Public Health Insurance Plan

Should some uninsured Americans be able to enroll in a newly created, publicly administered health plan as the nation works to expand health insurance coverage?

A key issue in the health reform debate is how best to provide affordable, high-quality health insurance for an estimated 36 million uninsured U.S.citizens.

One analysis suggests that 6 million Americans would ultimately meet eligibility requirements and would choose to enroll in a public plan.

In general, supporters believe that a public plan could bring new competition, choice, and accountability to the provision of health insurance. Administrative expenses could be lower than for private insurers, and there would be no need to generate returns for shareholders; as a result, dollars spent on health coverage would stretch further.

The version of the public plan passed by the U.S. House of Representatives would negotiate payment rates with doctors, hospitals, and other providers, and supporters hope those rates could be lower than those paid by private insurers. The public plan would also be required to develop innovative payment mechanisms that could ultimately hold down the rate of increase
in health costs.

Opponents of a public plan argue that it would present unfair competition to private health insurers. Some provider organizations worry that by driving down prices, a public plan would reduce their ability to provide high-quality care. Employer and insurer organizations add that in order to maintain their revenues, health care providers might “cost-shift” by raising charges to employer-based plans.

Finally, there are also growing questions, on the part of both supporters and opponents alike, about how viable or effective the latest redesigned version of the public plan is likely to be.

This Health Policy Brief  lays out details of the public health insurance plan and explores the key arguments for and against it, and was published online on November 10, 2009 in Health Affairs.