Will federal health reform lead to a CalPERS-style health plan for all?

October 21, 2010

Will the federal health reform prove to be an incentive for employers to drop coverage for their workers and send them into the government-managed insurance pools instead?

Tennessee Gov. Philip Bredesen, a Democrats, thinks so, and he has done the math to show how his own state would save hundreds of millions of dollars a year by dropping coverage for its public employees and letting them take advantage of the subsidies available in the federal program. Bredesen argues that this will have serious consequences for federal spending and the cost of the program, because the number of people using the subsidies is likely to be far higher than projected when Congress and the Obama Administration drafted the plan.

If Bredesen is right, the nation’s health care system would eventually, and not too long from now, resemble a giant version of the CalPERS health benefits program for California public employees, with the government managing the definition of benefits and choosing several health insurance companies to collect premiums, negotiate with doctors and hospitals, and reimburse them for their costs. It would be a hybrid of public management and private implementation.

Would this be a good thing or a bad thing?

See Bredesen’s analysis in the Wall Street Journal.

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