Obama Reiterates Support for Public Insurance Plan, Pushes Affordability

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.

27 Senators Call for Public Health Insurance Plan

Twentyseven Democratic Senators have signed onto a “sense of the Senate” resolution demanding that a government-run health plan be included in whatever health care reform bill emerges from Congress. Staking out the liberal position for what will be one of the most controversial elements of this year’s health care reform debate, the Senators define a public health insurance option as “essential to reform” according to a report on Politico.com.

Of course, there are government-run plans and then there are government-run plans. As Politico reports, Senator Max Baucus, chair of the Senate Finance Committee, has said that while he expects any comprehensive health care reform legislation emerging from his committee to include a public plan this shouldn’t frighten opponents. “There are says to skin a cat. There are ways to find a solution,” the site quotes him as saying. One option under consideration, for example, is a “‘fallback’ plan, which would trigger a public insurance option if private competition proves inadequate in a geographic region.”

Most Republicans and many moderate Democrats have said they would oppose a health care reform bill if it includes a government-run health plan to compete with private carriers. Whether they would accept the idea of such a plan as a “fallback” is unknown.

Among those co-sponsoring the resolution are several important players in the health care reform debate. For example, Senator Edward Kennedy chairs the Senate Health, Education, Labor and Pensions Committee which will, along with the Senate Finance Committee, is drafting health care reform legislation. And Senators Dick Durbin and Charles Schumer are members of the Democrat’s leadership team in the Senate. Missing from the list are any members of the Moderate Dems Working Group — 18 Democrats (including one independent) who may seek to block inclusion of a government-run plan in health care reform legislation.

The 27 Senators listed by Politico as co-sponsoring the sense of the Senate resolution are:
Jeff Bingaman (D-N.M.)
Barbara Boxer (D-Calif.),
Sherrod Brown (D-Ohio)
Roland W. Burris (D-Ill.)
Benjamin Cardin (D-Md.).
Bob Casey (D-Pa.)
Chris Dodd (D-Conn.)
Dick Durbin (D-Ill.)
Kirsten Gillibrand (D-N.Y.)
Tom Harkin (D-Iowa),
Daniel K. Inouye (D-Hawaii)
Ted Kaufman (D-Del.)
Edward Kennedy (D-Mass.)
Frank R. Lautenberg (D-N.J.)
Patrick Leahy (D-Vt.)
Carl Levin (D-Mich.)
Claire McCaskill (D-Mo.)
Robert Menendez (D-N.J.)
Jeff Merkley (D-Ore.)
Barbara A. Mikulski (D-Md.)
Jack Reed (D-R.I.)
Bernie Sanders (I-Vt. – an independent, Senator Sanders caucuses with Democrats)
Charles E. Schumer (D-N.Y.)
Jeanne Shaheen (D-N.H.)
Debbie Stabenow (D-Mich.)
Tom Udall (D-N.M.)
Sheldon Whitehouse (D-R.I.)

Public Health Plan – Tea Leaves

President Barack Obama’s stated goal is to pass comprehensive health care reform by the end of this year. With a Democratic Congress and muted opposition (relative to those that opposed President Bill Clinton’s similar effort) President Obama has a good chance of succeeding. It won’t be easy, especially given the cost and the state of the economy, but the stars seem to be aligning.

Consider: Health care costs are a huge burden on America’s struggling manufacturing base. Health care reform would ease this burden. The public supports substantive change. Previous opponents to reform (doctors, hospitals, drug companies, insurance plans and the like) have lined up to promise to reduce health care costs by $2 trillion dollars by 2019. Voluntarily. Harry and Louise would be so proud. And President Obama has perhaps the most potent grass roots political organization ever assembled.

Hold that last thought.

One of the most controversial elements of the President’s health care reform package is the creation of a government-run health plan to compete with private carriers in the traditional market place. I’ve written on the controversy several times, so to oversimplify: liberals tend to think a public plan is essential to assure fair competition in the marketplace. Conservatives see it as the first step toward a single payer system. Many moderates, including centrist Democrats who appear to hold the balance of power on health care reform plan, seem skeptical about the idea.

Then candidate Obama campaigned strongly on the need for a public health plan. While he’s always expressed a willingness to compromise on the issue, in the past it has usually been about how a public plan would operate, not whether there would be one.

Hold this thought, too.

Now, let’s bring those two held thoughts together. Ben Smith over at Politico.com is reporting on an email sent out by President Obama’s grass roots organization, Organizing for America, on the issue.  The letter urges supporters of the President to pledge to support three broad principles for health care reform. These principles are:

  1. reduce costs;
  2. guarantee choice; and
  3. ensure all Americans have quality affordable health care.

That’s it (the full email is printed on Mr. Smith’s blog). No mention of a public health plan. Zip. None.

Organizing for America’s call to action is focused on the right principles, too. Some of commented that the Administration’s emphasis seems to be more focused on health insurance reforms than on containing medical costs. I confess, I write more about the former than the latter, but that’s in part due to the nature of this blog and it’s because market reforms have been more controversial — so far. The reality is that President Obama has consistently worked to emphasize the need to rein in the escalating cost of health care in this country. In many ways he’s been successful in gaining consensus on those aspects of his plan.

Which means the question becomes whether he’ll fight to keep a government-run health plan in the mix even if it means jeopardizing the progress he’s made along other fronts. I don’t want to read too much into one email. But the fact that Organizing for America’s call to arms doesn’t mention public health plans may, just maybe, mean the Administration is willing to deal on the issue — or may be recognizing that the votes for a public plan just aren’t there. It’s too early to tell.

But look at it the other way: if the email had included the creation of a public health plan as a core principle, it would be very hard for the Administration to later back down on the issue. By side-stepping the opportunity to make such a plan a core principle of reform, at the very least President Obama is leaving the door open on whether a public plan needs to be part of the final package.

That’s the kind of flexibility he’ll need to pass comprehensive health care reform. And it’s why I personally believe meaningful reform is indeed likely to pass this year.