Public, Private Health Insurance Systems Could Work in Tandem, Howard Dean Tells Brokers and Agents

The private health insurance market can exist alongside a public health care plan, and may even provide some healthy competition, according to the former head of the Democratic Party.

In fact, it is possible that individuals who choose to enroll in the proposed government plan will decide to leave it and enroll in a private plan after they discover how restrictive it is, said Howard Dean, who is also a physician and the former governor of Vermont.

Regardless of whether a public option is ultimately created, Congress is still failing to address the real health care crisis in America, and that is cost, Dean said during a keynote address Thursday, May 28, at the Council of Insurance Agents & Brokers’ Employee Benefits Leadership Forum in Colorado Springs, Colorado.

“What will happen with the public option [is] people will initially choose to go to the public option,” Dean said. “But it works both ways. After they’ve been there for a while, some of them will decide it’s too inflexible, it’s too bureaucratic, and they will come back into the private option.”

“Meanwhile, I think the fact that a public option is there, it’s going to force [private insurance] companies to reassess how they do cost control; it’s also going to force them to reassess how they’re paying physicians,” he said.

“A public/private hybrid can work,” said Dean, comparing a government-run public plan option, which legislators may include as part of a comprehensive reform likely to be unveiled next month, with the federal program through which Medicare beneficiaries can buy from commercial health insurers and others federally subsidized prescription drug coverage.

“It’s come under budget by a substantial amount for all four years of its existence,” he said. “I think that there is ample room for the public sector and the private sector to cooperate and coexist. I think it will change the way people do business in the private sector. I think that’s a good thing.”

“I think the advantage is, we’ll still have all the innovation of the private sector that doesn’t happen in the public sector, and we will have some downward pressure on costs from the public-sector plan,” which he said should cost much less to administer.

Drawing from his experience in Vermont, where as governor he outsourced Medicaid to the private sector, he said he found that administrative costs were much lower when the program was state-run. While Medicaid’s administrative costs average only about 4 percent, the administrative overhead of a well-run publicly traded insurer averages around 20 percent, according to Dean.

But even as Congress debates whether to include a public option in the health reform legislation it soon will consider, it is failing to address the real health care crisis in America, which is the escalation in costs, Dean asserted.

“I believe the thing that makes America the greatest country on the face of the Earth is part of why we spent 60 percent more of our GNP on health care,” he said, comparing U.S. health care spending with that of most other industrialized nations. “Our culture … is imbued with optimism. Cynicism is sort of not allowed in America. We think we can do anything, and unfortunately that also means that we think death is an avoidable consequence of every single illness that there is.”

As a result of this aversion to death, Americans spend far too much on end-of-life care, and it is bankrupting the nation, Dean said.

“We spend an enormously disproportionate part of resources in the last six months of life, and they get damn little quality of life,” he said.

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter.