Question: Will the public option give government undue power in the health insurance market?
Jacob Hacker: I think the insurance companies’ saying that they are worried about the public health insurance option is one of the better arguments for having one. The fact that they think that this public health insurance option is going to have to change the way they do business is one of the arguments for doing it, because if the private insurance companies were saying, "We're not so worried, it's just going to be another small competitive challenge," then I really would wonder if this was going to provide the kind of check and benchmark for private insurance companies that we need.
There’s valid criticisms of having a public health insurance plan competing with private plans, and they're all addressing the legislation that's been discussed on Capitol Hill. I mean, my proposal argued for a level playing field, which means that the private and the public health insurance plans have to abide by the same rules, that the public health insurance plan can't be funded by taxpayer dollars, it has to receive all its funds from the same sources that the private insurance plans receive, such as the subsidies for lower- and middle-income people who get coverage and the premiums that people pay. And finally, I've argued that there really should be strenuous efforts to make sure that there is adequate adjustment for plans that take on a higher risk population. In fact, to me, that's one of the concerns. That the public health insurance plan is probably going to be more attractive to people who really need care because they really want to have a transparent plan that is going to be there when they are sick, and if that's the case then we really need to work hard to make sure that the playing field isn't tilted against the public health insurance plan.
So, the other thing to say, and I think this is really crucial that people understand, is that what the private insurance companies are arguing against, really, is choice. I mean, they're arguing against the idea that there should be competition and people should be able to vote with their fee between private insurance plans and the new public insurance plan.
The polls suggest the people want to have that choice, but I think a lot of people are going to choose private health insurance plans that have name recognition, they've got decades of experience, they've got deep marketing pockets. Many people associate the government with poorer service. So, the public health insurance plan isn't going to start out with a dominant position. It will only gain a stronger position by convincing people that it can provide better coverage and higher quality of care. And ultimately, isn't that what this is about? Healthy competition, where the private insurance companies and the public plan are both building their strengths and remedying their weakness.
Private insurance plans have many virtues. There are some that don't have. They haven't been very good at holding down premiums; they haven't been very good at bargaining with providers, they haven't been as innovative as they say they have been in the delivery of care. I mean, right now, we're talking about Medicare taking the lead in reforming the delivery of our healthcare system. Well, I think that we should have a public health insurance plan for people younger than 65 that are contributing to that reform as well.
So, to me, the best argument for it is the private insurance companies are worried about it because that's precisely what we need. Real competition.
Question: Why do you oppose federally promoted health cooperatives?
Jacob Hacker: Well, I think the co-op model is just a fig leaf for people who are opposed to the public health insurance plan and don't want to have the blood of the public health insurance plan's demise on their hands. The Congressional Budget Office looked at this and said, the co-ops weren't going to make any of the market. I mean, I'm not against the idea of having member-run cooperative health plans. There are some wonderful plans out there, like Group Health Cooperative of Puget Sound, and Health Partners in Minnesota. But those plans are very small and limited and even with new federal funds, it's going to be very difficult to create those plans and have them compete effectively against these massive private insurance plans that dominate the market today. I mean, Group Health Cooperative in Puget Sound has a half million members, and Well Point has something like 33 million members. So, you need to have some very serious counter weight on day one to the private insurance plans and only a public health insurance plan that's linked to the Medicare program in important respects is going to have that.
So, one of the things that's really important about the House legislation is that it creates this new public health insurance plan, in part, building on the infrastructure of Medicare. It's run by the Department of Health and Human Services, it's a federal program, it will be offered nationwide. It will not have rates that are tied to Medicare's rates. That was a concession that was made to get the votes necessary to pass it, but it will have the Secretary of Health and Human Services negotiating rates with providers and probably using the bargaining power of this large pool effectively to try to keep down rates.
So, to me, the cooperatives are really just a way of hiding opposition to the public health insurance plan and there is only a few people who seriously think they're going to work. And one of them is Kent Conrad of North Dakota. So, that's why they're in the legislation, but I think for the most part, they don't have very strong support, either in Congress or outside it.