There has been much debate regarding health care reform and the inclusion of a public option to provide needed competition to the private health insurance industry.While conceptually this sounds like a reasonable idea there are some potential flaws to this model that need a closer look.
1) Who would use this plan?
For most America’s currently using private health insurance, there is little cause to believe they would switch to a public health plan. Most of the costs of health insurance and payment to providers is not taken up by the patient, rather it is assumed by a third party (employer). Thus unless an individual or family is faced with a sudden loss of insurance due to unemployment or rise in premiums, most America’s that are currently insured will not switch.
2) Subsidy for the Private Insurance Industry
There is a real possibility that the public insurance plan will become a haven for persons or families that simply are unable to qualify for private health insurance. This would include the sick, elderly or uninsured. If the basic premise of the insurance industry is to pool risk, the outcome will be even higher profit margins for the private insurers because they can knowingly exclude unfavorable risky persons with the knowledge these ‘high risk’ populations can go to a public health plan. Thus the average premium under the public plan may be a great deal higher for individuals than under private insurance due to this ‘higher risk’ pooling. That is unless the government (taxpayer) subsidizes the average premium under the public option.
3) A reasonable alternative?
The status quo is no longer acceptable. Too many families are excluded from basic coverage do to a flawed system that is focused on profit maximization and not the provision of community wellness or disease prevention services that reduce costs. This system stymies workforce innovation by restricting workers from changing jobs or becoming self employed to simply retain health coverage for their families. However creating a public option that provides greater profits for the private insurance industry through a publicly available safety net does not seem like the most efficient solution. Essentially, this is the equivalent of a federal stimulus for the private insurance industry on an annual basis.
A more reasonable solution would be to develop legislation that creates incentives for the development of insurance collaboratives to further pool risk, consolidate administrative waste, and mandate coverage for the poor, underinsured and uninsured while ensuring high quality standards for health care service delivery.
Pooling risk, not further subdividing insured populations will most likely reduce overall costs.
4) A way forward for health reform in America
Re-shaping the American health care system into one that is more equitable, expands access to care, maintains quality, and contains costs poses a great challenge, but also a remarkable opportunity.
But there are no ‘shotgun solutions. Thus whatever investments we make in the short term should be seen as a flexible, supportive of innovative ideas, and a series of quantifiable experiments that can be revised over time. Establishment of comparative effectiveness programs at the national, state, and county levels will jumpstart a long overdue process of evaluating what works and doesn’t work specific to health care delivery.
But comparative effectiveness must not be solely focused on health care delivery. These efforts must look at the entire health care value chain and associated stakeholders. The value chain includes both supply and demand side causes such as medical education, medical technologies, research systems, and patient care. Stakeholders must include training institutions (colleges and medical schools), insurance companies, medical and device manufacturers, clinicians, and the patient.
Unless we start a process by which we look to evaluate and improve upon the entire value chain in health care, we will continue to develop piecemeal solutions that will have limited impact.
Most importantly, while thinking nationally or even regionally, it is important to act and create local solutions.
