COVERAGE: To Opt or Not To Opt? Is That the Question for the Public Plan?
This post appears on the National Journal's Health Care Experts Blog where you can also see what other health policy analysts have to say about allowing states to opt out of a public health insurance option.
The public plan debate marches on this week as we discuss whether or not states should be allowed to “opt-out” of the public health insurance plan. Allowing states to choose not to provide the public health insurance plan as an option in their markets has its virtues. It establishes the infrastructure necessary to create a public health insurance plan nationwide, but it also makes the decision ultimately a state judgment. This may be a safer way to go for those who worry about government expansion.
While we do not know the details of what kind of public plan states would be able to “opt-out” of, we suspect the center of gravity is closer to a level playing field approach, such as that proposed by Senator Schumer (where the plan would have to negotiate payment rates with providers) as opposed to the version supported by progressive Democrats in the House (where the plan would administer prices based at least in part on Medicare rates). If the level-playing field approach is in fact adopted, assertions that the plan would simply “underpay providers” rather than “driving real reforms that bring down costs and improve quality” are unfounded.
Also, let’s remember that all versions of the public plan under serious consideration require it to be self-financing. Taxpayers will not be subsidizing the public plan. Rather the main cost of reform will be providing low-income subsidies that can be used to purchase the policy of individual’s choice -- public or private. Americans will get these subsidies whether or not their state chooses to offer them a choice of the public plan, and whether or not they choose the public plan if it is offered to them. Therefore, the argument that somehow residents of opt-out states will be footing the bill to finance a public plan they are unable to access is just wrong. The public plan will not be financed by taxpayers.
Repeated fears that the public option will pay less than market rates and somehow be subsidized by taxpayers deny what is being considered seriously by Congress and signal paranoia about the future. Critics are right to be vigilant. But we should not decide against doing something that could add real value in markets where insurer competition is lacking just because it might possibly be “turned” into a bad idea by a future Congress. If someone proposes to give the public option unfair advantages in the future, let’s debate it then, fairly and forthrightly.
Senator Reid’s announcement is not the end of the public health insurance plan debate. A weakness of the opt-out approach is that many of the states most likely to “opt-out” because of ideological reasons are the same states that you could argue need the public plan the most because of lack of competition and affordable policies.
Moving forward we should be on the look-out for new public plan ideas that possibly meld Schumer’s “level playing field” with Reid’s “opt-out,” Snowe’s “trigger,” and Carper’s state “opt-in.” Stay tuned.