Public option pops up again

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Where do we go from here?

The so-called “public option” is back on the table. According to Politico there’s a “feud” between liberal and moderate Democrats about the wisdom of such an approach. That’s an overstatement, and really it doesn’t even matter if they are fighting about it or not.

Health insurers have a problem, which is that it’s hard for them to prove that they add value. Does all their utilization management, network development, formulary administration and price negotiation improve cost, quality and patient experience enough to justify the extra administrative costs and hassles they impose on the system? It’s an open question, and one that health plans have a hard time answering convincingly.

Since the Affordable Care Act (ACA) passed, health plans haven’t really had to address this fundamental question. With all the new regulations, marketplaces, and mandates, customers and plans have been busy getting themselves into compliance and learning and testing out the new system. No one has really asked the question about whether we need plans or not.

ACA health insurance marketplaces in some parts of the country are seeing less competition than is ideal as some health plans give up. Aetna gave the feds the middle finger by announcing plans to exit exchanges in retaliation for the government’s opposition to the company’s mega merger plans. The exchanges are fixable but opponents in Congress prefer to let them die if possible rather than fix them. However, this passive aggressive approach to the exchanges could ultimately backfire if it means the government sponsors a “public” competitor to give people choice.

For some, opposition to the ACA is ideological. They don’t like federal mandates, or expanding access to birth control, or they just don’t like Obama. But opposition to the public option is more about business considerations than ideology. Apple wouldn’t be worried if the government started making smartphones, but health insurers are worried about whether they can do a better job than Uncle Sam.

And let’s face it, a government option brings us a big step closer to a single payer system under which insurance companies would essentially be out of business.

Health plans don’t have to worry too much today about single payer or even a public option. Even Senate Democrats can’t agree, so it’s unlikely a public option will make it through Congress. But give it another 10 to 15 years and we’ll see.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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By healthcare business consultant David E. Williams, president of Health Business Group.

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