To assuage the insurance industry’s fears that a public health plan will drive them out of business, President Obama has been highlighting that three dozen states offer a government health plan to their employees without ill effects on the private insurance market. But while the public plans cover 3 million workers, they haven’t been successful at holding down health costs, which is a cornerstone of healthcare reform, reports The New York Times. “Even the best of them are pretty far short of what most of us who advocate public plan choice want,” Jacob S. Hacker, a political scientist at the University of California, Berkeley, told the Times.
Most of the state plans don’t make reimbursement conditional on medical performance and quality, and they are usually administered by commercial insurers that aren’t constrained in negotiating payment rates with providers. And although Obama and the Democrats say that a public plan will maintain reserves and not be subsidized by the government, skeptics say that the government wouldn’t let its health plan fail--undermining the promised fair competition with private insurers. The Lewin Group forecasts that a public plan paying rates similar to Medicare will succeed in providing coverage to 28 million uninsured and will cause 119 million people to opt out of employer-sponsored insurance for the public plan.
