The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Senate Finance Committee Rejects Government-run Health Insurance Plan

Posted by Alan on September 29, 2009

The Senate Finance Committee continues to refine its health care reform legislation. Today it broke ranks with other Congressional committees with jurisdiction over health care reform by defeating amendments to create a government-run health plan. The debate was passionate, but ultimately enough Democrats joined with Republican Senators to defeat two attempts by the panel’s more liberal members to insert public option language into the bill.

Keeping the public option out of the bill was a major victory for Senator Max Baucus, chair of the Finance Committee. While acknowledging that a public option would “hold insurance companies’ feet to the fire,” his opposition was based on the goal of enacting health care reform this year. According to ABC News Senator Baucus believes health care reform including a government-run program cannot pass the Senate.

Senator Jay Rockefeller insisted, however, that a public health insurance plan was absolutely essential to meaningful reform. Failure to to create a public, non-profit plan to compete with private carriers, the Associated Press reports the West Virginia Democrat as saying, “was a virtual invitation to insurance companies to continue placing profits over people, and he predicted they would raise their premiums substantially once the legislation went into effect.”

Senator Baucus countered that the legislation being developed by the Senate Finance Committee includes numerous consumer protections, including a provision to prevent insurance companies denying coverage based on pre-existing conditions. None of the lawmakers on either side of the aisle spent much effort in defending the behavior of private insurance companies. Senator Baucus said he agreed with the intent of the Rockefeller Amendment to “hold the insurance industry’s feet to the fire,” according to the Washington Post. The Associated Press quotes Senator Jim Bunning as observing that “the private sector is not doing exactly what it should do with medical services.”

Republican members of the committee were unanimous in their opposition to public options. The Washington Post quotes the ranking GOP member of the panel, Senator Charles Grassley, as warning that a government plan “will ultimately force private insurers out of business” and that “The government is not a fair competitor. It’s a predator.”

The first public option amendment, offered by Senator Rockefeller, would have permitted the government-run plan to set reimbursements to medical providers at levels paid by Medicare for the first two years. (After that period, I believe the Senators proposal would have permitted the public medical plan to, like Medicare, impose rates on providers). It should be noted, Medicare often pays doctors and hospitals less than the cost they incur providing services. The five Democrats joining with Republican committee members to defeat this amendment were Senators Baucus, Thomas Carper, Kent Conrad, Blanche Lincoln, and Bill Nelson.

Senator Charles Schumer then proposed an amendment that would have required the public plan to negotiate reimbursement rates with providers, much as private carriers do today. Three Democrats – Senators Baucus, Conrad and Lincoln – voted against accepting this amendment.

I’ve maintained for some time that a government-run health plan was unlikely to be part the health care reform plan passed by Congress. The Senate Finance Committee’s rejection of this provision increases the likelihood of this outcome, but the debate will continue. Senator Schumer, for one, pledged to continue the fight. 

"’The present system is broken’" the Washington Post reports him as saying. “He said he was pushing for a public option not for ideological or symbolic reasons but because ‘costs are going through the roof.’ And he expressed confidence that, ‘with some work and some compromise,’  proponents of the provision eventually could get 60 votes on the Senate floor. ‘We are going to get at this, and at this, and at this, until we succeed, because we believe in it so strongly.’"

With polls showing 65 percent of the public support a government-run health plan operating like Medicare to compete with private health insurance plans, President Barack Obama continuing to argue for a public option, and Speaker Nancy Pelosi claiming the House was unlikely the House would pass health care reform that did not include a public option, this debate is far from over. Assuming the Senate Finance Committee moves forward a reform package this week, the next step will be for it to be integrated into the bill passed by the Senate Health, Education and Pensions Committee – legislation that does include a public option.

Getting health care reform is a long hike. Today’s vote in the Senate Finance Committee is a step along the way – albeit a very significant step indeed.


13 Responses to “Senate Finance Committee Rejects Government-run Health Insurance Plan”

  1. daniel lane said

    I think the health care reform bill is a good try . but i dont see anything changing for the better we are going to end up paying high premiums and the companys will still find ways to make millions

  2. If you are going to require people to purchase health insurance there has to be some method to control the cost. I have to buy car insurance in the state that I live in and there are mechanisms in place to regulate the cost of that insurance. I see very little in this bill that would do that. This is starting to look like a major win for the health insurers as it was in Massachusetts.

