Jacob Hacker Defends the Public Option

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.

The architect of the public option defends his healthcare solution against criticisms and counterproposals, including the co-op model.

​There are two kinds of failure – but only one is honorable

Malcolm Gladwell teaches "Get over yourself and get to work" for Big Think Edge.

Big Think Edge
  • Learn to recognize failure and know the big difference between panicking and choking.
  • At Big Think Edge, Malcolm Gladwell teaches how to check your inner critic and get clear on what failure is.
  • Subscribe to Big Think Edge before we launch on March 30 to get 20% off monthly and annual memberships.
Keep reading Show less

Harvard: Men who can do 40 pushups have a 'significantly' lower risk of heart disease

Turns out pushups are more telling than treadmill tests when it comes to cardiovascular health.

Airman 1st Class Justin Baker completes another push-up during the First Sergeants' push-up a-thon June 28, 2011, Eielson Air Force Base, Alaska. Participants were allowed 10 minutes to do as many push-ups as they could during the fundraiser. Airman Baker, a contract specialist assigned to the 354th Contracting Squadron, completed 278 push-ups. (U.S. Air Force photo/Airman 1st Class Janine Thibault)
Surprising Science
  • Men who can perform 40 pushups in one minute are 96 percent less likely to have cardiovascular disease than those who do less than 10.
  • The Harvard study focused on over 1,100 firefighters with a median age of 39.
  • The exact results might not be applicable to men of other age groups or to women, researchers warn.
Keep reading Show less
Photo by Alina Grubnyak on Unsplash
Mind & Brain

Do human beings have a magnetic sense? Biologists know other animals do. They think it helps creatures including bees, turtles and birds navigate through the world.

Keep reading Show less