The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Obama Reiterates Support for Public Insurance Plan, Pushes Affordability

Posted by Alan on June 3, 2009

President Barack Obama lined up squarely behind the creation of a government-run health plan today. At the same time the White House has fully engaged on the financing of his health care reform plan.

Whether a public health plan should be created to compete with private sector carriers is among the most controversial issues in the current health care reform debate — and will be one of the most difficult on which to find common ground.  While many Democrats, especially those on the left, are insisting a public plan be a part of whatever reform package emerges from Congress, Republicans are equally firm — and united — in opposing them.

During his campaign for president, then-Senator Obama included a government-run health plan in the health care reform plank of his platform. Lately, however, there were indications there might be flexibility in his position. In a letter sent today to Senators Max Baucus and Edward Kennedy, President Obama removed any doubts as to where he stands. “I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest.”

Senator Kennedy, Chair of the Senate Health, Education, Labor and Pensions Committee, is a strong advocate of a public plan. Senator Baucus, the Chair of the Senate Finance Committee, has been less supportive. It is these two committees which will draft the Senate version of reform. The House bill is all but certain to call for creating a public plan.

The mere fact that President Obama supports a government-run health plan does not mean it will be in the final bill. Republicans appear to be unanimously opposed to the idea and so are some moderate Democrats. Together they could block passage of legislation unless the public plan is removed. Or there could be a compromise. One possibility being discussed would prevent the entry of a government-run plan into the market unless “triggered” by certain (yet to be determined) events.

The President’s letter to the committee Chairmen also conveyed the Administration’s support for a health insurance exchange to help consumers obtain coverage. “I agree that we should create a health insurance exchange — a market where Americans can one-stop shop for a health care plan, compare benefits and prices, and choose the plan that’s best for them, in the same way that Members of Congress and their families can.” Interestingly, this describes an exchange as an information clearinghouse. This falls short of Senator Kennedy’s call for a gateway that would, among other things, “”… negotiate with insurance companies to keep premiums and copays low….”  The Senator is describing something akin to a purchasing pool.

President Obama’s letter addressed market reform, but concentrated on cost cutting measure. “I want to stress that reform cannot mean focusing on expanded coverage alone. Indeed, without a serious, sustained effort to reduce the growth rate of health care costs, affordable health care coverage will remain out of reach. So we must attack the root causes of the inflation in health care. That means promoting the best practices, not simply the most expensive.”

This is part of an Administration-wide effort to focus on making coverage more affordable. For example, Peter Orszag, the Director of the White House Office of Management and Budget, has written two blog posts on the fiscal effects of health care reform (here and here).  In his most recent post he writes of “game changers” that, while not reducing costs immediately, are critical for long term savings. Among the changes he calls for are “patient-centered quality research and re-orienting financial incentives through bundling and payment for quality rather than quantity of services delivered.” Both the President’s letter and the Director’s postingemphasize the Administration’s desire to make health care reform “deficit neutral even over the next five to 10 years, through scoreable offsets such as savings within Medicare and Medicaid and (as necessary) additional revenue.” (“Scoreable” offsets are those recognized in the federal budget. The Congressional Budget Office recently provided guidelines on how they would go about determining the impact various health care changes will have on the budget.)

I expect we’ll be hearing a lot from the White House on health care reform with greater frequency in the next few weeks. While the Obama Administration has been content to lay out broad principles and let Congress hammer out the details, it cannot afford to be completely hands-off. The President has consistently expressed his hope for bi-partisan legislation, but he has been even more vocal that health care reform needs to happen this Fall. The President will need to spend a great deal of political capital to get a bill on such an expensive and complex issue to his desk for signature. He is clearly willing to make that expenditure.

It would have been foolish for the President to back off or even water down his call for a public plan at this stage. My guess is that he will need to push liberals into accepting a reform package that doesn’t go as far as they would like. By siding with them now he’ll be in a better position to do just that when the time for compromise arrives. We’re not there yet, but we’re getting closer.


5 Responses to “Obama Reiterates Support for Public Insurance Plan, Pushes Affordability”

  1. I wonder what kind of undetermined events could trigger the republicans or the moderate democrats to accept a public health plan. It seems highly unlikely as long as the shift comes from the strong supporters of the public health plan.

  2. Dave said

    I agree with Alison. I am new to the blog but everything you write makes a lot of sense and brings clarity to what isn’t always clear.
    Thank you.

  3. Alison said

    Thank you again for all you do to keep us up to date. Your blog is daily reading for me.

  4. I am a health insurance broker and my job is to help my clients find the best options in health insurance coverage. Our country is founded on the freedoms that protect our individual rights as citizens. However, in the medical realm of emergency care- it is not equal. I just got a bill for an emergency room visit for my teenage daughter who had a tummy ache. She had a CT scan- everything turned out fine. The hospital’s bill for about 4 hours in the ER was $9,110.19 and my insurance company repriced it according to their contract at $2,341.00. So it is very smart to buy health insurance if not for anything else for the network pricing that will protect you from inflated pricing at the hospital. Had we not had the insurance, we could have been stuck with the bill. I keep thinking of the many patients that I saw in the emergency room that day. What did they pay?

    What we need is regulation on hospital pricing- it needs to be fair and equitable to all.

    Finally, I support government regulation on equitable hospital pricing (within each hospital), expanding affordable coverage for everyone, and finally an individual mandate that will require everyone to buy health insurance or we will see hospital pricing hit the roof.

    The health insurance broker is the most important ingredient in the process of purchasing health insurance. The devil is in the details and a good health insurance broker will educate you about your options and benefits without costing you a dime. A good health insurance broker works independently in the system checking every option for competiveness in order to protect the client and to keep everything in check.

  5. The President’s position on mandated coverage looks to employers for participation, yet provides for exemption of small business. This will not increase coverage given that the majority of uninsured employees are in businesses of less than 50 employees. A mandate will have to be more comphrensive or we will continue to have 15% of the population uninsured.

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