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Letters to health-care Santa: Give private options some public power

Hacker176.ashx.jpegOver the course of this week, I'll be asking some health-care experts what they'd like Santa to add to the bill during conference committee, and publishing their responses on the blog. In this post, Jacob Hacker, the Stanley B. Resor Professor of Political Science at Yale University, gives his thoughts on improving the bill. An expert on the politics of U.S. health and social policy, Hacker is considered by many to be the intellectual godfather of the public option.

Affordability, affordability, affordability. That's the mantra progressives should be repeating from now until a bill passes, and for years afterward. Coverage and care costs too much, and until we get a handle on those costs, we will be chasing the tail of real reform. The Senate bill begins to tackle this problem, but it falls dramatically short in many key areas. Most obviously, the Senate bill fails to create countervailing power in the form of a public option to promote delivery system reforms and press insurers and providers to rein in costs. Given the intransigence of Joe Lieberman and Ben Nelson -- who have exploited the institutional dysfunction that is the Senate filibuster to thwart the will of a strong majority of Americans and of Senate and House Democrats -- there's no prospect of reviving the public option in this round. But it must be a top priority going forward, and it should be revived in the stronger form that's needed to really guarantee that all Americans have affordable quality care.

At the very least, the President and House leaders should insist on more generous subsidies for middle- and lower-income Americans and tougher regulations on insurers (including self-insured employer health plans). Insurers must be prevented from shifting costs onto consumers or providing weak benefits to reduce costs, rather than aggressively bargaining with providers. In addition, the independent Medicare advisory commission should have the expanded capacity to encourage delivery-system reforms in private-sector plans as well as the federal Medicare program. At a minimum, the new federally contracted plan arranged by the Office of Personnel Management should adopt these delivery-system reforms. I would also argue for placing an upper bound on reimbursement rates (say, 133% of Medicare fees) for private plans within the exchange that use fee-for-service payment. Insurers claim that provider monopoly power keeps them from bringing down rates to reasonable levels on their own -- one of the key original arguments for a public option, I might note -- so let's have the federal government give insurers a hand.

Earlier in this series, Diane Archer called for Congress to create national exchanges rather than state exchanges, Alain Enthoven offered some ideas for how to fix the exchanges, David Cutler proposed a soda tax, and Austin Frakt argued for competition in the Medicare Advantage program.

By Ezra Klein  |  December 22, 2009; 2:26 PM ET
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