JACOB HACKER, ROGER HICKEY AND THE PUBLIC PLAN OPTION

President Obama said during the campaign that he wanted to give Americans an option of buying into a public plan that would compete with the private health insurance industry.

Single payer advocates say the public plan option won’t work – it will be too costly and leaves too many billions of dollars in savings on the table.

But that hasn’t stopped Obama and the public plan forces from pushing ahead.

Yesterday, the architect of the public plan, UC Berkeley’s Jacob Hacker, was in Washington at a press conference unveiling the details.

Hacker was joined by the Institute for America’s Future Roger Hickey.

The Hacker plan gives people without workplace coverage access to an “exchange” with private and public plan options.

The public plan mirrors Medicare’s administrative infrastructure, but would be run separately from Medicare.

The plan has its own risk pool and offers the same benefits and coverage terms nationwide.

Hacker said offering a public health care plan option is the only feasible way to design a sustainable health care system and ensure everyone has access to the care they need.

“Without public plan choice, private health insurers will still be able to game the system to maximize their profits while failing to provide health security over the long run,” said Hacker. “Providing a public health insurance option that competes fairly with private plans is critical to ensuring access, controlling costs and improving the quality of care for all Americans.”

Dr. David Himmelstein of Physicians for a National Health Program, said Hacker’s public plan won’t work.

Himmelstein called the Hacker plan “a compromise aimed at avoiding insurance company opposition to a single payer plan.”

“But it can’t solve our nation’s health care crisis,” Himmelstein said.

“The proposed plan would realize only a small fraction – at most 16% – of the administrative cost savings that could be achieved through single payer,” Himmelstein said. “That’s because insurance overhead – which might well be lower in a public option plan – accounts for a small part of the overall administrative costs of the current system. The need for hospitals and physicians to continue to bill dozens of different insurance plans would mean that their internal cost accounting and billing apparatus that causes most of the excess paperwork at present would continue.”

“As a result, the public option plan would not save nearly enough on bureaucracy to make care affordable,” Himmelstein said. “Absent massive savings on administration, the expansion of coverage would be very costly, and costs would continue to rise in future years since the proposed plan has no means to achieve real health planning or use global budgets to set enforceable limits on cost growth. Hacker’s plan would also do little or nothing for the tens of millions who are currently underinsured – they have coverage but still can’t afford care.”

To get a sense of what the public plan faction is up to, we interviewed Hickey after the press conference.

Single Payer Action: Physicians for a National Health Program argues that the public plan leaves too many billions in savings on the table.

Hickey: I agree.

Single Payer Action: Given that the insurance industry is opposed to a public plan anyway, why not just go single payer?

Hickey: It’s possible that we may fail to get a public plan into this reform. But we have more of a chance to get a public plan than we do of winning a majority for single payer right now.

Single Payer Action: You would prefer single payer?

Hickey: Yes, in the best of all possible worlds, single payer with some amount of choice, at least for a transition period. But I’ve been around politics long enough to know that it is very unlikely to get single payer with this Congress. It sees to me that single payer people are saying – whatever reforms get done are insufficient and need to be pushed farther. Some single payer people are saying – don’t do any reforms because that will simply prevent single payer down the road. But I’m pushing what I believe is both doable and would set off a virtuous dynamic of reform.

Single Payer Action: Is it back door single payer?

Hickey: That will have to be determined by the future. I could live with a mixed system. Germany and Switzerland and many other countries have mixed systems. The evolution there is that the private insurance companies have evolved into non profits, but there are still several different players.

Single Payer Action: I got an e-mail from a doctor in Germany. And he said another good reason to get rid of the private health insurance corporations is so they don’t go overseas to pollute and corrupt the systems over there, which they are now doing in Germany now.

Hickey: I understand. There are only a few private insurance companies that have anything worth emulating – Kaiser Permanente and a few others. But the chances of getting a majority in Congress vote to outlaw the private insurance companies are virtually nil.

Single Payer Action: So, is it just a political calculation on your part?

Hickey: Everybody in the world is making a political calculation. And it’s mixed in with moral calculations. Do you want to expand health care coverage while you are trying to perfect the best system you can possibly get. Or do you want to wait until things get so bad that the country turns to single payer?

I’m making the observation that there is nowhere near a majority in the Congress for anything like single payer. So, I’m not willing to sit and wait for the perfect. It’s possible to take major steps forward in covering everybody. My friends who support the Massachusetts plan say – now we are going to turn to cost control and that’s going to transform the Massachusetts plan. Maybe not. I’m not a big fan of Massachusetts plan.

I’m trying to get something better than Massachusetts for the country. And I don’t for a minute think that’s the end of reform.

Single Payer Action: Do you believe that the insurance industry can be persuaded to come on board with the type of public plan that you outlined today?

Hickey: I’m hopeful that the Congress can be persuaded to come on board. And I’m hopeful that the Congress will ignore obstructionism from the insurance industry.

Single Payer Action: What do you hear about what Obama is going to do?

Hickey: We know what he campaigned on – which is something similar to Hacker’s plan. And his people keep reinforcing that they are going to go for a public plan. But it’s not just Obama’s job. Our Health Care for America Now coalition has got to get members of Congress, including good liberals, to come out for a plan. I don’t know if you saw the recent statement by the Progressive Caucus. They said look – many of us are in favor of a single payer plan. But in terms of the reforms going on now, we want to insist on a public plan. That’s the right kind of attitude for single payer people to take.

Single Payer Action: PNHP came out in response to the Progressive Caucus and said – it won’t work.

Hickey: The PNHP line seems to be – don’t do any reform at all unless it’s pure single payer. I can understand that is it’s position. I just don’t share it. It means that you are condemning a lot of people to no health care at all for many years to come.

Single Payer Action: They would argue that you are condemning 22,000 Americans to death every year for lack of insurance.

Hickey: I’m not going to support anything that makes things worse. If the Congress passes something like what Obama ran on, large numbers of people who don’t have insurance will get insurance. And they we’ll begin the process of transforming the health care system.

Single Payer Action: PNHP people argue that anything but single payer will make things worse because you don’t get the savings to make it work and the private insurance companies will engage in cherry picking, driving healthy people into the private system and bankrupting the public system.

Hickey: It depends on the rules of the game. Obama is trying to get rid of Medicare Advantage. That’s the direction of a level playing field that we need to have. And we need it to be – as Hacker was saying – rated for risk, so you don’t have that death spiral. I acknowledge the danger there. But it depends on the rules of the road that we establish. The Democratic majority at least understands that the Medicare Advantage programs are a bad deal and want to get rid of those extra subsidies.

Single Payer Action: On the political calculation, could it be that if they would accept what you are proposing, they would also accept single payer?

Hickey: I don’t see either Obama or a majority of the Democratic members of Congress, much less the Republicans, voting to outlaw the insurance industry and to herd everybody into a public plan that they don’t understand. That is pretty unlikely to happen. Certainly in this Congress. If things get worse, if the private insurance companies continue to mistreat people the way they do, down the road, things could come to a head and you might get a single payer plan. But I don’t quite understand the calculations of single payer people. They know they are not going to get it this year. I guess the assumption is we wait until things get really bad. But I certainly respect people who have thought it through and support single payer. I hope the single payer movement gets stronger. It will put pressure on Congress to do something.