The Public Option: Dead By Pen Strokes In Congressional Committees

The so-called public option has emerged as the single most divisive point in the health care reform proposals being shaped in various committees in Congress. Republicans have risen up to demonize it as a government takeover of health care on the slippery slope toward socialism. Within the powerful Senate Finance Committee, it is being called a deal-breaker for any bipartisan bill.

The public option refers to a new public plan that would compete with private health insurers in an effort "to keep them honest". It is a concept trumpeted by Jacob Hacker, now a professor of political science at the University of California, Berkeley. His original idea, as first envisioned in the 1990s, was that a large public program, operated along the lines of Medicare, could cover as much as one-half of the non-elderly population by shifting all or most of the uninsured, as well as all Medicaid and SCHIP enrollees, into the plan from the start. Because of its size and efficiency, such a large plan would be able to keep its premiums much lower than private plans, thereby increasing its attractiveness to enrollees. In addition, all non-elderly Americans, whether privately insured or not, would be eligible to participate. Government subsidies would be extended to those unable to afford the plan. Private insurers would be required to offer the same minimum benefits as the public plan.

So the initial idea was premised on the thought that a public plan could bring needed competition into the financing of health care. Forget that dream. Although the current House and Senate bills both include a "public option," it is in name only. What might have roared like a lion is becoming, at most, a mouse that barely squeaks. The details change every day, but already these kinds of changes from Hacker's original concept make it a policy non-starter:

• Many people with private insurance who want to change will not be able to select the public option
• The public plan may not kick in until 2013 or until such time as private plans have been demonstrated not to save money (a so-called "trigger")
• Whatever new regulations that are imposed by the reform bill will only apply to new private plans; existing plans will be grandfathered in as is
• Private insurers worry that a public plan would crowd them out by undercutting their premium levels, so they lobby to keep the public program small
• The current proposals in Congress do not impose caps on private insurance premiums; nor do they allow the public option to significantly lower its premium rates below private plans
• The public plan will not be "pre-populated" with all Medicaid and SCHIP enrollees from the start, thereby keeping the plan small
• Instead of initial coverage estimates in the range of 120 million enrollees by public plan advocates, the Congressional Budget Office (CBO) estimates that only 10 million would be enrolled because of the fine-print restrictions now being placed on the plan within Congressional committees. These restrictions are being heavily lobbied by the private insurance industry to ensure that they won't have any real competition.

The transformation of the public option from a potentially useful policy to its present irrelevance is well described in the recent brilliant analysis by Kip Sullivan, attorney and member of the Minnesota chapter of Physicians for a National Health Program. (PNHP web site at www.pnhp.org) This transformation is no accident. Opponent of a public plan have so far successfully and deceptively argued that it would be a "government takeover". The Lewin Group, a supposedly non-partisan health services consulting group now owned by UnitedHealth, the second largest private insurer in the country, serves its new masters in two ways -- by making projections for a public plan in the range of 120 million (a scare tactic), and keeping its silence during Congressional testimony on the cost-saving advantages of single-payer financing (as it has demonstrated in many state studies in recent years).

The fight against real competition is a do-or-die battle for the private insurance industry. Over many years, it has demonstrated its inability to control health care costs, is in business to make money for its shareholders by covering healthier people and avoiding sick people, and has already failed to compete against Medicare in efficiency, reliability or value. The currency of the realm in this industry is the medical-loss ratio (MLR), or how much is paid out for actual medical care, its "losses." Between 1993 and 2008, industry-average MLR's dropped from about 95 percent to 80 percent, diverting more money away medical care to administration, profits and shareholder returns.

We are now being told by the Obama administration and many legislators that the public plan will bring competition into the system and will help to cut costs and make insurance more affordable. At the same time, they are trying to reassure the insurance industry that the public plan will not put them out of business. This is double-talk and snake oil of the worst kind.

