This past Sunday, Jacob Hacker, Yale Professor and New America Fellow (and like all Fellows, not affiliated with our Health Policy Program), published an Outlook piece in the Washington Post about the government’s role in covering all Americans. I have a great deal of respect for Jacob and am thankful for his many contributions to the health reform conversation. Nonetheless I do feel compelled to offer my own perspective on the most salient points in his essay.

I applaud Jacob for taking on the “socialized medicine” rhetoric. Such language was invoked to oppose Medicare in 1965 and is still used as a scare tactic in today's health care legislative debates. Just this year, identical exaggerated claims damaged the debate on expanding SCHIP, the State Children's Health Insurance Program. The same rhetoric threatens the effort to build bipartisan consensus on a sustainable system of coverage for all Americans. Indeed, those who use the phrase "socialized medicine" want to stop us from covering everyone. As the ranking member of the Senate Finance Committee, Charles Grassley (R-IA), said during the children's health debate, “Shouting socialized medicine during a health care debate is like shouting fire in a crowded theatre. It is intended to cause hysteria that diverts people from reading the bill, looking at the facts.” As we approach the next great national conversation about covering all Americans in a high-quality, high-value health system, it is my sincere hope and belief that we can maintain a fact-based dialogue. Jacob Hacker has, and will continue to, help us do just that.

The Democratic candidates have included a public insurance option in their campaign health proposals; that option will be part of a broad national conversation about reform in the election season and beyond. Under the right circumstances, this type of plan could play an important role. I strongly disagree, however, with Jacob's argument that public insurance option is some kind of “secret weapon” uniquely capable of controlling health care costs through price controls. Public programs like Medicare and Medicaid have served our nation’s most vulnerable quite well for more than 40 years. But they are not immune to the cost and quality challenges facing our overall health system. CBO Director Peter Orszag has said repeatedly that the rising health care costs per beneficiary threatens the sustainability of both Medicare and Medicaid far more than "Baby Boomer" demographics or enrollment growth. Orszag also uses CBO analysis to conclude that over long periods of time, Medicare costs per beneficiary have grown at about the same rate as private sector costs per covered person. This is not surprising, since Medicare buys health care services in the same delivery system the rest of us use. Thus, the key to sustainable public health insurance programs is also the key to building a sustainable health system for us all. We need to get excess cost growth under control. Put another way, we need to greatly increase clinical value added (high quality care) per dollar spent. We must “buy smarter,” within Medicare and elsewhere, if we are to cover all Americans, as we should and can.

In addition, the public plan proposed by Hillary Clinton and Barack Obama (and John Edwards) will compete with private insurers for customers in a revamped health insurance marketplace built on price and quality, transparency and choice. That bears repeating: the proposed public plan will compete with private insurers under a new set of fair rules. No candidate is proposing to rely on provider price controls to rein in spending growth. Simply cutting prices across the board will not address the underlying inefficiencies in our system, especially those related to decisions about using new technologies, which most economists agree are the major reason costs continue to grow so fast. In fact, both Clinton and Obama have suggested using a number of inter-related tools— comparative effectiveness research, disease management and prevention, health IT, and smart payment reform (e.g., bundled payments for keeping patients healthy, rather than paying doctors for each service regardless of outcome). These are tools that could control health care cost growth while enhancing value without having the government dictate 10,000 health service prices in 3,000 counties. Furthermore, unlike Jacob in the plan favored by the Economic Policy Institute, no candidate is proposing extending access to the Medicare program “as is.” One could as easily imagine modeling the “public option” after state employee benefit programs wherein a self-insured PPO, with the insurance risk borne by the government, competes with commercial insurance products for employee market share. The point of the public option for the Democratic candidates, I contend, is far more about assuring a choice for our citizens in a re-organized and newly competitive marketplace—with rules designed to work for all for the first time, ever—than it is about controlling costs through price controls. At a minimum, I see no evidence in the campaign documents, candidate pronouncements, nor in the words of their advisers (with whom I too have consulted at some length) that the option being envisioned is Medicare itself rather than some new plan that will be designed to compete within a framework of price and quality competition, like FEHBP.

Jacob Hacker did us all a favor by pointing out the disingenuousness of the “socialized medicine” canard, which has been used far too to discredit any new or important role for government. Serious analysts agree, if we are to cover all Americans and enhance the quality and efficiency of our delivery system, government roles will have to be redefined.

Campaign platforms are more like watercolor paintings than high-resolution photographs or blueprints for legislation. The good news in this campaign is precisely that all the Democratic candidates (except Dennis Kucinich) proposed a central role for private insurance markets and choice, re-aligned patient and provider incentives, and of course committed to making sure that all Americans have high quality coverage. I would also note that John McCain is the first Republican candidate in my professional lifetime (which is longer than I like to remember) to propose supply side reforms—i.e., price transparency, pay for performance—which some influential provider groups have long resisted.

Any health reform that is sustainable—economically and politically—will require shared responsibility and unique partnerships between government, employers, and individuals. Neither government nor individuals in free markets alone possess a silver bullet to cure what ails our health system. It will take creative policy development and unwavering persistence from all of us in and out of government. It will take political leadership to secure 60 votes in the Senate. We can and must move ahead without heavy-handed provider price controls, or I fear we will not do it at all, once again.