We Don’t Need a “Public Plan” By Richard C. Lord

This article is more than 12 years old.

There has been a lot of discussion recently about whether health care reform needs to include the option of a "public plan". Our experience in Massachusetts has convinced me that health reform with virtually universal coverage is very achievable without the total disruption to the marketplace and our employer based system that would occur with the creation of a public plan.

The proponents for a public plan have argued that such a plan is necessary to promote competition and to keep the private plans "honest". They seem to ignore the fact that we already have 1500 private plans being offered in the country - I fail to see how one additional plan will change the competitive landscape.

Furthermore, such a plan could threaten the viability of employer sponsored coverage which is currently enjoyed by over 170 million Americans.

In Massachusetts, we chose correctly to build upon our employer sponsored system by simply filling in the gaps, most importantly by providing subsidies to low-income residents to purchase private plans offered through the Connector. This has worked extremely well. We also addressed coverage needs for another large segment of the uninsured, i.e. young adults, by offering them more affordable plans through the Connector or allowing them to stay on their parents’ plans for an additional two years after losing their dependent status.

A public plan could destabilize the insurance market as the government will be both the payer and the regulator. We all know about the massive cost shifting that currently occurs with our largest government payers, Medicare and Medicaid. These two programs which account for 50% of health care spending, simply do not reimburse providers for their full costs, resulting in much higher costs to all of the private payers. Another public payer will simply exacerbate that situation. Health care premiums for both employers and individuals would be more affordable if the government payers would simply pay their fair share.

Government health care programs have demonstrated no ability to be innovative in addressing either quality or cost issues so it is hard to imagine why we think a new public plan would be any different. I am hopeful that the discussion in Washington will shift away from this needless distraction and focus on how our nation can meaningfully address the access issues for millions of our citizens as well as creative ways to make health care more affordable.

Richard C. Lord
President & CEO, Associated Industries of Massachusetts

This program aired on July 2, 2009. The audio for this program is not available.

Martha Bebinger Twitter Reporter
Martha Bebinger covers health care and other general assignments for WBUR.