The Alan Katz Health Care Reform Blog

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Senate Likely to Move Forward with Health Care Reform Absent a Public Option

Posted by Alan on December 14, 2009

Liberal Democratic Senators appear to be sliding down a slippery slope, but one that will likely move health care reform to a conference committee.

In the beginning was a robust public option: a government-run health care program to compete with private carriers that would pay doctors, hospitals and other providers a small percentage above Medicare’s reimbursement levels (which for many services are below those medical providers’ actual cost). Moderate and conservative Democrats balked, claiming a public option paying Medicare-like rates would decimate the private market.

So liberal Democrats offered a compromise: the public health insurance plan would negotiate with medical providers as private carriers do. Never mind that this approach undermines the rationale for a public option – driving down health care costs. At least it preserved a government-run plan. Still no love. Moderate and conservative Democrats balked, claiming the government-plan would still have an unfair competitive advantage in the market, driving private health plans out of business.

So a group of Senators negotiated another health care reform compromise. The Gang of 10 (five liberals and five moderates) proposed turning to the Office of Personnel Management to administer a health care program involving private carriers in a manner modeled after the Federal Employee Health Benefit Plan (which is the program that covers members of Congress). They also proposed allowing individuals 55 through 64 to buy into the Medicare program. At first the Gang of 10’s compromise seemed to have some wind at its back. But Senator Joe Lieberman announced his opposition to the Medicare buy-in concept (a proposal he previously had supported). And on Monday, after a caucus of Democratic Senators concluded, the party’s leadership in the chamber all but announced the Gang of 10’s compromise proposal was off the table. Which means liberals face an uncomfortable choice: see health care reform fail or remove the public option and push legislation through the Senate – then hope they can improve it in the conference committee.

While this result was far from certain, it isn’t much of surprise either. The fate of health care reform has long been in the hands of moderate and conservative Democratic Senators. Republicans have been united and vocal in their opposition. Announcing early in the debate that they could never support any health care reform plan that contained provisions core to the Democratic platform is not a high percentage approach to being invited to negotiate on the legislation. So their 40 votes have long been off the table. That meant that the discussion would take place exclusively among the 58 Democrats and the two Independent Senators who caucus with them.

And that’s what’s happening. And that’s why the Senate is likely to pass a health care reform bill before Christmas leaving it up to a House-Senate conference committee to come up with the final version of the reform bill. Liberals won’t be happy with the process. There will be a lot of complaining by their supporters that Democrats are failing to deliver on meaningful reform. But the reality is that moderates like Senators Tom Carper and Blanche Lincoln are as much a part of the Democratic party as Senators Jay Rockefeller and Charles Schumer. Whatever emerges from Congress will need to be acceptable to all Democrats. not just the most liberal. Or the loudest.

What all this also means is that the real work of drafting comprehensive health care reform legislation is about to get underway. It’s been a long strange trip, but that’s American politics in 2009 – and 2010, too.


5 Responses to “Senate Likely to Move Forward with Health Care Reform Absent a Public Option”

  1. Allen H. said

    I am not sure if this is the proper forum for this discussion or not, but here goes…

    I realize there are many, many moving parts to this, but what is the likely overall effect on brokers and agents?

    1. Small group market. It appears that many small groups will migrate to the Exchange (where brokers would be likely t be involved, at a lower commission scale.
    2. Individual market. Who knows
    3. Medicare Advantage. Likely to be around for 5 years, and after that, who knows.
    4. Will the health insurance broker be around in 5-10 years?

  2. Rick said

    After we sift through the smoke screen of blaming the messenger, what is likely to be in the final plan that actually reduces the over usage of care or the health care providers price tag?

    • Alan said

      Rick: good question. There’s actually more cost containment in the bill than meets the eye — especially if you include some items that were passed earlier as part of the stimulus package. The early elements included investment in medical technology which holds great promise for both reducing costs directly and improving quality. There’s also programs in the package that will stimulate experiments in compensating doctors for outcomes, not just activities, creating comparative effectiveness guidelines, and more. It has been said that if the cost containment elements were put into a separate bill it would actually look fairly substantial. (I’ll try to find a more substantial and in-depth list of it all and post it).

      Now, is it enough? Probably not. But is it a start? Yes.

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