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The Public Plan Diversion

Public health insurance isn't necessary for improving quality, controlling costs or expanding access, and it shouldn't dominate the debate.

June 20, 2009

The left and right alike want to transform the health care debate into an ideological cage match on whether to create a public competitor to private insurance companies. If they succeed, the nation could squander an invaluable opportunity for transformative reform.

Properly structured, a public insurance option could contribute to a better health care system. But such a plan isn't indispensable for it. It's possible to improve quality, control costs and expand access with only a limited public option -- or, if politically necessary, without one at all.

For all the hurdles remaining, the potential for broad agreement on how to advance those three key goals is far greater than when President Clinton pursued universal health care in 1993-94. But the focus on the public insurance option is obscuring that convergence -- and threatening to dissolve it. "This issue has got way out of proportion," says Len Nichols, health policy director at the centrist New America Foundation.


The left and right have a shared interest in highlighting the public plan because it divides Democrats from Republicans more than anything else in the debate. In that way, it fits the preference of so many strategists and activists in each party for ideological disputes that energize their base.

But substantively, the public plan "is not where health care falls or rises," notes one senior administration official. Other decisions will matter more in determining whether reform achieves its big goals for access, quality and cost control. And while important differences remain -- particularly over how to pay for expanded coverage -- substantial consensus is developing on these larger issues.

That dynamic was underscored Wednesday when three former Senate majority leaders -- Tom Daschle, D-S.D.; Robert Dole, R-Kan.; and Howard Baker, R-Tenn. -- released a budget-neutral universal coverage plan through their Bipartisan Policy Center (where, full disclosure, my wife works).

The three began from very different perspectives -- Daschle is a close ally of President Obama, and Dole led the fight against Clinton's plan. But they reached consensus around the belief that universal coverage, like civil rights and environmental legislation a generation ago, "is something whose time has come," as Baker puts it. Their agreement, Daschle says, proves "as difficult as it is, it is possible to reach common ground if you are determined to do so."

What might constitute common ground on health care? The foundation would be a mandate on individuals to purchase insurance, with government subsidies when necessary, matched with a mandate on insurers to sell to all applicants at reasonable rates, regardless of prior health conditions. Democrats -- including Obama -- long resisted the "mandate to buy," and insurers long opposed the "mandate to sell." Now that deal's supporters range from Obama, to the health insurance industry, to Dole, Daschle and Baker. More controversial is requiring employers to help fund their workers' insurance, but an approach that exempts the smallest firms and asks for sliding-scale contributions from larger ones could probably attract sufficient support.

Next, any agreement would attempt to restrain costs and improve quality through greater investments in prevention and information technology, and reforms that tie payments for physicians and hospitals with results for patients. Specifics on those fronts will require tough negotiations with providers, but there's broad agreement around the general direction. Voices ranging from Obama, to the former Senate leaders, to an extraordinary "Health CEOs for Health Reform" group Nichols has organized, are advancing proposals to move from today's atomized fee-for-service medicine toward more integrated care that links physician reimbursement to results, using Medicare as a lever for change.

"The surest... way to promote efficient and effective health care is to structure reimbursement policies to reward its delivery," says Blue Shield of California Chairman Bruce Bodaken.

A public plan could promote such reforms, too. But to do so, it wouldn't need the Medicare price-setting power that the left wants and the right fears. Less intrusive versions of the public plan -- like Nichols' state-based alternative, or a beefed-up version of the co-op plan Senate Budget Chairman Kent Conrad, D-N.D., recently proposed -- could also support payment reform.

Physicians, hospitals and insurers have a political incentive to embrace such a compromise, because if a scaled-back public plan doesn't generate any industry support or GOP votes, the pressure will grow on Senate Democrats to steer back toward the left. Conversely, Daschle believes liberals would squander a historic opportunity if they fracture the potential consensus by demanding the most aggressive public option. "I would urge everyone to get the best deal you can [on a public plan] and come back another day if we don't get it exactly right," he says.

The fate of health care reform might turn on how many of Daschle's former Democratic colleagues accept that eminently sensible advice.

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