The Hacker report has just come out, and it does what it sets out to do. It proves that publicly provided healthcare is cheaper and more effective than privately provided healthcare. It then tells policy makers how to make public healthcare more expensive than private healthcare, because, as usual, the study is driven by political calculations rather than by the numbers or the logic of the report itself.
A new public plan partnering with Medicare would have substantial incentives to invest in quality improvement as compared with private insurance. For one, private insurance will always have limited incentive to treat those with chronic and costly disease, yet they are the ones most in need of innovations in treatment and care coordination. A public plan, which by nature will take all comers, is best able to treat them and disseminate the lessons learned to the private sector.
What Hacker has just admitted here is that private plans don’t want to take on the most costly patients and that those patients will be shunted into his proposed public plan. The cost savings in Medicare come in part from it being more efficient, but they also come from the fact that Medicare insures everyone in its age category. It gets the cheap people and the expensive people, and they even out. If private plans are able to cherrypick the profitable and cheap clients, forcing the expensive clients into a public plan, the public plan will not be cheaper than private plans.
This is a plan which is tailor-made (though, I’m sure, unintentionally) to improve private insurance companies’ bottom lines and take the most expensive people off their books.
This is what happens when you do a study whose conclusions are determined not by the numbers or logic of the subject being studied, but by political calculations. You wind up with bad policy, and since some polls show universal health as being favored by a majority, it’s not even clear to me that you wind up with good politics, especially since if the past 8 years should have taught us anything, it’s that bad policy is bad politics.