In Health Care Reform, Public Plan Becomes Sticking Point

STUART BUTLER: Well, uh --

KAREN POLLITZ: Go ahead, Stuart, you lived in one.

STUART BUTLER: I've lived under one version of a public plan. I lived under it for almost 30 years -- a single-payer system. And that's a system where government really does determine not only the financing of the system and allocates resources from a budget, but also enters into contract with individual doctors and hospitals and so on. So the hospitals and doctors may be in the private sector, but they actually work directly for the government, under contract.

In that sense, Medicare itself is a single-payer system, in that sense. But these ideas vary. A single-payer system can mean everybody works for the government directly, like in the Veterans Administration; it could mean they do it under contract, such as we do, or as doctors do in Britain; or they just simply bill services to the government, and that's reimbursed in some way, which is really how Medicare operates. So when you think of a single-payer system, you have to think of a range of different alternatives.

And I wouldn't say that it's not under discussion. It may not be called that, but I think those people who want a public plan much like Medicare are, in effect, talking about a single-payer system. So types do vary, and I think the issue that needs to be addressed is, what are the side-effects, what are the tradeoffs, of having that kind of system. And I think that's where somebody like me from Britain or people from Canada and so on try to emphasize that a single-payer system is not everything you and your doctor wants with no paperwork and no restrictions, which is what we so often hear from advocates of a single-payer system.

KAREN POLLITZ: I think a single-payer system is very much a Rorschach test -- that people read into it a lot of things that they want. It may be, as Stuart said, that people see less hassles, less confusion, less duplicity, and then others see kind of very dark and deleterious things. So politically, I think, a single-payer program means very different things to different people, even though it may not have as much of a range in actuality.

BETTY ANN BOWSER: It's not part of any discussion going on currently, is it, on the three bills that are under consideration on Capitol Hill?

KAREN POLLITZ: It's not featured in any of the bills at all. And there was a little bit of a brouhaha earlier this summer, when the Senate committee started holding hearings and people who want or represented organizations that wanted single-payer weren't allowed to participate. So I think when the House committees held their hearings this week, they were much more careful to include that point of view and make sure that they could at least come up and make their case.

STUART BUTLER: But let me just add a point to that, though. Part of the reason why there is so much resistance to certain key things being discussed -- and I would include a public plan option, and also the idea of a strong and independent federal board, in some way, to make decisions and so on -- the reason why there is so much resistant to those kinds of things is that a lot of people -- and I include myself in this group -- feel that when you put those kinds of elements in place, particularly in the way that's being discussed particularly in the House bill and Senator Kennedy's proposal, that they will lead inexorably to the single-payer system.

And if we want to have a single-payer system, then let's discuss that, let's debate it and make a decision. Let's not set up a situation to slide gradually into that end result where there hasn't been a real debate up front about what it should actually look like.

KAREN POLLITZ: Well, I think the debate about a public plan option has very much been pitched in terms of 'do you or don't you want single-payer?' by those who oppose a public plan option. The insurance industry just jumps right there. Oh, if you do this, we'll be, you know, squashed like a bug. We won't have a chance. There's no way we'll be able to compete.

We'll all be out of business in 15 minutes. And that's just not at all clear to me that that would be the outcome. So I think, again, this sort of debate about a single-payer plan is -- or about a public plan option, rather, is becoming cast in terms of single-payer for ideological reasons more than, you know, for how the program might actually work.

STUART BUTLER: Oh, oh Karen, I wouldn't say for ideological reasons, exactly; I would say for, if you like, political science reasons. For example, if you do have Congress itself ultimately in charge of a public plan of any kind and Congress itself is also setting the rules of competition, that's why people worry, because unless you have a firewall between that public plan and who's setting the rules, it's hard to imagine how Congress wouldn't stack the deck in some way. And I think proponents of the public plan have just not offered those protections.

