Designing a Mixed Public and Private System for the Health Insurance Market

This paper considers design features of a health care reform proposal that would offer a government-run health insurance plan alongside competing private plans in a government-run insurance exchange. The Medicare program provides a practical guide to the problems and opportunities offered by such a mixed public and private system. Since both public and private plans have inherent advantages and disadvantages, both plans can be offered on a relatively level playing field. Among the items to be considered in creating a level playing field are the benefit package, advertising and consumer information, risk selection and risk adjustment, the choice environment, default enrollment, provider payment rates, and the administrative structure.