Several scholars discuss and debate the pros and cons of a public plan option at The American Prospect. Here is a brief excerpt:
The far bigger question ishow those exchanges work:
Are they open to all employers and individuals — required, in fact,for employers below a given size — or open only to the individual andsmall-group market?
Do the exchanges have the power to risk-adjust the premiums paid to health plans?
Can they regulate the marketing strategies and benefit designs of private insurers?
The public plan will likely end up as a dumping ground forhigh-cost, mostly low-income people if the exchanges are open only tothe individual and small-group market and have inadequate power torisk-adjust premiums or to regulate private insurers' marketing andbenefit design. In other words, we could get a public plan that instead of"disciplining" private insurers, as the president said last week,actually buttresses their dominance of the system. Watch what you wishfor.
Robert Kuttner:
The public option, as it is evolving, is even more dubious than PaulStarr's apt critique suggests. Under the House leadership bill, peoplewho have coverage through their employers are ineligible. So theproposed, head-to-head competition between the public plan and privatecompetitors is left to employers, not individuals.
What's distressing is that progressives have put all their eggs inthis leaky basket. It's clear that Jacob Hacker's original inspiration– that over time the superior efficiencies of a true public plan wouldcrowd out private alternatives — is being undermined by the politicsof compromise. Even Sen. Max Baucus, not exactly a lefty, remarked theother day that he wished that single-payer hadn't been taken off thetable, if only for tactical reasons.
In public opinion polls and in liberal advocacy, the badly flawedpublic option has become a kind of proxy for what most Americans reallywant — national health insurance. . . .
Robert Reich:
Paul Starr worries that the public plan would end up a dumping groundfor the sicker and more expensive. If that were the likely outcome,private insurers, the pharmaceutical lobby, and the American MedicalAssociation would be all in favor of it. But they're apoplectic about apublic option because they fear exactly the opposite, which also seemsto me more likely: By virtue of its scale and scope, a public planwould have the bargaining power to get lower drug prices and betterdeals with health providers, thereby eating into their profits. Andthey worry that the lower administrative costs of a public plan thatdoesn't have to show a profit, or spend on marketing and advertising,will further erode their margins. Of course we need to pay attention tothe precise organization of the risk exchanges, but that's mainly tomake sure the public plan is allowed to exert full competitive pressureon the private plans. . . .