Make us your home page
A Times Editorial

The public option battle

As Congress combines various health care reform bills, the most controversial issue remains whether to create a government-run insurance plan. The so-called public option is regaining popularity with voters, and it could increase competition and drive down costs. But it is not a cure-all, and there may not be enough votes for it in the Senate. A reasonable compromise would be to include a public option that would take effect only if private health plans prove too expensive and cover too few Americans.

As much as a straight-up public option would be desirable as a way to inject strong competition into the private marketplace, political reality suggests that it probably won't be attainable. The sole Republican who voted in favor of health reform, Sen. Olympia Snowe of Maine, is opposed and so are conservative Democrats. The hope is that the combined Senate bill will be "mostly baked" by week's end. What emerges should at least include a trigger that would allow for the creation of a government-run health insurance option if private insurance companies fail to meet certain benchmarks. Private insurers would have the chance to demonstrate that through increased competition and a bigger pool of customers they can deliver nearly universal heath care coverage at a reasonable price. If they fail, a government-run option would become available.

A trigger that is a real safety valve if the private marketplace fails to rein in costs and cover most Americans would help to silence critics who say that the true intention of a public option is to move to entirely government-run health care. But supporters of a public option should not oversell it. The nonpartisan Congressional Budget Office determined that the Senate health committee's public option would be unlikely to offer lower premiums than those set by private insurers, because providers would be paid at rates similar to privately negotiated rates.

Other public option proposals would tie reimbursement rates to the lower Medicare reimbursement rates. But Medicare premiums are set to rise 15 percent next year. Most Americans won't feel this pinch because federal law prevents Medicare's monthly premiums from rising more than Social Security benefits. But the sharp increase suggests that even a government plan has limited ability to hold down the nation's growing medical bills and that other cost-containment efforts are also needed.

This is the biggest criticism of the entire reform effort: All the viable congressional plans essentially retain the current fee-for-service model that encourages providers to heap more health care services on Americans at escalating prices. By not tackling the real driver of excessive costs — the perverse incentives for doctors to do more tests, prescribe more drugs and perform more surgeries — health care reform will not bring expenditures in line with other advanced nations that spend significantly less per capita and enjoy better health outcomes.

The Obama administration and Congress need to be as aggressive about containing health care costs as they are about making coverage more available. Instead of fighting an all-or-nothing battle, they should compromise, allowing a public option that would kick in if the private insurers fail to reach clear goals for availability and affordability. That would leave more time and political capital to deal with even tougher issues involved in creating a health care system that is more efficient in delivering services and controlling costs.

The public option battle 10/20/09 [Last modified: Wednesday, October 21, 2009 5:07pm]
Photo reprints | Article reprints


Join the discussion: Click to view comments, add yours