Understanding the Complexities of a Government Health Plan

I’ll be writing more on this later, but I wanted to note that Avalere Health, the highly respected firm that objectively analyzes public policies affecting healthcare, today released a report on the controversial proposal to create a government-run health plan that would compete with private health insurers.

(A disclaimer:  The Healthcare Leadership Council provided funding for Avalere’s research, but had no role in the editorial process or the conclusions reached by the study’s authors.)

The paper addresses many of the key questions concerning the government plan concept.  How can a government plan control costs while, at the same time, ensuring a level playing field with private insurers?  Would a government health plan pay providers fixed rates like Medicare, which could have considerable ramifications on healthcare access?  Or would the government plan have to negotiate with physicians and hospitals, just as private plans do?

As the Avalere press release explains,

Assuming that providers can decline participation in the public plan, the Avalere paper outlines a series of critical options and decisions that face a government-run plan in developing a provider network, including whether to pay different amounts to different providers in the same specialty and the same market, and how to address instances where providers demand higher rates as a condition of their participation.

In other words, if Congress is intent on moving forward with the government-run health plan idea, there are no small number of complex issues to work out in the short timeframe Congress and the White House have laid out to pass a health reform bill.

More on this later.