Who's Afraid of a 'Public Plan,' and Why?

If private companies are better at whatever might be the task at hand, mainly because they have already accrued the benefits of prior healthy competition, why would our nation's private health insurance companies so desperately fear the presence of a public sector alternative as part of that very competition?

Surely they would expect to be able to easily thrash such a public alternative in the marketplace. After all, they have the head start of being better at doing this from the outset, they have the advantage of being more nimble and responsive going forward, and the public program, whatever its final form, will be disadvantaged by the inevitable ineptitude of government.

Private Companies May Have Little to Fear From Public Plan

So why on earth would the private companies be worried that the public program alternative might be able to even come close to achieving their standards?

To be sure, if the same public program that competes with the private entities also gets to write and enforce the rules of the competition, that might create a problem. But almost all serious observers anticipate that the public program alternative currently being proposed will not also control the regulatory framework in which services are offered; it will simply be available as another option, and will survive only if it can succeed as a genuine alternative to those private companies.

Clearly, if the certain ineptitude of a public program and the obvious superiority of the private sector are true, there would be no reason for the latter to fear the former. Given the passion of such fear in today's health policy conversation, one cannot help but wonder what else might be going on here.

R. Paul Duncan, Ph.D., is a Research Foundation Professor at the University of Florida, where he also Chairs the Department of Health Services Research, Management and Policy. Much of Duncan's research is focused on access to health care and issues surrounding health insurance coverage.

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