PERILS OF THE PUBLIC PLAN

Paul Starr on how a public health-care plan could turn out to be the opposite of what progressives intend:

In the current battle over health reform, progressives may have set themselves up for trouble by pinning all their hopes on the creation of a government-run insurance plan. A public plan is not a bad idea -- indeed, it could be a critical element in successful reform -- but it could also easily turn out to serve the opposite purposes from the ones progressives intend.

Here's the delicate political problem: Depending on the rules, the entire system could tip one way or the other. Unconstrained, the public plan could drive private insurers out of business, setting off a political backlash not just from the industry but from much of the public. Over-constrained, the public plan could go into a death spiral itself as it becomes a dumping ground for high-risk enrollees, its rates rise, and it loses its appeal to the public at large. Creating a fair system of public-private competition -- giving the public plan just enough power to offset its likely higher risks -- wouldn't be easy even if it were up to neutral experts, which it isn't.

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