Obstacles to Reform: the Public Plan and the Federal Health Board

Conn Carroll / May 05, 2009

Senate Finance Committee chairman Max Baucus (D-MT) is hosting a Roundtable Discussion on “Expanding Health Care Coverage” today and Heritage fellow Stuart Butler is testifying. While Butler sees “broad consensus for action on coverage” he also identifies “nuclear landmines on the road to broad agreement.” They are a public plan and a federal health board:

Some say that within an exchange there must be a default plan that will be a “safe harbor,” and that plan should be a public plan – perhaps one modeled on Medicare. But it is important to remember an old sporting adage – if the umpire works for one of the teams you should be suspicious of the score. The simple fact is that if the government is sponsoring a competition within an exchange, and also is the owner of one of the plans, there can be little doubt that the rules and regulations promulgated by Washington will favor the government-sponsored plan. A “competing” public plan as a choice will inevitably become a public plan for all, and is unacceptable. Fortunately, as I note below, there are alternatives to achieve the same stated purpose.

A powerful federal health board could also undo any consensus. It’s one thing to have a body to spur and distribute cost-effectiveness research, as the new Federal Coordinating Council for Comparative Effectiveness Research will do. It’s quite another to have a board, as others have urged, that is not really answerable to anyone and starts to determine how medical care is to be provided. To be acceptable, any such board must not be a monopoly of information – other clearinghouses should be established in the private sector. And it must not promulgate rules for coverage and professional conduct in the private sector.