Inventor of the public option explains why it’s crucial

Obama's speech to Congress is likely to be pivotal for the plan. In an interview, Jacob Hacker makes his case

Topics: Healthcare Reform, Barack Obama, Howard Dean, U.S. House of Representatives, U.S. Senate,

Inventor of the public option explains why it's crucialPresident Barack Obama listens to a question during the Organizing for America National Health Care Forum at the Democratic National Committee headquarters in Washington Thursday, Aug. 20, 2009

Just a couple years ago, very few people could have told you what the “public option” is. Now, the idea to have a government-run, not-for-profit health-insurance program — like Medicare or Medicaid — that people could choose as their healthcare provider has become one of the focal points of the debate over reform. In fact, the degree of support (or lack thereof) that President Obama expresses for the idea in his address to a joint session of Congress Wednesday night is likely to be one of the most analyzed parts of that speech.

Jacob Hacker, a professor of political science at Yale and fellow at the New America Foundation, is widely credited with coming up with the idea for a public option. Salon spoke with him by phone last week about why he feels it’s necessary for healthcare reform and how he thinks Democrats have been doing at making the case for reform generally.

Why a public option?

I think it’s pretty clear why if you look at what’s happened over the last generation in American health insurance. Private insurance plans have basically failed us, and we need to have competition between a new nonprofit public health insurance plan that puts patients first and not private insurance companies.

I’ve argued that the public insurance plan really achieves three critical goals. It serves as a backup for people who want to have a good plan that’s available in all parts of the country and that provides them with a broad choice of providers. It provides a benchmark for the private insurance plans, encouraging them to improve the delivery and cost effectiveness of care and keep their premiums down. And it offers, finally, a cost control backstop because public health insurance in the United States has actually done a better job than private plans of keeping costs down over time, and it could do a much better job in the future if it were given the authority to innovate in the payment for, and delivery of, care.

Why the public option as opposed to single-payer?

There are two main arguments against single-payer. One is that it’s certainly not in the political cards and it requires displacing the existing employment-based health insurance system on which millions of Americans rely and moving a huge amount of healthcare financing onto the public budget at a time when we’re facing record deficits.

The second reason is less political and more a policy reason. I believe strongly you can achieve a lot of the virtues of single payer by having this public health insurance plan, and at the same time you’re allowing the private plan to be able to capitalize on its own strengths in a context in which it faces a strong competitor. The problem with our system isn’t so much that we rely on private insurance, but that private insurance plans are completely unaccountable and fragmented. And with this public health insurance plan competing on equal terms, on a level playing field with private plans in all parts of the country, then you’re going to see consolidated insurance companies facing more pressure to build on their strengths and improve their weaknesses. I do think that private insurance plans have strengths. In particular, I think that they are more capable of building integrated provider networks and that a public health insurance plan will, of necessity, be more focused on providing a broad choice of providers to allow people to have access to services in all parts of the nation.

I would say finally that many countries have systems that have heavily regulated private insurance plans that coexist with public health insurance. Germany is an example. Australia is an even more pertinent example. It appears that those systems are able to bring costs in line and provide health security despite the fact they’re not true single payer systems in which the government is the monopsonistic single insurer.

Why had nobody come up with this idea before?

I don’t think it’s fair to say no one had come up with the idea. The idea of a public insurance plan goes back very far, and the Medicare program, of course, embodies that ideal. In 1965, the United State decided that for America’s elderly, and later for America’s disabled, there would be a public health insurance plan available regardless of income or medical conditions. And that plan is enormously popular today, to the point that many Americans, it seems, aren’t fully aware that it’s a government insurance plan, because it works so well they just can’t believe the government actually gets things right.

The fact is, though, that besides single-payer supporters, there wasn’t a really strong push for the idea of having competition between a public insurance plan and private plans, because I think there was a belief that there were these two extremes. You either expanded public coverage dramatically or you gave tax breaks or other kinds of subsidies to people to enroll in private plans and you regulated those private plans. I do think we have to regulate private plans, but I also think people younger than 65 should have the same choice that older Americans have to enroll in a public health insurance plan.

I’ve seen some arguments to the effect of, “Howard Dean is now a strong proponent of the public option. But if the idea was already out there, and liberals are so committed to the public option, why wasn’t Dean talking about it during the 2004 primary?” Do you know of any particular reason? Is it just because you weren’t talking to him?

I find this to be a strange argument, because it doesn’t really have anything to do with the merits of the idea. But in fact, when it came up, I looked back and it turns out that during the debate over the Clinton health plan, Rep. Pete Stark argued that people should be allowed to enroll in a new Medicare Part C within the health alliances that the Clinton plan was designed to create to allow people to obtain private health insurance.

So in fact there have been liberals talking about this even before my 2001 proposal, but I think it didn’t have the kind of prominence because there was a real reticence on the part of many on the left to talk about the fact that government insurance actually works quite well, and also I think perhaps a lack of full appreciation of just how consolidated the private insurance market has become.

What do you think of the proposals in Congress so far?

The proposal that was developed on the House side by the three congressional committee chairs was a really good marker for the debate. It contains the three essential elements of the reform plan that builds on private employment-based coverage, but fixes it where it doesn’t work. Namely, [it offers] a new place where people can get group health insurance if they don’t have it from their place of work, and I think crucially through this exchange they can also get access to a public health insurance plan. The second element that this plan contains is a requirement on larger employers to provide health insurance or help finance it. And finally, there was an individual requirement on people to have coverage once, and only if, it was made affordable to them.

