In their year 2007 JHPPL paper, Mark Schlesinger and Jacob Hacker argue that the public/private hybrid structure of Medicare offers a natural model for universal coverage for the nonelderly. Their argument is good, but things didn’t exactly work out as they expected. The ACA includes no public option. Among the many nice passages, these caught my eye:

In health care, as in many other areas, Americans value choice. Although these preferences have been widely recognized in health policy literature, the literature often asserts incorrectly that the only important consumer choice in health care involves the choice of physicians and that the selection of an insurer has little perceived value to most consumers. The evidence suggests otherwise. […]

[P]rivate benefits tend to be more adaptable over time and less constrained by political institutions that otherwise inhibit social policy change. […]

On the other hand, publicly administered programs have been more innovative on the payment side, developing new prospective payment systems for hospitals, physicians, and long-term care facilities […]. This appears to reflect a public-sector advantage in developing and diffusing innovations that involve substantial economies of scale.

I have argued in the past that a hybrid Medicare is the natural political equilibrium, in part because consumers really do want choice of plans. That fact, and not claims of cost control, is the right argument for inclusion of private plans in Medicare and beyond. Yet, traditional Medicare does seem to be in the best position to exert meaningful cost control.


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