- The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.
- The public plan should pay doctors and hospitals more than what Medicare pays. Medicare rates, set by law and regulation, are often lower than what private insurers pay.
- The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.
- To prevent the government from serving as both “player and umpire,” the officials who manage a public plan should be different from those who regulate the insurance market.
From a policy perspective, none of this is particularly controversial, actually.
Schumer is proposing a public health insurance plan, run by the government, that breaks the private insurance monopoly we have today. His policy prescriptions do not turn the public health insurance plan into a meaningless proposal. Here's why, point by point.
Should the public health insurance plan be self-sustaining? The concern here is that if the public health insurance plan has to be self-sustaining, than it will have to charge unaffordable premiums to stay afloat. This isn't how it will work.
Every implementation of the public health insurance option I've seen separates the public health insurance option from affordability provisions. (See Jacob Hacker for a liberal, and very good, proposal.) That means that as long as the insurance you choose conforms to certain insurance industry regulations and offers a comprehensive, standard set of benefits, you will get subsidized by the government so you can afford your premiums. It doesn't matter if you're on a private or public plan, you will get the subsidy as long as your plan conforms to certain benchmarks, or is part of the proposed insurance "exchange." (And, if sicker people enroll in a plan - public or private - the plan would be subsidizing more, eliminating self-selecting among private plans.)
So, your premiums wouldn't be affected by the self-sustaining idea. And, if we believe in the idea that a public health insurance option will be more efficient than private health insurance (no profits to deal with, no advertising, much less administrative overhead), self-sustaining isn't actually such a crazy idea.
Should doctors be forced to accept the new public health insurance plan? Doctors are not forced to accept Medicare now, so I'm not sure why we should go further with the public health insurance plan. While it's true that new Medicare enrollees can have trouble finding a doctor accepting new patients with Medicare, this is true for patients with private health insurance as well. In fact, it's harder for patients with private insurance to find doctors than it is for patients with Medicare [pdf]. In fact, 97% of doctors accept Medicare.
So, why is it hard to find care? We lack of doctors, especially primary care doctors, in this country. This is a problem that must also be solved, but it won't be solved by forcing doctors to accept the new public health insurance plan.
Should the public health insurance option pay Medicare rates? Not necessarily. Medicare and the VA are both government-run health care plans, and they pay different rates. And in fact, Medicare should pay higher rates for primary care and less for some specialists. By allowing the public health insurance plan to bargain for its own rates, as Schumer is doing, we can even out that balance. Schumer is only saying the public health insurance option will pay "more" than Medicare, but not saying how much more or more to which providers, and is still allowing the public health insurance option to bargain, something Medicare under Part D (a huge giveaway to the drug companies) can't do for drug prices. Schumer's plan is, in fact, a victory.
Should the public health insurance option be overseen by a separate board? Making a separate board to oversee the public health insurance plan makes sense. The administrators would still be government officials according to Schumer, but they wouldn't be the same people making the rules about the insurance market. I'm not sure how this is controversial.
Schumer is in fact proposing a real public health insurance plan - government run and a strong competitor with private insurance. And most importantly, Schumer's vision breaks the monopoly of private insurance, and this is the main standard on which a public health insurance plan proposal should be judged. None of his "compromises" are actually problematic from a policy perspective. We will still get something that's effective and affordable, and something that breaks the private monopoly.
What is really telling is the reaction of the insurance industry to this compromise:
Insurers also remain skeptical. Karen M. Ignagni, president of America's Health Insurance Plans, a trade group, said, "We are very, very grateful that members of Congress have been thoughtfully looking at our concerns." But she said she still saw no need for a public plan if you have much more aggressive regulation of insurance, which the industry has agreed to support.
Linda Douglass, a White House spokeswoman, said that Mr. Obama was for a public plan but that he realized it could be defined in different ways.
Mr. Schumer said his goal was a level playing field for competition between public and private insurers. But Ms. Ignagni said, "It's almost impossible to accomplish that objective."
The insurance industry has been continually lying, saying they're for reform. And yet, when a compromise comes around, they are dead set against it, and automatically reject the entire premise of a public health insurance plan, no matter how it's set up.
The insurance industry is not reasonable, and it does not want reform. That is beyond clear.
I would encourage you to contact Senator Schumer and all of your Representatives and tell them what you think about the public health insurance option. However, I would also encourage you to think about this compromise critically. We as progressives have become allergic to the word compromise, and for good reason. Over the last eight years, it usually means we're getting screwed. However, this just may be a new era, and some basic definitions are changing. This compromise might not be nearly as bad as you think.