KAREN POLLITZ: But in Medicare Advantage, where Congress opened up the Medicare single-payer plan and said to private plans come on in and compete, they lost their shirts! They overpaid like crazy. The private plans completely skimmed them off. So I just -- I don't buy that and the structure of the plan that is set up in the House bill is very distinct. There is a regulatory body and there is HHS, which runs the public programs.

And they are distinct and that's how states regulate their high-risk pools -- I mean, we have examples of that. There's no reason to think that, you know, it's all one big monolith and it's all going to be run for the purpose of putting other plans out of business. There's just no reason to think that at all.

KAREN POLLITZ: The way the House bill is written, and that's the only -- that's the one I'm most familiar with; the Senate Finance bill has not yet been released -- the way the House bill is written, yes. Self-employed people would be able to purchase coverage in a new insurance market -- a new, national insurance market called a health insurance exchange. And there, you would have a choice of a number of health plan options offered by private insurers, as well as a public plan option.

They would all offer the same set of basic benefits; they would all operate -- or you would have a range of cost-containment options, but within a limited range, and if your income was below, I believe, 400 percent of the federal poverty level, you would get some help paying for the premiums. So as a self-employed person, you certainly would have the choice of a public plan.

STUART BUTLER: And let me just add that I think the condition of this particular viewer is a very common one, and certainly, if it's somebody with any kind of poor medical history, these are precisely the people who face the biggest problems today. I think Karen and I and most people who look at healthcare reform are agreed on some very important elements, that people like this ought to be able to go through some form exchange and to get choices of a range of plan -- as we said, there's some debate about whether they should include a public plan -- but a range of plans.

And also, there needs to be, both through regulations and through dealing with subsidies and other kinds of support, to make sure that a person who has a bad medical background, and therefore, is likely, in an insurance market, to pay very high costs, in some way get cross-subsidized so that their premiums are not as high and they're not turned down for insurance. I think there's broad agreement, including among insurers, to do that. So I think in this debate over the public plan, it's very important to recognize that there's a whole range of issues and general models of change that have very broad support.

And that's why I think it's a bit troubling sometimes when an issue like the public plan seems to get in the way of achieving the 80 percent that we can actually agree on and get that done, and then we can maybe debate a public plan later on, where the people feel that the range of plans and the regulations are insufficient -- if they really do feel that, then let's look at this more controversial idea sometime in the future.

BETTY ANN BOWSER: The next question is from viewer Ani Dalit in Boston, Massachusetts. "If an employer offers limited health insurance to its employees, would that offer prevent the employees from being eligible for better health insurance through a public plan?"

KAREN POLLITZ: I don't think so. Again, the bills are still being written, but the requirement to offer a qualified health benefit plan would also apply to employers, so employers would have to offer at least the minimum level of coverage that is required under federal law. And if they didn't, their employees could come right into the exchange and choose among the plans there and the employer would pay a fee instead to help finance their care choices there. So it would not be allowed any longer for employers to offer substandard care to their employees.

STUART BUTLER: I think that also raises a related concern about -- you say substandard, but it may just be simply -- an employer may offer a plan that's leaner than is available under the exchange or under a public plan, and it may be that the public plan, for all kinds of reasons, in terms of, say, for example, the amount it pays doctors may be less expensive than what the employer currently provides. And the worry I think that is there is would employers perhaps decide to discontinue a plan that their own employees are actually pretty satisfied with in order to save money by either abandoning that plan or simply paying a fee to the government, which is less than they would provide otherwise.

So the big concern is that a public plan -- indeed, any alternative -- might induce employers to switch their employees involuntarily into some alternative. And that's why this issue of -- that the president has set as a principle -- if you're satisfied with what you have today, it won't change -- is very much under question in terms of if you have a very inexpensive public plan that then employers push their employees into.

KAREN POLLITZ: Well, just one thing on that: Under the House bill, it's not possible for employers to push their employees into anything. They can certainly keep the plans that they have now. But if employers decide to -- they have an election to make. Do I want to provide benefits or do I want to, you know, pay this fee and then my employees go into the exchange? And if that happens, the employees, then, get the full range of choice that they get to choose from. The employer never dumps anybody into the public plan. That just -- it can't happen the way the bill is written.

