Former President & CEO, INTEGRIS Health

Some Ideas Won’t Go Away

Published in The Journal Record
July 27, 2016

“I’ll be baaaack” was the famous retort of The Terminator as played by Arnold Schwarzenegger in the first of a series of movies about aliens returning to earth to readjust history. Some people, and even some ideas, simply won’t go away.

President Obama recently indicated that while he was very satisfied with the results of the Affordable Care Act he thought low cost insurance would be more available if a public option was added to the health exchanges’ choices. The idea of a public option was originated by the bill’s proponents.  The concept was that the government could compete with commercial insurers in the market of the exchanges.  There were howls of protest from the insurance industry that a public option was inherently unfair in a competitive arena.  In addition, most providers were afraid a public option would create yet another version of the payment schemes available in Medicare and Medicaid.

Health providers traditionally negotiate with insurance companies over payment rates. Larger providers such as multi hospital systems clearly have an advantage in those negotiations.  Medicare on the other hand simply tells the provider what it will pay.  There is no discussion.  There is no negotiation.  As a result of this capability to dictate pricing the insurance companies feared a decidedly unlevel playing field in vying for patients in a public marketplace.

Ultimately the public option was dropped as the bill moved through its legislative hurdles. The bill’s sponsors negotiated the option away in exchange for insurance industry support of the overall legislation.  Now, the president is again calling for the option.  His take is that we need the public option to restore competitiveness in premium setting.

It is clear insurance companies have moved to high levels of premium increases along with raising deductibles as a hedge against expensive new requirements such as the coverage of pre-existing conditions inherent in the law. To achieve the re-institution of a public option would require exposing the bill to a congressional debate with very problematic outcomes.  The Democrats would clearly love to see the institution of a public option but risk an uncertain future if the bill were exposed to a plethora of amendments and challenges coming from the right.

Some ideas simply won’t go away.

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