Public Health Plan Key to Health Care Reform Compromise
President Barack Obama came to Washington promising a new era of politics where pragmatism trumped partisanship and the search for common ground was more than a prelude to a political rumble. Health care reform will be his opportunity to deliver. Specifically, it will be interesting to see if the Administration is willing to accept meaningful health care reform that does not include the creation of a public health plan to make government sponsored health care coverage available to all Americans.
Whether there should be a government-run health plan to compete with private carriers, even if only in the individual and small group market segments, is shaping up to be the most controversial element of the health care reform debate. Many Democrats and progressives see it as a critical tool for controllingcosts and for maintaining a balance of power between consumers and insurance giants. Many Republicans and conservatives see it as the first step toward a single-payer system. Each side has made clear that they are implacable on this issue.
Except for the Obama Administration. Maybe. It has already indicated a willingness to negotiate how such a public health plan would operate. However, there’s been no sign the President would negotiate away his campaign promise to make available to all Americans health insurance at least as good as members of Congress receive through a government program if that’s what it would take to pass an overall reform package.
Part of the problem is that the President is trying to have it both ways: introduce a government-run health care plan while preserving the private, employer-based system. Today, government-run health plans shift costs to private carriers. No one seriously denies this reality. By setting Medicare and Medicaid reimbursements rates low (sometimes lower than providers actual costs) doctors and hospitals are forced to increase their charges to privately insured patients. This results in higher private insurance premiums. A government-offered alternative to private coverage for all Americans would, in theory, work the same way. As more costs shifted to the private carriers the price differential would increase resulting in more consumers moving to the public plan. Eventually, the public plan would be the only viable alternative in the market.
In suggesting the Administration was open to a compromise on how the public health plan would operate, the Associated Press reported Director of the White House Office on Health Reform, Nancy-Ann DeParle, as suggesting that “the public plan pays hospitals and doctors rates similar to what private insurers pay. That would address fears that government would use its muscle to pay rock-bottom prices for medical services, allowing the public plan to charge discounted premiums that private insurers couldn’t compete with”.
But if they are going to have a cost structure comparable to the private market, why bother? If a goal is to control medical costs, how can a public plan not use it’s clout to negotiate lower charges from providers? Is a government official going to go before the press and say “We could bring down the cost of health care, but we choose not to?”
If the public health plan is setting reimbursement plans at the same level as private carriers it’s not contributing to cost containment, which is the most powerful rationale for creating a public health plan in the first place. Yet if it creates a public health plan that does impose lower costs, it will eventually drive private carriers out of the market.
It’s too early in the process for President Obama to negotiate away creation of a public health plan. But it may be a compromise he’ll be forced to make, in which case the sooner he cuts the deal the more valuable the bargaining chip will be. The reason for this calculation is that President Obama may lack the political clout to push through Congress health care reform that includes a government-run health plan competing with private carriers. The political reality is that Republicans are adamantly opposed to the idea and Democrats are not unified on the issue.
Democrats will soon have a (theoretically) filibuster-proof 60-seat majority in the Senate with Pennsylvania Senator Arelen Spector switching parties to become a Democrat, the likely seating — eventually — of Al Franken as a Senat0r from Minnesota, and with two independents caucusing with them. Yet 15 of those Democrats and one of the independents have formed a moderate caucus that has raised questions about the cost of the Administration’s health care reform package and about a government program. Senator Specter is likely to join this group. With 17 votes they would hold the balance of power on key elements of the reform package. If advocates of a public health plan try to ram the idea through Congress without any Republican votes, it may find it lacks the necessary Democratic votes as well.
Then again, they may. President Obama is an adept politician. He may be able to swing enough moderates into support of a government-run health plan. While this certainty remains, the idea of a government-run plan could be the key to achieving a compromise on the overall health care reform package. Assuming Republicans and moderate Democrats are willing to negotiate. If they’re not, the Obama Administration should simply try to get everything it’s seeking rammed through Congress, giving ground on nothing. But if all sides are truly interested in reaching a consensus, the public health plan element is among the most valuable bargaining chips President Obama holds.
By making clear — at the right time — what he would want in exchange for leaving out the government-run plan, President Obama will be able to gauge how serious Republicans and moderate Democrats are in compromise. And learning that information, in and of itself, is worth the offer.
Posted in Barack Obama, Health Care Reform, Healthcare Reform, Politics Tagged: Al Franken, Arlen Specter, government health plan, Nancy-Ann DeParle 
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