Public Plan is Being Swiftboated

Cheryl Clark, for HealthLeaders Media , August 21, 2009

Jacob Hacker, the Yale professor who many consider the intellectual father of the public option, yesterday described aspects in current health reform proposals as "good" and "not-so-good," but said he fears most the growing support for proposals that he called down-right "ugly."

"Americans want reform, but they're scared now," Hacker said in a news briefing yesterday. He said the reason is "pretty simple"—"scaremongering and lies directed at health reform proposals on Capitol Hill."

"We're seeing the Swiftboating of health reform right now and it's not a pretty sight," Hacker said, referring to a smear campaign to damage the 2004 presidential bid of U.S. Senator John Kerry by attacking his military record as swift boat commander in Vietnam, which were charges never substantiated.

At the Campaign for America's Future-sponsored news briefing, Hacker was joined by Rep. Raul Grijalva, D-AZ. and Rep Keith Ellison, D-MN.

The congressmen are among 60 lawmakers who have pledged to oppose any health reform package unless it includes a meaningful public option to give consumers a choice, which Hacker described as an essential pillar of a three-legged stool.

In Hacker's view, the other two essential legs of the stool include a requirement for employers to contribute to the cost of coverage if they don't directly provide insurance coverage for their employees–a so-called pay or play provision–and a requirement that individuals also buy coverage, perhaps with subsidies, if they don't get coverage paid from their employers.

But with some essential political support dissipating for that most critical leg of the stool, the public plan, Hacker said, "Many of us committed to this goal have watched with a mix of anger and despair about the way in which this debate has spun out of control in this last month."

Hacker tried to parse those parts of existing health reform proposals in three categories.

Good provisions, Hacker said, are those that allow the public plan to create a provider network, pay providers using an established system similar to Medicare, is transparent, and operates as an effective competitor with private insurance plans on a level playing field. It would obtain drug price discounts and deliver value to "workers, their families, employers, and the economy overall." The public plan, obviously, is in the good category.

"Not-so-good" parts of the health reform package, which have been gaining traction, would mean having to create a provider network for a public plan from scratch and negotiating rates directly with providers across the nation, rather than building on Medicare's existing network and payment structure, Hacker said.

He characterized the "ugly" as the Senate Finance Committee's cooperative model, supported by its co-chairs, Max Baucus and Charles Grassley. Hacker said a cooperative will be a much less effective and weaker mechanism for the public to obtain health insurance because it fails to perform three essential functions:

  • It does not provide a benchmark for cost reductions and quality because it would not have the necessary clout to pressure insurers to improve the value they deliver to their members, nor would it have the strength to bargain more aggressively in markets where one or two insurance companies dominate.

  • It would not provide a backup that offers financial and health security to those without coverage through their employers, or to small employers without access to good group health coverage plans.

  • It would not be an effective backstop to bring down costs over time through innovations in payments and the delivery of care, innovations that will be available to the private sector.

In a policy brief also released yesterday, Hacker wrote that "federally promoted health cooperatives should be understood as an effort to kill the public plan and, with it, the prospect of an effective competitor to consolidated insurance companies that have too often failed to provide affordable health security."

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