The Alan Katz Health Care Reform Blog

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Kennedy Calls for Substantial Government Role in Health Care

Posted by Alan on May 30, 2009


In the United States Senate, two committees will play a leading role in drafting health care reform: the Finance Committee chaired by Senator Max Baucus; and the Health, Education, Labor and Pensions (often referred to as the HELP) Committee led by Senator Edward Kennedy. The two chairman have pledged to work together in order to bring one bill to the floor sometime this summer. In the meantime, the committee members are developing policy options, staking out positions, testing the political waters, and all the various other chores required to actually produce legislation.

The Senate Finance Committee has put forward three health care reform option papers. They describe choices the committee will need to make. One option, for example, is to create a government-run health plan to compete with private carriers. Another is to do without a public plan and count on the market to promote competition.

The Senate HELP committee has been taking a less formal approach, but it too has now begun putting its collective thoughts on paper. The Washington Post reports that Senator Kennedy is circulating an outline of the health care reform package his committee is likely to propose. The HELP Committee is traditionally more progressive than the Finance Committee (needing to focus on the cost of things does tend to bring out the pragmatist in most lawmakers) so it’s not surprising that the package, as the Washington Post puts it, “[i]n many respects adopts the most liberal approaches to health reform being discussed in Washington.”

Among other provisions, the Kennedy proposal  would create a government-run plan to compete with private carriers, require individuals to purchase coverage and employers to contribute to the coverage.  According to the Post, the HELP Committee will propose allowing Americans earning up to 500 percent of the federal poverty level ($110,250 for a family of four) to purchase Medicaid (although according to Bloomberg.com the package sets a floor of 150 percent of the federal poverty level for Medicaid eligibility — currently states can set their own financial level for their citizens to qualify for Medicaid).  Bloomberg.com also reports the committee’s proposal would expand eligibility for the State Children’s Health Insurance Program to “children” up to 26 years old.

Inclusion of the public plan will be especially controversial. Most Republicans and many moderate Democrats who have stated an opinion on the topic have said they could not support health care reform legislation that calls for creating a government-run health plan. The fear is that, by underpaying physicians, the plan will force doctors, hospitals and other medical providers to shift costs to the private plans. Since premiums reflect the underlying cost of medical care, the public plan would gain an unfair price advantage. The outcome, over time, would be private carriers would be forced from the market, leaving the public plan as the only option available.

The HELP Committee’s proposal will fuel this fear. Bloomberg.com writes that Kennedy’s proposal would allow the public plan to pay health care providers just 10 percent more than Medicare pays them — which would still be less than the actual costs medical professionals and hospitals incur in treating Medicare patients.

One of the more far reaching ideas Senator Kennedy is calling for are the creation of “gateways” to facilitate the purchase of affordable health insurance. These gateways might at first seem to be similar to the health insurance exchanges many in Congress are calling for, but they go further.  In an opinion piece published by the Boston Globe, Senator Kennedy writes he will seek to create “gateways to better health across America. You can contact the gateways online, by phone, or in person to figure out what policy works for you.”  Going even further, the “gateways would “negotiate with insurance companies to keep premiums and copays low and help you with your premiums if you can’t afford them.”  In this regard, the gateways seem to be a throwback to the Clinton Administration health care reform plan of the 1990s. Central to that effort was the concept of “managed competition” in which purchasing pools would negotiate the cost and coverage of health care available in a community.

While Senator Kennedy repeats the frequently cited mantra of “if you like your current coverage you can keep it,” the elements of his health care reform plan would all but guarantee that your current coverage won’t be around for long.

One Response to “Kennedy Calls for Substantial Government Role in Health Care”

  1. Mark Goodman said

    Once again the leaders in Washington are looking to solve the insurance issue and not the healthcare issue. It maybe more politically expedient to hang the issue on insurance companies but it will not solve the issue of lowering costs.

    The increase in Medicaid payments to providers will be too little to increase the number of providers who will accept it. Also keep in mind that more and more physicians are no longer accepting Medicare patients because of their low reimbursement rates. Once again if you can’t solve the cost issue you can’t solve the coverage issue.

    I am a life long left leaning democrat who has spent most of my working life in the benefits field. Although there is a significant opportunity available to solve this mess it seems clear that once again politics will trump reason.

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