As just another plan available to a small segment of the population, the public plan if ever enacted will further fragment the system, increase bureaucracy, and still not result in either cost containment or open choice of coverage. The playing field would remain tilted in favor of private insurers, and the public plan would likely become a dumping ground for poorer and sicker patients through adverse selection.

Though many may not yet realize that the public option is dead on arrival if it ever gets to a floor vote in Congress, it is high time to move the debate on to consider real policy alternatives in our quest for cost containment, universal access, and improved quality of care. Let's check the closet. Where is that H. R. 676 when we need it?

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press.

Buy John Geyman's Books at: http://www.commoncouragepress.com

Comments

[CommonSenseUSA]

I think it is a shame that the debate on health care reform has devolved to fearful defiance and 'trust us we know what is good for you' elitism. While I agree that the Right wing is guilty of shamelessly pandering to the public's worst fears, the Left has not helped their position by being unable to define what shape the reform will take beyond 'things will be better and cost less'. It is too much faith for the average person to put in our politicians.
If you really want to get a meaningful public option in the bill, you need to get Congress to define and communicate a few things BEFORE they vote. Some suggestions:
What is considered basic coverage? Is it the same as Medicaid? Medicare? Something different?
What will the unassisted premium be? Where will assistance kick in? Will the premiums pay for the program, if not where will the money come from?
What will be the deductible? Will there be a co-payment? Will doctors be required to participate?
By not offering any concrete information you leave the door wide open for the opposition to step in and 'define' your program. Health care is SO important, that is why people are easily frightened. Convince your representatives to communicate real information. Some of them can't believe that regular people would object. To these representatives the protesters are either hopelessly stupid or paid insurgents. Tell them to get over it and lay out some specifics. People will listen.

[Chaimirija]

Funny how they are still fighting it...even though it is completely watered down. I think it is a tactic to get the weak PO to stay in, then it looks like a victory...and the companies got what they wanted: mandated private insurance. The grandfather clause is most disturbing.

[expired]

Health Care: The Public Plan Option

These Democratic Senators have NOT agreed to support it:
Senator Blanche Lincoln (D-AR)

Senator Tom Carper (D-DE)

Senator Maria Cantwell (D-WA)

Senator Ron Wyden (D-OR)

Senator Bill Nelson (D-FL)

Senator Ben Nelson (D-NE)

Senator Mary Landrieu (D-LA)

Senator Kent Conrad (D-ND)

Senator Max Baucus (D-MT)

Senator Dianne Feinstein (D-CA)

Senator Evan Bayh (D-IN)

Senator Mark Pryor (D-AR)

Senator Joe Lieberman (I-CT)

Senator Mark Warner (D-VA)

These names are reported by The Hill here and here

Update: Senator Kay Hagan (D-NC) says she supports a public option.
Update: Senator Jeff Binghaman (D-NM) says he supports a public option.

[FreedomAgain]

Well, thats a good list of crooked democratic senators.

[HeBeGeeBee]

I have called the office of EACH Blue Dog Democrat on the House Energy & Commerce Committee regarding healthcare. My comment: "I would like to encourage Congress person _(name)_, in the most emphatic of terms, to support a healthcare plan WITH a public option. This issue is so important, that I will personally commit funds to defeat any Democratic Congressperson who impedes this effort.

Zack Space (OH-18) [phone] Staffer will pass it on.
Mike Ross (AR-04) [phone] Mailbox full. Can't leave a message.
Charlie Melancon (LA-03) [phone] Staffer will pass it on.
James Matheson (UT-02) [phone] Phone hangs up on answering. This is how he serves?
Jane Harman (CA-36) [phone] Staffer says congresswoman is committed to a public option "so she is right there with you".
Baron Hill (IN-09) [phone] Staffer will pass it on.
Bart Gordon (TN-06) [phone] Staffer will pass it on.
John Barrow (GA-12) [phone] Paraphrasing: "Congressman Barrow is NOT opposed to a public option, he just wants to make sure it doesn't wreak havoc in the private sector." Me: "Congress has been working on this for 75 years. I have friends who are staying married, living apart, instead of divorcing, because one person's health coverage depends upon the other. It's time to do something now! Staffer: " The Congressman is working with the President to see that something gets done."