  3. Billy B said

    I’ve said it before and I’ll say it again. The public option/insurance reform is a small part of the reform picture and at best will make a 10% difference. But then again it may be 10% worse too.

    The core reform that is needed is to break the “procedure/test=profit” link for doctors and hospitals. As long as that remains, they will just keep ordering up more unnecessary procedures and tests.

    • Nosedoc said

      While I agree that self-referral has gotten out of hand and is a major factor in driving up health care expenditures, I have generally regarded profit as an important incentive for physicians to work hard and more hours, and to provide better care than the competitor down the street. Paying physicians a salary (don’t even mention capitation) is the alternative, and this would bring about a fundamental change in the way care is delivered. I cannot imagine health professionals maintaining private practices if they are salaried. I would also expect physician labor to become organized under such circumstances. Larger entities (hospitals, insurers and state & local governments) would have to step in as the employers. There are a lot of details that would have to be worked out, including work hours, on-call coverage, benefits, etc.

  4. Linda Ann Prasil said

    The health care problem in this country has been created and is controlled by the insurance companies and the pharmaceutical industry and their well-paid lobbyists. They have bought Congress. They own and pay our legislators through their campaign contributions. They write the laws enacted by Congress. They have launched all out attacks to thwart any attempt to stop them from losing that control by funding ads full of outright lies, scary but nonetheless meaningless buzzwords, and misleading demagoguery.
    But this is OUR Congress. Congress is not employed by the special interests. They are paid by us, the taxpayers, the ones they deny the same access to medical care that we provide for them with our tax dollars.
    Why do we let them get away with it? It’s time we flood the legislators, both Democrats and Republican, with the one thing we have more powerful than special interests—our vote. Let’s tell them that we will vote out of office any member of Congress who takes money from the insurance industry or the pharmaceutical companies. It’s time to take back OUR government

  5. BGNE said

    Health Care reform is going to go back and forth for a while, before it passes if it ever does. The senate is saying they will not pass a bill with a public option and the house is saying they will not without one!

  6. Nosedoc said

    Thank you, Alan, for pointing out the truth about Medicare reimbursements. As for “negotiation” over reimbursement rates, if “take it or leave it” qualifies as negotiation, I guess health care professionals take part in negotiation with health insurance companies.

    I believe a major problem here is that everyone seems to agree the health care system is broken, but no one can agree about identifying the primary issues that make it that way, so therefore, we can’t agree on the solution(s).

    • Gary Weiss said

      I don’t agree the health care system is broken. In my opinion, when something is described as broken, it doesn’t work. I don’t know anyone for whom the health care system doesn’t work. I’m sure it doesn’t work for some, but it certainly works for most, and for most people, works well and clearly is not broken.

      Truth be told, it’s Congress that’s broken, because based upon results, it certainly doesn’t work. That’s my new mantra–Congress is broken!!

      • Nosedoc said

        Not broken? We are spending ourselves into oblivion and the financing of the system is on an unsustainable course. So while the system may be functioning now, I don’t believe this will last much longer without substantive changes in the ground rules. And yes, the Congress and several presidential administrations certainly have allowed things to get this way.

        • Gary Weiss said

          Yes, but by your own admission, it’s not broken. Most people get high quality health care from the best health care providers on the planet.

          Sure, we need to do something about the ever-increasing costs. But what Congress has in mind will fix nothing and only make things worse.

          If we don’t return to a system where consumers are more responsible for their costs, the cost slowdown will never happen. I also advocate helping those who need assistance financially.

          In terms of spending ourselves into oblivion, I think we need to take a good hard look at what our gov’t is doing. Have you seen the size of the deficit lately? Our national debt? And they continue to add pork to bill after bill. Congress even voted to increase their budget today. Most of us, even large corporations, are cutting back, but not Congress. They’re spending even more on themselves. Not a very pretty picture.

        • Nosedoc said

          And two years ago Countrywide Mortgage was functioning just fine, too.

  7. Cynthia said

    I find it hard for a NYT/CBS poll to be credible.

    The latest (and proven to be credible) Rasmussen reports say that support for the healthcare plan proposed by Congress hits an all time low at 41%, while 56% are opposed.

    I’m thinking that Alan is correct…the government run health plan will not be part of the health care reform plan passed by Congress.

    • Gary Weiss said

      I hope you’re right about the credibility of the polls. But it probably doesn’t matter. Those who need support for that point of view will use the CBS poll to their ends.

      How is a poll proven to creditable or not?

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