Happy Trails, Trigger

Okay, my apologies to Roy Rogers, but I was pleased to see in the New York Times that the idea of a public plan trigger is finally getting serious consideration by the White House and by Senate Finance Committee members.

I proposed the trigger concept in a piece that ran in THCB back in March. It was clear then that a nationwide public plan faced very considerable political obstacles, and I suggested that a more acceptable approach might be to establish a public plan option that would be implemented only where and when private plans failed to meet predetermined cost control targets.

Senator Olympia Snowe proposed the trigger approach to fellow members of Senate Finance some weeks ago, and the NYT reports that the White House—desperate for at least one Republican vote in the Senate—is now analyzing its political feasibility and practicality.

Senator Snowe’s approach, reflecting the situation in her home state of Maine, where the market is dominated by a single insurer, would tie the trigger to affordability, rather than to cost control. This approach has political advantages, but could be labeled as unfair, since it includes a factor that private plans cannot control—individual incomes—in the trigger comparison.  It also has the disadvantage of focusing on individuals who are just above the Medicaid income threshold. To achieve affordability for this lower-income group could mean a public plan network virtually identical to that of Medicaid, raising the question: why not just allow this group to buy-in to Medicaid?

However, any trigger is probably better than the nationwide public plan option. It’s also more realistic than Senator Conrad’s proposal for health cooperatives, a concept that has never been successfully implemented (Seattle’s Group Health Cooperative, despite its name, is a Kaiser-type HMO).  The experience of Medicare Advantage, in which the private plans with most enrollees cover the basic benefits at lower cost than the government-administered FFS plan, suggests that a trigger approach could provide the best of both worlds. In most areas, especially with real price competition through an exchange, the private plans would compete only with each other, while in those areas in which private plans failed to meet established benchmarks, the trigger would result in public plans being created to provide additional competition.

There is a precedent for a trigger approach. As the NYT points out, the legislation creating the Medicare drug program included a provision for establishing a government drug plan in any area with fewer than two private plans. This hasn’t happened, of course, because competition for Medicare D business has been fierce—and has probably contributed to program costs far below the projections of CMS actuaries.

Roger Collier was formerly CEO of a national health care consulting firm. His experience includes the design and implementation of innovative health care programs for HMOs, health insurers, and state and federal agencies.  He is editor of Health Care REFORM UPDATE .

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3 replies »

  1. The trigger is just a delay tactic to keep the insurance companies in business longer. They make billions of dollars a day so every day of delay is a day of profit.
    The insurance companies have already failed and it is time now to pull the trigger. We have high cost health insurance everywhere and our quality of care even for those with insurance is bottom of the league tables.
    We have also tried cooperatives. Blue Cross and Blue Shield started as cooperatives and now they are a big part of the problem. Other cooperatives have been too small to have any market power.
    BTW, Medicare Advantage costs the government 12 to 18% MORE than standard Medicare. This is not a solution.
    There is no effective private plan competition anywhere in the US. It’s time to pull the trigger.

  2. Roger – I think the idea of Snowe’s ‘trigger’ is as thin and meaningless a gruel as Conrad’s co-ops.
    You might be interested in Nate Silver’s take as someone whose views are closer to yours than mine, A Trigger with Teeth? in particular his money quote:
    “…if Democrats insist on a public option, they ought to recognize that (i) the public option has already been significantly compromised and (ii) there may be better compromises available — some of them involving a trigger.”
    But as for your statement “the White House—desperate for at least one Republican vote in the Senate” – I believe the political calculus has (finally and thankfully) changed.
    There may have indeed been some establishment sentiment in support of ‘bipartisanship’ for its own sake, but the repub caucus in both houses has shown zero good faith from the start. I think they’ve made themselves irrelevant to meaningful debate and participation.
    I think it’s unfortunate that we don’t have a parliamentary system, because that would make everything a lot more clear.

  3. “health cooperatives, a concept that has never been successfully implemented”
    How are we defining cooperatives? Las Vegas Chamber of Commerce has a long running and very successful guarantee issue plan that any business can join by becoming a member. Renewals are done in two year periods, average 5-6% a year. Offers a choice of plans. It is a model for what reform should look like. It didn’t require any legislation, doesn’t cost tax payers a penny. There are things that could be improved but over all more successful then anything being proposed in Washington. NE Ohio has COSE.
    My fear about a trigger is you can’t trust the government. You’re asking the people that want a public plan more then anything to be the judge of when a public plan is needed. They want one now and are only considering a trigger because they can’t cram it down our throats today.
    If they base the trigger on cost inflation what prevents the government from saying private insurance must cover dependents of adult age with sever disability no matter the age that are currently covered by Medicaid, some states already did that to age 30. Or they could pass a law saying therapy and training for autistic kids and adult should be covered fully by insurance. Or any other law that would drive cost past the trigger point.
    Government is primarily responsible for the cost inflation already, trusting them to hold it down or judge when others haven’t and thus we need a public plan is dangerous. They have an agenda and one way or the other plan to fulfill it. Triggers are just another sneaky stepping stone to what they started with Medicare.