So, those were the right principles, but there are contentious elements of that legislation and it wasn’t exactly emulated in the Health, Education, Labor and Pensions Committee on the Senate side. So I think there’s a sense in which we’re going back to the legislative drawing table to try to figure out how to produce a bill that can gain sufficient support to pass. But I think the legislation that was created really laid down a pretty strong foundation for negotiations.

Is it worth passing one of these bills if the public option isn’t included?

I think it’s premature to discuss that. To be honest, the public insurance option is hardly the only controversial element of these bills. Most of the talk has been about other aspects of the legislation such as the end-of-life counseling that was misleadingly and downright grotesquely transformed in conservative rhetoric into “death panels.”

To me, the real question — if the discussion is about whether there should be a public plan — is what would take its place? So far I’ve seen no proposals that have a real viable alternative to having this public plan competing with private insurance. That public plan provides both savings in the legislation, helps make it easier to expand coverage and provides a guarantee of a much greater degree of certainty that there will be long-term efforts to control costs and improve the quality of care.

You’re not a fan of the co-op proposal, right?

No, and frankly, I haven’t found any health policy experts who are. It’s really a political solution to a political problem, rather than a policy solution to a real world problem.

I also don’t think co-ops buy any real political support that wouldn’t be conceivably gained otherwise. The fact is that virtually all Republicans are against all of the core elements of the proposal on the table today, and it’s not likely that they’re going to support any sort of meaningful step toward expanded coverage at this point. It’s certainly the case that dropping the public plan or substituting some co-op gimmick for it isn’t going to buy any substantial Republican support. I mean, the president — when he wavered a few weeks ago and offered an olive branch to conservatives by saying he might be willing to drop the public plan, the right basically burned the olive branch to a crisp and started saying that co-ops were just a public plan by another name.

I know that politics isn’t your area as much as policy, but what do you think of the way the Obama administration and the Democrats have gone about selling reform so far?

I think it’s pretty clear that the public face of the effort has not been nearly as strong as the Obama administration’s and the congressional leadership’s efforts to develop the legislation itself. The fact is that there was going to be a very fierce attack on whatever the president and his allies put forward, and yet it seems as if the White House and leading Democrats were really thrown off stride by the stridency and ferocity of those attacks.

The Obama administration made the right choice in not repeating the mistake of President Clinton in developing the legislation in house, but I think they may have erred a little bit too much on the side of avoiding getting directly involved in the presentation of alternatives and the promotion of them in the public sphere. At this point, it’s really, I think, the president’s responsibility to explain clearly and concisely and forcefully what he believes in and what he wants to have done and it’s the congressional Democratic leaders’ responsibility to make that set of ideals a reality on the floor of the House and Senate.

Democrats are going to have to hang together here, or they’re going to hang separately in the midterm elections. There just has to be, I think, a recognition that this is going to be a partisan legislative drive and it will judged by its results, as messy as the process will almost certainly be. Democrats have to deliver on this issue. It’s vital to the future of our nation, it’s vital to the economic security of Americans and it’s vital to the Democratic Party’s long-term political standing.

The media has some complicity in the problems reform has faced. I think there’s too much focus, as there always is, on the political back and forth and too little on the relative merits of competing policy ideas and on the underlying case for and against change. To me, the really important message that needs to be kept in mind is that if we fail to act on reform, the problems we face are not going to disappear. Those who say, “Let’s go back to the drawing board and spend another year or two debating this issue” are really saying, “Let’s not do anything.” And we cannot afford to do nothing. It’s a cliché, but failure is not an option on this issue.

I don’t expect that journalists will necessarily see themselves as responsible for action or inaction on a legislative issue, but given the enormity of the issue, one of the most important roles they can play is one of public education, and I think it’s really striking how underinformed many Americans are about many of the core aspects of what is on the table. And that’s the president’s fault, but I think it’s also the fault of the media. So that’s my soapbox speech on that one topic. Present company excluded.

As much as I always want to defend my colleagues, I think we obviously do bear some responsibility. But I’m not sure that what you mentioned before, the decision to not do it more in-house, hasn’t played into that. The fight in Congress became the story, so it became a process story.

Yeah, that’s true. But it’s remarkable how limited that fight has been in the sense that if you think about it, many of the major legislative achievements of Republicans when they had control of Congress were done through a partisan majority strategy. So it’s not surprising that you have lots of opposition from the other side of the aisle to that kind of strategy, and that’s what you’ve seen today. But the Democrats have been remarkably unified on the House side. The Blue Dog revolt was much less consequential on the content of the House bill than many people supposed it would be. On the Senate side, the problem is exactly what’s been identified well before this debate began. We have this non-majoritarian process in the Senate where you have to get 60 votes, and that means barring remarkable unity among the Democrats — and good health as well — that you have to attract a few Republican senators to pass anything.

I think the only real surprise that has certainly shaped the journalistic story is — well, there are two. One is [Montana Sen.] Max Baucus’ role, which no one I think would have predicted in advance, that he would both be so central and so stubbornly wedded to getting a bipartisan deal with a group of three Republicans, only one of whom looks likely to vote for or support any reform legislation.

The second thing, which I mentioned before, is the ferocity and bitterness of the attacks on the plan during the August process. That’s certainly colored the press’s coverage. But that of course is a very recent development, and I think even prior to that the frame of coverage was far more political than was warranted or than is desirable on an issue where most people, most Americans, really are so pragmatically oriented towards trying to understand what will work and what won’t and how it would affect them.

Alex Koppelman is a staff writer for Salon.

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