit by providing too many services for the well-insured and too few for those who cannot pay.  Most physicians are paid fee-for-service, which gives them a similar incentive, particularly specialists who receive very high fees for performing expensive tests and procedures. Nonprofits behave much like for-profits, because they must compete with them. In sum, healthcare is directed toward maximizing income, not maximizing health.” If you want to get a first hand look at this problem, read Atul Gawande’s recent superb New Yorker article, “The Cost Conundrum.”

Insiders have known about this problem for decades. Some outstanding institutions have at least gotten their own houses in order, but the overall system is still broken because so much money is at stake. Now, the “haves” are fighting tooth and nail to hang onto their share of the gravy train.

In some ways, it seems like the question of a public plan is moot. With so many people now chronically unemployed or underemployed, there will be millions more people who can’t afford health care if they don’t get some kind of help.  Many states facing budget crunches are talking about cutting Medicaid, not expanding it.  So, either the Federal government has to step in, or we leave those people without coverage.

The options are narrowing quickly. Obama seems to get it, let’s hope that Congress does too.  Up until now, playing “politics as usual” has taken the front stage to really addressing the country’s health care mess.

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