[snesich]

So, Mr. Geyman, should those of us who want a real public health care option just give up now?

Your words, however persuasive, don't give us any direction, except "Keep on Fighting for Single Payer No Matter How Long it Takes."

I agree. But what the hell do we do now, in 2009? Just surrender to the insurance companies and their congressional lackeys and go back to watching our big screens and visiting the mall?

Your tone of resignation is music to the ears of Republicans and the "health care industry". It will cause a lot of people to get discouraged and give up. Which is just what the anti-health care crowd wants us to do.

So, any suggestions? Or should we just stop "wasting our time" calling our members of congress?

[Awake-and-Sing]

The President didn't have the power to wave a magic wand.

However, think of how the whole terms of discussion would have been different if the President had demonstrated courage and leadership by drawing a line in the sand around a strong public not-for-profit option, promising a veto of anything less, instead of practicing wimpy and ineffective "new politics".

Think of how the whole terms of discussion would have been different if single-payer advocates had even just been allowed to the table to make their case. A strong public option would have been the compromise approach instead of a pipe dream.

What can you say about wimpy and ineffective "new politics" when you give away your main negotiating point just to get the industry lobbyists and conservatives at the table? as if this was even a worthy goal in itself? as if talking and negotiating with conservatives ever accomplished anything?

(Ooh, we have an ineffective bill that doesn't help people but is a windfall for corporations, but it has "bipartisan" and industry support. Isn't "new politics" wonderful?)

If only we had Democratic Party leadership in the White House and in Congress with courage and which isn't held hostage by corporate campaign contributions.

Campaign finance reform appears to have been the one reform that underpinned all other reform.

[AZgrammy]

He asks: Where is that H. R. 676 when we need it?
As I recall, that's the Single Payer plan.
H. R. 676 is not going to happen now, at all.
We CAN still get a Public Option though, and make it work!
If everyone calls their Congressmen-women and Senators and INSISTS, we CAN!!!

[juhar]

I'm speechless. I never believed anything would change to give the average person a break until this presidential campaign. I became so invested and now I am totally deflated. I feel like little Natalie Wood in the "Miracle on 34th Street," chanting desperately "I believe, I believe. I believe. Please don't tell me there is no Santa Claus and Martin Luther King never a dream.

[hellostats]

Why not just lower medicare age to 0?

[Konnie]

well i was going to suggest 62........­.......but i like your number better.........

we really do have the best government money can buy............

i want to cry

[jazzman]

Does anybody really care if this thing passes anymore. We all know that its a sham and a giveaway to big health insurance companies and big pharma. We should close down the whole show. What other countries have been able to provide so easily; universal health care for all, cannot be provided in the U.S. because we are too corrupt, too greedy, and too stupid to do it.

It's all symptomatic anyway. Nothing that really benefits people comes out of Washington anymore because Washington doesn't work. Our day in the sun has passed. We're totally dysfunctional. The future belongs to Asia.

[hellostats]

"Does anybody really care if this thing passes anymore."

That's a great way to put it. You know what? I don't care.

[sparky09]

"Does anybody really care if this thing passes anymore...?" Ask that question of the tens of millions without health care ...

[snesich]

If I'm a Republican and/or an insurance company executive, I'd be thrilled to read your remarks!

The first goal of conservatives is to get you to accept their twisted views. Failing that, their secondary goal is to get you discouraged and demoralized so that you give up trying. (Either way they win.)

Me, I'm not going to help the conservatives through acceptance or resignation.

Do you know you're helping the opposition? (Or, are you possibly one of them.)

[BobLablah]

Why not just lower medicare age to 50?

[hellostats]

Why not just lower med!care age to 0?

[BobLablah]

Costs and opposition. Take it one step at a time.