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One (more) Argument For The Public Insurance Option

Harold Pollack is a public health policy researcher at the University of Chicago's School of Social Service Administration, where he is faculty chair of the Center for Health Administration Studies. He is a regular contributor to The Treatment.

Health care advocates are watching politicians for signs for what of elements of reform they will jettison in order to win the all-important, filbuster-proof majority of 60 votes in the Senate. And probably no single element looks more vulnerable right now that the proposal to create a public insurance plan, into which anybody could enroll. The progressive blogosphere is aflame with conjecture about whether President Obama's left eyebrow curled in the expected way when Charles Grassley dissed this ingredient of Candidate Obama's healthcare plan. Over at Slate, Timothy Noah worries that the public plan will be jettisoned. Over at the American Prospect, Ezra Klein is more optimistic.

It's no surprise that the public plan provokes deeply-rooted ideological and commercial opposition. It provides a plausible political and administrative trajectory to an eventual single-payer plan. It places government in competition with private insurers--on ground rather favorable to the government. Conservatives and private insurers have ample reason to balk.

For these very reasons, and for others, many progressives find the public plan option congenial. As Jacob Hacker--the idea's intellectual father--notes in a recent paper, experience suggests that effective public programs provide high-quality, cost-effective care. Compared with the fragmented array of private plans, the public sector can reduce costs. Government has superior bargaining power with drug companies, equipment suppliers, doctors, and hospitals. The public plan could act in concert with Medicare and Medicaid, and it would have greater leverage in encouraging standardized quality improvement strategies and electronic medical records. The public plan would thus establish quality and cost benchmarks the private sector would be hard-pressed to match.

Then there is the less tangible fact that private coverage has lost much of its allure in recent years. For all Americans like to complain (often rightly) about bad government, millions doubtless conclude from specific experience that public coverage is safer, more stable, and more trustworthy than private plans.

In my view, the above arguments more than justify moving ahead with the public plan. Yet there is one additional argument that receives less attention. A public plan would provide an essential option--and an equally essential backup--for millions of Americans living with chronic illnesses or disabilities. Some of these Americans now receive Medicaid, with the accompanying inefficiencies, and indignities of meeting the requirements of a means-tested public assistance plan. Some receive private coverage--coverage that imposes burdensome deductibles, coverage gaps, and copayments, and that is often insecure. Still others endure even more precarious circumstances.

Imagine that you are a parent with a decent job that pays $80,000/yr, but that you have a 5-year-old son with cerebral palsy who requires a motorized wheelchair. He will need this $30,000 non-toy replaced every few years to accommodate his developing body as he grows. Should he get a new unit every five years? Every three years? Every two years?

As these delicate decisions are made, in whose hands would you place your family's fate: a public plan, or a private insurer that is required by law to serve you but that might enjoy many opportunities to cut corners or to encourage you to choose another plan? At minimum, you would want that public plan to be there, as both a backup and as a benchmark to determine reasonably fair rules.

Or imagine that you are in my shoes, responsible for a cognitively disabled adult with a costly and complex genetic condition. Would you trust a private plan, knowing that you won't really know how good it is until your loved-one runs up a $50,000 hospital bill?

There are other knotty matters. Disabled children and adults require many services, some at the fuzzy boundaries of medical care. Many children receive school-based therapies and rehabilitative services financed by Medicaid. For years, states and the federal government have fought over who should pay. Yet over time, an intricate and valuable system has emerged to finance these services. A public plan could address these issues. Private insurers really can't, even if they were motivated to try.

There is one final matter. A public plan would have greater legitimacy to say "no," when families in difficult circumstances very much want services that are not justified. No healthcare system can--or should--finance every costly therapy or desperation measure. Private insurers and managed care organizations have lost public standing to make these judgments, even when "no" is arguably the best answer. This is an inevitable subtext when insurers are sued by breast cancer patients seeking bone marrow transplants, or when a presidential candidate lambastes a firm that refused to finance a liver transplant to a dying leukemia patient. As American society faces new dilemmas arising from costly medical technologies, a public plan stands a much greater chance of carving out a space for reasonable decision-making.

I can't predict the politics here. Some Senate heavy-hitters support the public plan. Others do not. The White House's position seems artfully vague. I'm watching the president's eyebrow closely, hoping it curls the proper way.

--Harold Pollack