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Public Plan Would Stifle Innovation. Or, Would It?
Depending on the breadth of a public plan and enrollment numbers, private plans could be either slightly affected or decimated. Private insurers and their supporters are in fighting mode, arguing that a public plan would have an unfair advantage over private insurers and would expand government-run healthcare.
Meanwhile, America's Health Insurance Plans, hoping to derail the public insurance option, has started to make concessions unheard of even a year ago. It has agreed to accept all members regardless of health status and to stop charging women higher rates for individual health coverage as long as the federal government mandates that all Americans have health insurance.
Despite these changes, President Barack Obama and the Democrats are still pushing for a public plan to compete against private insurers.
Private insurers' arguments against a public plan are valid, but I think they might have more support from the public and from politicians by taking a different tack. Namely, they should promote the idea that they are grounded in innovation. A number of health insurers recently told me that a public plan could cramp healthcare innovation. Creative thinking in healthcare does not come from the federal government, but through private enterprise, the argument goes.
Private insurers have introduced many healthcare innovations. Robert Zirkelbach, director of strategic communications at AHIP in Washington, DC, says private insurers have spearheaded quality improvements, care coordination, and chronic condition management programs. "Those kinds of things aren't being done in public programs today. A public plan could turn back the clock on all of those initiatives put forth," he says.
Sam Nussbaum, MD, executive vice president and chief medical officer at WellPoint, Inc., in Indianapolis, says programs like bundled payments, pay for performance, and value-based insurance design came from the private sector. In fact, VBID, which was spearheaded by private businesses Marriott and Pitney Bowes, is now featured in legislation that would test the idea in the Medicare population.
"I continue to like the current system with the ability to innovate, to do new things, to experiment with different approaches, and we're going to lose that under this government-directed centralized system," says Nussbaum.
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John W (6/11/2009 at 3:14 PM)
How gracious of the insurers to agree to guaranteed issue and community rating in return for no public option! A public plan needs to be structured to be on a level playing field, so that everybody competes on their ability to facilitate affordable, quality care and not on the ability to sqeeze providers. But, without the public option, "reform" is just a market expansion plan for insurers and a payment guarantee plan for providers. The ill-defined idea of a network of REA-type coops as an alternative is absurd. Just more complexity, fragmentation and meltdown potential.
Howard Larkin (6/11/2009 at 10:48 AM)
Having been enrolled in numerous private insurance plans and twice in a high-risk pool run by the state of Illinois, my personal experience is that the public plan offered far better customer service than any of the private plans. I have had many protracted run-ins with some of the nation's largest private insurers over claims denials and appeals, often requiring me to submit the same documentation multiple times because they "didn't receive it." I have been threatened by phone representatives with retroactive denial of claims already paid for daring to challenge denials, even though I had overturned previous denials on the same issues. And oh yeah, the only reason I was able to get into the state risk pool in the first place was because private insurers rejected my son and me down for coverage based on pre-existing conditions after our COBRA ran out. By contrast, the state-run plan never denied a claim and even helpfully informed us of additional benefits that my disabled son qualified for. The notion that somehow private insurers wil necessarily deliver better service or coverage is simply false. If a public plan is included in reform what is much more likely to happen is private companies will find new ways to dump high-risk patients into public plans, just as they do now by refusing individual coverage even to those who have been continuously insured in group plans for decades. I don't think there is any chance that private insurance will disappear in this country. There will always be demand for private coverage for highly compensated workers. But if there is a public plan, its membership will grow not just because patients will choose it, but because private insurers will try to shift risky patients into it as they continue to compete based on risk selection rather than service.
Art Walker (6/11/2009 at 2:04 AM)
The health insurers have been especially innovative in increasing premiums and paperwork, while decreasing service and patient choice.