Public Plan Options: Strong, Weak, and MRP?

Courtesy of Health Affairs Blog, and Harold Luft:

"The two options are the “strong” and the “weak” versions of a public plan, referring not to the strength of the proposals, but the power of the public plan. The “strong” version, as advocated by Jacob Hacker, among others, is a near-clone of Medicare adapted for those under age 65. It uses Medicare’s buying power in setting fees for providers, thereby keeping down the premium cost relative to private plans without such leverage. Not surprisingly, providers and private insurers vigorously oppose the idea, which they see as inevitably leading to a “Medicare for all” single-payer system. The proposal has other important features largely tied to parallel changes that need to be legislated for Medicare. Holding out for the “strong” plan risks having a political stalemate kill any chance of reform, but even if passed, it will not transform the health care system. "
....
"A “weak” public plan, as proposed by Len Nichols and John Bertko, would compete with private insurers by being transparent, nonprofit, and well-intentioned. It would follow all the rules required of private plans and not leverage Medicare’s buying power. Such a plan will need public funding to get started, probably bringing the public contracting, employment, and other rules that would hobble its ability to compete. An alternative to the “build your own” version is what many states have developed for their employees: a public plan that designs benefits and provider networks and carries risk, but leaves administration up to contractors."
....
"I propose an alternative avoiding the weaknesses of both the public solutions such as Medicare for all and current private insurance plans, while building on the strengths of each. It establishes a publicly chartered major risk pool that eliminates the need for the problematic behaviors of private health plans while enhancing choices for providers and patients.

"The new entity would be publicly chartered, but nongovernmental. Independence from direct
congressional oversight means that it avoids being hamstrung by special-interest groups. It has a publicly appointed board with long terms, similar to the Federal Reserve, with even higher expectations for transparency. Aside from some start-up funding, the pool is self-financing.

"The major risk pool would not itself offer coverage directly to consumers; instead, it would offer reinsurance for hospitalization and chronic care — the most expensive components of health care — to health plans, which would sell comprehensive wraparound packages. In my book, Total Cure: the Antidote to the Health Care Crisis, I use the term “Universal Coverage Pool,” or UCP to describe most of these functions. The plan for health reform called SecureChoice in Total Cure has income-based subsidies and other features that may or may not be included in the current legislative discussion. Here I use the term “major risk pool,” or MRP, to describe a more narrowly construed publicly chartered plan.

'The rationale for the MRP is twofold. (1) By pooling risk for the most expensive and financially threatening components of health care, it spreads risk broadly. Allowing health plans to buy coverage at demographically determined rates, it eliminates significant administrative and marketing expenses. (2) By paying in new ways for what covers, it will transform the delivery system."

I will admit that this is beyond my amateurish economic capabilities to evaluate well. So, I'll wait until Hacker or Nichols or others do, and keep you posted...

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