A Public Plan is Healthy Competition

Jacob Hacker’s 2006 book, The Great Risk Shift [1], helped politicians understand the economic pressures on the average family — including the rising costs and increasing loss of health insurance — or the threat.

And in his Health Care for America [2] plan for health reform, published in early 2007 by the Economic Policy Institute, he outlines the concept of Public Insurance Plan Choice — the idea that all Americans be guaranteed

1. the right to keep the insurance they currently have, or
2. choose either from competing private insurance plans — OR
3. a public insurance plan — like Medicare for the not-yet-elderly.

Today we are releasing an important report by Dr. Jacob Hacker.

It is entitled HEALTHY COMPETITION: How to Structure Public Health Insurance Plan Choice to Ensure Risk-Sharing, Cost Control, and Quality Improvement [3].

The report is being published jointly by our Institute for America’s Future and the Center for Health, Economic & Family Security of the U.C. Berkeley School of Law where Dr. Hacker is Co-Director.

I just want to remind you that Jacob’s EPI plan has been incredibly influential. His public insurance proposal is central to Barack Obama’s health care plan – and to the health proposals of the other main Democratic presidential candidates -- Edwards and Clinton.

It was embraced by Senate Finance committee chair Max Baucus in his recent Health Reform White paper, by the Chairmen of the key Committees of jurisdiction in the House, and by Gov. Kathleen Sibelius, Obama’s candidate to lead HHS.

And it has been echoed by the work of others, like the health proposals from the Commonwealth Fund.

The public plan is also central to the principles of the large activist coalition called Health Care for America Now! [4]

And as a result this growing consensus, some people — including some special interests — are starting to question or even oppose the public plan.

In a previous paper [5] published in December by IAF and the Berkeley Center, Jacob argues that the public plan (in the context of a mixed system) is crucial to controlling costs and assuring quality. And President Obama has insisted that a crucial test of health reform is whether it can reorganize the health system to “bend the cost curve” downward. I urge reporters to ask proponents of other approaches a basic question: How does your proposal for expanding coverage also control costs in the health care system?

Now that the debate about public insurance choice has really been joined, lawmakers and journalists have been asking fundamental design questions:

How would the public insurance plan work? Who would be covered? How would it compete with private insurance plans? How can we guarantee competition will take place on a level playing field?

Earlier versions of Hacker’s new memo have been read eagerly by key Administration and Congressional staffers. This new version benefits from their comments and questions.

I’m sure this new paper will be just as influential as his earlier work as the health care debate goes forward.