And I guess I would also add that in the state of Massachusetts, which hasn't had much luck at all in terms of reducing health care costs yet -- and some folks from Massachusetts who testified in Washington this week said that if they had a public plan, they probably would have made some more progress in that regard -- but in the state of Massachusetts, there has been an increase in employers offering coverage and in people taking up their employer coverage. So I don't know that this specter of employer coverage disappearing is really one that we should anticipate at all. It seems the plans that have been offered so far are very much oriented toward keeping in place a lot of the coverage that people are familiar with today and that is good coverage.

KAREN POLLITZ: I'd say the odds are pretty good at this point. You know, who knows? My crystal ball is no better than anybody else's. But I think there is clear and strong support for a public plan option on the House side, and the Senate, for all that they're wrestling with it, does not seem to be heading toward a position where they say, nothing -- no public plan at all.

So they are working with some different models that would be more like a co-op -- a publicly established or sponsored co-op -- that would operate under sort of a public charter and public rules and compete against private plans. So it seems at this point like the Senate may bring some version of a public plan option into the conference and then the debate will be over what version of a public plan as opposed to whether we'll have on or not.

STUART BUTLER: Yes, I think I'd agree with Karen on that prognosis, although we're all looking into a crystal ball here. But I think she brought up a very important point, which is that I think part of what's going on in the Senate is to say, well, let's look at what the objectives are, of a public plan, in terms of a choice, a government-approved option, and so on, and let's see if there's, perhaps, another way of achieving the same objective in ways that can actually draw in a wider range of people and deal with these concerns.

That's why these ideas like a co-op, which is, you know, an enrollee-owned, beneficiary-owned plan, or something like the federal employee system has for members of Congress, which is a negotiation with a few particular private plans that then agree to offer services all over the country in a certain way, but in the private sector and completely private.

There may be other ways of achieving those objectives of a public plan without bringing about the very controversial aspects of this issue of if you have the government actually owning and directing a plan at the same time as its setting the rules of competition, which is what I think is so troubling to people. So I think there's a third way approach that might well come out of the Senate here, I think.

BETTY ANN BOWSER: This question comes from Albert Hersch (sp) in Chevy Chase, Maryland: "How will any kind of insurance plan, public or private, mandates or no, deal with the fundamental causes of healthcare inflation -- the way health care is delivered, including fee-for-service?"

KAREN POLLITZ: Well, I think there are a lot of approaches that are being looked at. One is, again, this public plan notion to inject a measure of competition into insurance markets that we just really haven't seen in a very long time in many markets that have become so concentrated.

But there are also important investments, I think, in both of the bills that we've seen so far, in comparative effectiveness research, in new administrative simplification approaches -- so other ways to make the delivery of health care and health insurance more efficient, more rational and less expensive.

STUART BUTLER: Well, I'd agree with that. I think the notion of competition -- of giving people wider choices than they have today -- is a critical element so that people can say are they satisfied or dissatisfied. You know, today, I think most people -- certainly, a very large proportion of people in the sector where employers offer insurance have either one plan, or at most two offerings -- sometimes two offerings from the same insurer -- so there isn't really the kind of choice that you would have in an exchange system.

So getting competition is critically important, and allowing the different plans to organize themselves in different ways so that you really do begin to see pressure to find the most cost effective opportunities. In addition, I think it's very important to recognize that one of the reasons we have very high inflation in health care -- costs keep going up -- is we have a lot of open-ended subsidies in the healthcare system which we really need to get under control.

One of them is the tax treatment of health care, and the president, I think, is now more open to looking at a reform of the tax treatment so that you don't just get an open-ended tax subsidy to get insurance through the place of work. We've got to put some limits on that to make people think much harder about whether they're really getting value for money or whether they're just getting as much as they want without regard to cost, which is unfortunately what happens in a lot of plans today.