Implementing Health Care Reform with All-Payer Regulation, Private Insurers, and a Voluntary Public Insurance Plan

The Cost Control paper argues that health care reform proposals without serious cost controls will fail both as policy and politically. Most of the agenda being discussed in current debate has already been judged by the Congressional Budget Office (CBO 2008) as unlikely to yield significant savings within the necessary time frame. That paper reviews both the compelling reasons for doubt about relying on measures such as cost-effectiveness research and “pay for performance” in the short-term, and the even more compelling reasons for better control of the prices paid for services both in the shortand long-term. In response to the liberal/conservative dispute over whether a “public plan” would have “unfair” advantages over private insurers, which is based on belief by both advocates of the public and private sectors that the public plan could do a better job of limiting prices, I argue that the logical solution is to combine the efforts of public and private insurers to create an overall system of standard and coherent prices for medical services – what in other countries is known as all-payer rate-setting. This is a compromise that would be better than either doing without the public plan or having the public plan simply in competition with the private plans.