Medical Device Daily Washington Editor

WASHINGTON — The rhetoric coming out of the Beltway suggests that healthcare policy will occupy center stage along with the economy for at least the next couple of years, and a conference call hosted on Wednesday by the progressive policy think tank, the Institute for America's Future (Washington), gave an overview of a proposal for a public insurance option for those who are not already eligible for public healthcare insurance programs. Despite calls for urgent action on the matter, at least one member of Congress thinks healthcare will not be done during the honeymoon of the first 100 days.

Penned by Jacob Hacker, PhD, co-director of the Center on Health, Economic and Family Security at the University of California Berkeley School of Law (Berkeley, California), the proposal outlines the case for a federal health plan to compete with the private sector for those not eligible for existing government plans, but the document omits any discussion of the expected impact of such a plan on the federal budget, which by some accounts may already be headed for a deficit of as much as $1 trillion next year, thanks in part to the financial crisis.

However, an analysis of the plan by the Lewin Group (Falls Church, Virginia) projects an increase in federal healthcare spending of roughly $53.8 billion a year over the first 10 years of such a plan.

His proposal includes "a core and yet controversial component" of a national insurance exchange which would be comparable to conventional Medicare to the extent that it would "pay private providers to deliver care," Hacker said. "This is not an argument for a universal Medicare program, but a hybrid approach" between public and private systems.

Hacker said the argument for his plan has three parts, the first of which is cost. "Contrary to many perceptions, Medicare has done a better job of controlling costs" than private payers, he said, noting that between 1997 and 2006, per-enrollee costs grew 7.6% a year in private care vs. 4.6% in Medicare. He also cited lower administrative costs on the part of Medicare compared to private insurers.

The second argument is that a new public plan can improve care by "coordinating efforts with Medicare" to develop data on payment reforms that trim costs without sacrificing the quality of care, Hacker said.

The third leg of the stool is that "a new public plan modeled on Medicare ... can set a benchmark for private plans" in terms of cost control and access, Hacker said. He also made the case that the structure of such private plans means that disease management and care coordination do not suffer because of job losses and changes.

"In opinion polls, Americans say they want a choice between public and private plans," he said, adding that his proposal "lets Americans have their cake and eat it, too."

Hacker said that under his proposal, the federal healthcare instrument might look more like the federal employee health benefit plans than like Medicare, but stated that ideally, CMS "would not be in charge of managing the competition," which would be handled by "a higher level administrative body." However, he offered no details on that administrative entity.

Rep. Pete Stark (D-California), chairman of the health subcommittee of the House Ways and Means Committee, said that older Americans have access to what he sees as "a very excellent plan in Medicare."

As for the debate as to whether healthcare reform should incorporate both public and private insurance, Stark observed, "many have said we need both. I concur with that," adding that the task of reimbursement for a federal plan would be handled by intermediaries, as is the case with Medicare. He also remarked that cost control would improve because of increased bargaining power, such as for prescription drugs.

Stark was asked whether any reform that did not include publicly-funded insurance for those not eligible for any current federal health programs was a non-starter, to which he replied, "I believe so. In the absence of a public plan, you would have to so strictly regulate private plans" that they would function as public plans.

He added that he "can't imagine that we could have a reasonably priced plan without everyone having to join," although he also said he preferred to avoid describing such a requirement as a mandate. "Everyone has to be in the pool," he said, stating that "everyone should be covered and everyone should pay according to their ability to pay."

On the other hand, Stark sounded a note of caution to those who want quick action. He said he does not anticipate having a bill together within the first 100 days of President-elect Barack Obama's swearing in, observing that the effort may take a full year.

Stark acknowledged that reform will need support from a number of organizations, such as the American Hospital Association and American Medical Association (both Chicago). He said that any such plan is not likely to get support from the insurance industry, but "they're the easiest to roll because nobody likes insurance companies."

The California Democrat took several opportunities to take a shot at the Republican Party, charging that the GOP has been "trying to destroy Medicare for the past eight or 10 years." He also asserted that Republicans have no intention of making a genuine effort to reform healthcare.