American Prospect’s Public Health Plan Debate, Part I

There is a fascinating but also frustrating "debate" over at The American Prospect on the prospects and merits of the public health plan concept. The participants are Robert Kuttner, Robert Reich, and Paul Starr.

You should read the whole debate, but here’s a quick intro:

Robert Kuttner favors single payer and argues that the political problems of getting there are no more difficult than those we’ll face getting a public plan and making it work.

Robert Reich likes single payer, too, but he agrees with those who think it’s not politically feasible, so let’s work hard to get a robust public plan for now.

Paul Starr isn’t committed to the public plan per se, but he’s adamant that a federally sponsored "exchange" be created to set the market rules, minimum acceptable coverage and quality/payment standards that all plans participating in the exchange should meet.

These are smart, thoughtful people, but they end their discussion still in basic disagreement about strategy and end goals. It’s critical for progressives to close these gaps, so I hope they’ll try again.

I agree with Kuttner and Reich that some version of single payer is the desired outcome (which may/may not allow private supplemental for features beyond the basics). Their disagreement is about how hard it is to achieve single payer given where we’re starting and the expected opposition. It’s clearly a judgment call, so progressives need a way to unify behind something to have any hopes of winning.

To give each side its due, I’ve suggested we work for a strong, well-defined public plan, but one that includes design goals/features that allow it to evolve (or not) toward single payer, depending on how the economics play out. It’s not single-payer by stealth; it’s single payer by design if/as it proves it’s merits and as individuals and businesses make choices.

How that choice plays out is the issue Starr addresses. (Discussed in Part II)

Like Ezra Klein, Starr believes the design and functions of a public "exchange" are more important than the public plan itself; indeed, Starr (and sometimes Klein) would accept a "weak" public plan if we got the desired exchange. Both cite the Urban Institute’s excellent description of what an exchange can accomplish and what it’s functions are. That’s a must read (pdf), but later.

Strangely, neither Klein nor Starr note that the Urban Institute’s paper describes both the public exchange and the public plan working together. It’s how they work together that determines how well they achieve the transformative and efficiency benefits of both. The exchange establishes the rules for reformed, efficient behavior, while the public plan modeled on those rules puts competitive pressure on private plans to make the reforms or lose market share.

I agree the functions, design and rules of the Exchange are critical. It not only provides the open "market place" where alternative plans are offered; it sets and enforces the qualifications, like minimum acceptable coverage, requirements to accept all comers regardless of risk or prior conditions (and banning rescission), and rules limiting price discrimination.

Thus, many of the desired reforms to end offensive insurer practices and inefficiencies would happen through the exchange under strong federal oversight. But that’s not enough to achieve the needed cost efficiencies. To get more of those, the public plan has to serve as the model for these reforms and pressure the industry to conform or lose market share. The two are complementary and both are essential.

I’ll pick up on Paul Starr’s concerns and other aspects of this debate in the next post, Part II.